Cognizant ups outlook, rides digital transformation, healthcare

IT outsourcing firm Cognizant delivers a strong first quarter and raises its outlook as it lands digital transformation deal and sees its healthcare business surge.
Written by Larry Dignan, Contributor

Cognizant Technology Solutions, an IT outsourcing company, reported a strong first quarter and raised its outlook as it lands healthcare, financial services and digital transformation business.

The company, which recently acquired healthcare IT specialist Trizetto last year, delivered first quarter earnings of $382.9 million, or 62 cents a share, on revenue of $2.91 billion, up 20.2 percent from a year ago. Non-GAAP earnings were 71 cents a share.

Cognizant's results were a penny better than expecations.

As for the outlook, Cognizant projected second quarter non-GAAP earnings of 72 cents a share on revenue of at least $3.01 billion. For 2015, Cognizant sees non-GAAP earnings of $2.93 a share on revenue of $12.24 billion.

That outlook was ahead of expectations by a bit.

CEO Francisco D'Souza said the company was landing enterprise business because it has expertise in digital business transformation. The move to digital is also driving demand for Cognizant's core business of managing and retooling business processes.

"Clients need a partner who can bring new capabilities in design, data science, and digital technology in addition to a deep understanding of a client's business, operating model, and technology landscape," said D'Souza on an earnings conference call. "What's interesting and important to note is that the shift to a digital enterprise is in turn driving demand for our traditional services."

According to Cognizant executives, the company is landing more traditional outsourcing deals because clients want to save money and then plow it into digital transformation efforts.

Like other outsourcing players in India, the bulk of Cognizant's business is in financial services, but the acquisition of Trizetto gave the company a much larger healthcare footprint. Cognizant's healthcare sales were up 42.7 percent from a year ago in the first quarter.


The company added 6,200 employees in the first quarter to end with about 217,700 workers. Of that sum, 204,000 are service delivery staff. Attrition was 14 percent annualized.

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