Cognizant to invest Rs 200 cr in Kolkata push

Bracing up to counter the deleterious effects of the slowdown in the US, Cognizant Technology Solutions Corporation is further expanding its presence in India. The company, which is targeting 10-15 per cent of its revenue share from outside the US and European markets in the next two to three years, will invest approximately $46 million (Rs 201 crore) to further expand its infrastructure in Kolkata.

A company source told Business Standard the company would add about 500,000 square feet of office space in the first phase of its new fully-owned techno-complex presently coming up on 20 acres of land in Bantala, a Special Economic Zone designated area. "Once completed, this new facility will be able to accommodate approximately 4,000 new employees," the company said. Cognizant currently employs around 5,000 personnel out of Kolkata in six development centres -- one fully-owned and the rest leased facilities.

The company is following in the footsteps of compatriots like Tata Consultancy Services and Infosys Technologies by diversifying and expanding rapidly into emerging markets like China and India where it has made sizeable investments. It is also looking at expanding its presence in the Middle East and Latin American markets.

A good number of companies who outsource financial and healthcare services to India have been affected by the credit crunch in the wake of the market downturn in the US. Some have scaled back significantly on their IT spends this year. Hence, Cognizant is targeting new growth areas like infrastructure services, business process outsourcing (BPO) and Knowledge Process Outsourcing (KPO) in Asia.

Cognizant, whose clients include AstraZeneca and Molina Healthcare, cut its 2008 outlook last week to $2.81 billion from $2.95 billion, despite meeting analyst expectations on bottomline. The management is also said to be expecting the company's top five clients in the healthcare segment to cut back spending into the third quarter of 2008.

Only 1.5 per cent of Cognizant's second quarter revenues (ending June 30, 2008) of $685.4 million came from Asian markets, with the majority from the US market and 20 per cent coming in from Europe. The company presently has over 59,000 employees on its rolls, of which almost two-third are placed offshore, providing low-cost software development services and support primarily to US and European companies.