Cognizant Eyes BPO Acquisitions

Chennai: | Updated: Oct 18 2002, 05:30am hrs
Nasdaq-listed Cognizant Technology Solutions Inc (Cognizant), with offshore development centres in India, is looking for acquisitions in the business process outsourcing space.

We are open to acquisitions. We have looked at call centre companies but the service is getting commoditised. We are looking at back office process focused firms, Cognizant chairman and chief executive officer Kumar Mahadeva told analysts during the third quarter earnings conference held on Wednesday.

Cognizant has recently acquired an United Healthcare facility in Ireland. It has initiated the process of acquiring the American Express relationship from Silverline Technologies, which is expected to be completed before the end of the calendar year. The company has $123 million in cash and its stock has been touching new 52-week heights at over $60, which should make financing acquisitions not a very difficult task.

About four of Cognizants clients are in the process of kicking off pilots in the BPO space within the next few quarters. The company aims to leverage its expertise in the financial services, insurance and healthcare verticals in its BPO operations.

Meanwhile, Cognizant, buoyed by increased offshoring by its customers, has raised the revenue guidance (for the second time) for the full year ending December 2002 to $226 million (Rs 1107 crore) from $ 218 million. It has added 950 employees (mostly offshore) during the third quarter to take the total headcount to over 5,500. Once again, we exceeded our own expectations as the trend to move offshore gains momentum. The strong results reflect the increasing comfort level of new and existing customers with Cognizants offshore outsourcing service, Mr Mahadeva explained.

For the quarter ended September 2002, it has reported a 35 per cent increase in topline to $61.2 million (Rs 300 crore) and a net profit of $9.7 million (Rs 47.5 crore).