The Hindu Business Line : Cognizant to scale up Mumbai operations

COGNIZANT Technology Solutions is expanding its Mumbai operations. It is in the process of acquiring additional space to total 75,000 sq ft with a capacity to house 750 people.

It currently has about 50 people, predominantly working on its vertical BPO space for pharmaceutical companies. The company, which yesterday declared year-on-year net profit growth of 51 per cent and revenue growth of 53 per cent for the quarter ended June 2005, also cited action in the financial services, ERP and healthcare arenas as triggers for growth.

The company attributed the slump in gross margins by 1.7 percentage points from the same quarter last year to 44.4 per cent in June this year, to the implementation of its annual global salary increases on April 1. "A slight increase in our onsite staffing ratios and lower gross margins associated with the 100 per cent onsite model of (the recently acquired), Fathom Solutions, (also contributed to the slump)," it said.

Interestingly, Cognizant has beaten the likes of Infosys and Wipro on a couple of fronts. Cognizant's incremental revenue for the June quarter was $30 million, while Infosys made $21 million and Wipro $23 million. Cognizant added 3,950 employees, mostly in IT services, between January and June this year, while Infosys and Wipro added 3,260 and 3,284 respectively, again in IT services.

Mr Lakshmi Narayanan, CEO of the company, said, "(In addition to)... a strong showing this quarter by our financial services practice, we saw particular strength in our healthcare and life sciences verticals."

The financial services vertical that contributes about 49 per cent of revenues grew about 57 per cent or $37 million, while healthcare that contributes to about 19 per cent of revenues, grew 48 per cent or $12 million in the quarter.

During the quarter, Cognizant signed up a large pharmaceutical company as a new strategic client. Cognizant earmarks as `strategic' clients who have a potential to clock annual revenues between $5 million and $40 million in the long term. Mr Narayanan said, "We... now work with five of the top 10 global pharmaceutical companies." It added 28 clients in the June quarter. Active clients number 246.

The company has also brought on board Mr Ramesh Gudalur, from GECIS, to head its v-BPO operations. The company has begun business process outsourcing projects for clients in the life sciences and healthcare sectors and will begin work in financial services too.

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