Cognizant eyes insurance BPOs

Refining its inorganic growth strategy further after carrying out acquisitions in consulting and analytics areas down the years, Cognizant Technology Solutions is understood to be scouting for business process outsourcing (BPO) firms specialising in insurance in the US and Europe.

The Nasdaq-listed company is looking to acquire companies handling back-office operations for US and European clients, primarily in insurance support and related operations, according to an investment banker who spoke on condition of anonymity. Such a move is expected to strengthen Cognizant’s insurance practice, which has focused primarily on the property and casualty insurance industries.

Cognizant is understood to be targeting BPO firms with revenues in the $5-50 million range this year. When asked, a spokesman said the company was always open to new acquisition possibilities, but declined to comment on any speculation to that effect.

Within the ambit of property and casualty insurance, Cognizant has been offering back office and front office solutions in the areas of claims processing, document management, policy administration, regulatory, reporting and solution frameworks, among others.

Most of the 85,000-plus employees and 50 development centres of Teaneck, New Jersey-based Cognizant are in India. The company, which offers BPO and consulting services, is seen by analysts as one of the key beneficiaries of the sharply rebounding $60-billion Indian outsourcing market.

Cognizant’s net profit for the quarter ending March 31 rose to $151.5 million (Rs 660 crore), up 34 per cent from a year earlier and 5.2 per cent quarter-on-quarter. Revenues for the first quarter rose to $959.7 million (Rs 4,222 crore), up 28.7 per cent from $745.9 million (Rs 3,278 crore) in the first quarter of 2009. Revenues in 2009-10 are expected to be at least $4.1 billion (Rs 18,860 crore), up by at least 25 per cent over 2009.

Cognizant has carried out eight acquisitions since 2005, including that of the UK-based program management consultancy, PIPC Group. PIPC was acquired last month for a little over £23 million pounds (Rs 154 crore). In 2009, Cognizant had acquired Pepperweed Advisors, the information technology consulting services division of US-based Pepperweed Consulting, for an undisclosed amount.