Cognizant eyes EU for further expansion

Sufia Tippu
Friday, 23 June 2006 12:33

IT Industry - Market

Fast growing IT services firm and offshoring specialist, Cognizant Technology Solutions, is looking at the EU for further expansion.

With more than 28,000 employees worldwide, Cognizant is positioned as a "hybrid" vendor because although it is headquartered in New Jersey, buyers often consider it a pure-play offshore provider because of the location of its delivery centers. More than 7000 engineers are based in the US while the rest are in its development centres in Bangalore, Chennai, Hyderabad and four other Indian cities.

The predominantly US-centric firm, which clocked a growth rate of 57% in the last quarter by providing a host of  IT services to JP Morgan Chase, Metlife, Marks & Spencers and Pfizer,  is now looking at expanding its footprint in the EU. It is not ruling out acquisitions at this point of time.

After having acquired Infopulse, an Amsterdam-based services  firm specializing in banking and financial services industry in 2003, Cognizant is now grid locking its EU strategy. “We might acquire a European firm too but we do not see acquisitions as a way to grow – we are growing rapidly as it is. Acquisitions are more for domain expertise as well as for increasing geographic presence,” said Lakshmi Narayanan, president and CEO, Cognizant Technology Solutions, told iTWire.

Although 86% of the company’s revenue comes from the US markets, the EU is projecting a tremendous potential from the demand perspective.

“Today, France, Germany and Switzerland are seriously looking at off-shoring IT work.  Earlier there were a number of issues like confidentiality and strict labor laws. But now, there is a higher level of confidence when it comes to getting work done off-shore. At the same time, if any new projects have to be executed, they can now be given to third party vendors outside these countries as against the previous mandate that existing work cannot be replaced by offshoring. And we are seeing a significant increase in new areas and projects,” he explained.

Its increased focus on growth in Europe is starting to yield results in areas like telecom, retail and media. “With our acquisition of Fathom in the US last year  we are able to capitalize on marketing and execution in telecom consulting – an area in which Fathom had significant expertise. Now, we are able to offer these end to end solutions to our EU customers too,” Narayanan added..

According to analysts, Cognizant is arguably the most westernized of the Tier I Indian vendors. “It has taken a lesson from the former Big Five firms, in that it creates revenue opportunities for itself by proactively architecting strategic solutions for clients and prospects — rather than just responding to Request for Proposals (RFPs),” says Stephanie Moore,  in  the ‘Quick Take’  Forrester report.

Indian vendors have never excelled in this proactive approach, almost always waiting for the customer to come to them. “However, the bar has been raised. Mature clients are no longer just searching for low-cost bodies — they are looking for their offshore vendors to provide business value through optimization and innovation,” she pointed out.