By Audrey B.
The big three of Indian outsourcing companies have a lot to evaluate, as their lower ranking rival Cognizant (CTSH) is slowly starting to emerge ahead of the pack following the company’s first quarter results. This comes with the continued albeit slow rebound of the outsourcing market this year.
Days before the release of Cognizant’s results, analysts were already forecasting a strong showing for the company with estimated revenue of $939.1 million or a revenue growth by up to 26%, especially with the solid results received from its other Indian rivals, Wipro (WIT), Infosys (INFY) and Tata Consultancy.
Upon the release of the company’s first quarter results for 2010 last May 4, many were pleasantly surprised by the results posted by Cognizant, with a 34% increase in profit surpassing everybody’s expectations. The company earned $151.5 million, up from a profit of $113.1 million in the first quarter of last year. Revenues rose 6.3% to $960 million, compared with the prior quarter.
Cognizant is even now expecting a $55 million increase in revenue for this quarter and fiscal 2010 revenue of at least $4.1 billion, up 25% compared to 2009.
Performance is strong for the company, as it continuously beats estimates quarter after quarter, signaling continued improvement in the company’s operations. Case in point is Cognizant’s last year revenues which increased at least $200-500 million dollars more than its rivals.
Aside from that is the company’s laudably low attrition rate with a 12.4% rate on a twelve month basis. The company increased its workforce last quarter by more than 7,100 people, indicating the strength of the company’s business for the quarter. Notably, last year, the company gave 200% bonuses to its top performers after its strong growth last year. As of last quarter, Cognizant’s workforce numbered at around 85,500.
Eyeing the trend that Cognizant has been following, it seems plausible that the company will reach its 2010 end of year forecast, and will pleasantly surprise us all once again by being ahead of estimates. As Kaufman Bros analyst Karl Keirstead so ably put it, “Cognizant should still be able to outgrow its larger peers in 2010.” If the company continues its current performance, then yes, Cognizant just might.
Disclosure: No positions
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