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Application development contributes major chunk for Cognizant

Pricing was stable during the fourth quarter

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Karen McLoughlin, chief financial officer, said that (formerly known as Application Development) represented 50.4% of revenue and outsourcing services (formerly known as Application Management) was 49.6% for the quarter.

While addressing earnings call today, she said, Consulting and Technology Services grew by 15.2% year-over-year and 1.5% sequentially. Outsourcing Services grew 19.1% year-over-year and 4.6% sequentially.

For the full year, Consulting and Technology Services represented 51.1% of revenue, and grew 20.4%, while Outsourcing Services represented 48.9% of revenue and grew 19.6%.

Commenting about pricing, she said, as expected, on a sequential basis, company's pricing was stable during the fourth quarter.

Cognizant closed the quarter with 821 active customers and the number of accounts which we consider to be strategic increased by 6. Accounts which we consider to be strategic have the potential to ramp up to at least $5 million to more than $50 million in annual revenue. Company's total number of strategic clients to 214, she said.

Commenting about cash and complex, McLoughlin said that balance sheet remains very healthy. “We finished the quarter with around $2.9 billion of cash and short-term investments. We spent aorund $126 million for capital expenditures during the quarter. During 2013, we expect our capital expenditures to total approximately $400 million,” she added.

The company's net headcount increased by over 6,300 people during the quarter. Around 39% of gross additions for the quarter were direct college hires, while 61% were lateral hires of experienced professionals. We ended the quarter with over 156,700 employees globally. During 2012, we added approximately 19,000 net new employees worldwide.

Attrition in the fourth quarter was 10.7%, lower than Q3 attrition of 13.0%. As we have discussed in the past, there is no consistent methodology in the industry to report attrition. We have historically reported attrition by annualising the turnover which occurred within the quarter, including both voluntary and involuntary. Our attrition statistics include all departures, including BPO and employees in our training program.

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