Airline industry slump hits Cognizant Tech Solutions

Indranil Chakraborty in Kolkata

After Skytech Solutions, a TCG and United Airlines joint venture, it is the turn of Cognizant Technology Solutions (CTS) to be hit by the downturn in the worldwide aviation industry.

According to an industry source, CTS, which has North West Airlines as one of its clients, may suffer a decline in revenue earnings from the airlines segment because of the most vicious downturn in the history of the aviation industry.

In the last financial year, CTS reported a revenue growth of 70 per cent to Rs 705 crore from Rs 414 crore in 1999-00.

The official spokesman of Chennai-based CTS admitted that there could be a decline in the volume of business from North West Airlines, but there is no indication that the airline will stop outsourcing its maintenance jobs to CTS.

According to Mr Siddhartha Mukherjee, vice-president of CTS’ Kolkata operations, the company does not expect any growth in the aviation segment.

“Last year we did a business of $3 million with North West, this year we hope to maintain that revenue. We have a master services contract agreement with North West and there is no indication North West will terminate the contract agreement,” Mr Mukherjee said.
Earlier, Skytech, after analysing the airlines’ traffic flow, revised its revenue growth for the current financial year from 70 per cent to 50 per cent.

“The September 11 terrorist attacks using United Airlines planes is spelling disaster for the software development, maintenance and servicing companies who service various back office needs of US airlines,” the industry source said.

In the third quarter, CTS reported a revenue increase of 23 per cent from $37.1 million to $45.5 million. For North West, CTS develops software for aircraft maintenance and spares and inventory management.

Industry sources said that CTS had already trimmed its onsite manpower strength by more than 40 per cent and all these technologists were deputed at other sites.

CTS’ official spokesperson admitted that there had been some reallocation of jobs but declined to give any figure.

Said Mr Mukherjee, “Reallocation of work force is a part of our business. In normal times this is natural, but in times of economic
depression, reallocation of jobs become an important parameter of a company’s business performance.”