Cognizant a local American company (CTS)-profit rose 49.1% to $203.7 million in India

CHENNAI | BANGALORE: Cognizant Technology Solutions (CTS) reported a double-digit growth in its net profit for the second straight quarter, signalling a rebound in spending by top US banks — the biggest market for India’s $50-billion outsourcing industry. 

Cognizant’s third quarter profit rose 49.1% to $203.7 million and revenues grew to $1.22 billion, up 43% from a year ago. 

“This is yet another evidence that clients are not just seeking cost efficiencies, but are also stepping up investments in their business platforms and new capabilities to drive growth and innovation,” said Francisco D’Souza, president and chief executive officer.

The company, which competes with Indian rivals Tata Consultancy Services (TCS) and Infosys Technologies , also raised its forecast for the year ending December 2010 on higher demand from top customers such as JP Morgan, 3M and AstraZeneca. The company said its revenues will grow by at least 38.8% to $4.55 billion this year, higher than the nearly 36% growth it had projected earlier. 

For top outsourcing vendors based in India, double-digit growth rates seem to be back, if the Cognizant, TCS and Infosys results are any indication, as customers in the US plan to save nearly $18 billion in costs by offshoring to India during the financial year which ends in March 2011. 

Technology research firm, Forrester, has predicted a robust 8.1% growth in 2010 and a 7.4% growth in 2011 for the US tech market. “Globally, the tech market measured in US dollars will grow by 7%, compared with our July forecast of 7.8%, with the somewhat weaker outlook for the US tech market offsetting slightly better performance in Europe and strong growth in Latin America, the Middle East, Africa, and Asia/Pacific,” said Andrew Bartels, vice-president and principal analyst, Forrester Research , in a September report. 

Unlike its Indian peers, Cognizant presents itself as an American company whose key management and workforce is based in the US. This makes a big difference when trying to capture clients, many of whom consider Cognizant as a local American company.