Cognizant Beats Infosys in Outsourcing

U.S. company's model includes higher spending and more aggressive sales effort.

The playbook for India’s technology-outsourcing industry is being rewritten by a company based in Teaneck, New Jersey.

Cognizant Technology Solutions Corp. is outspending competitors to win more business from clients such as Royal Philips Electronics NV, with 22 percent of revenue going on costs that included higher wages and putting more people into customers’ sites in the U.S. and Europe. That’s more than double the proportion at closest rival Bangalore-based Infosys Ltd., the annual financial reports of both companies show.

‘Risky Focus’

Cognizant completed 14 acquisitions in the past decade, focusing on software, computing and consulting services, according to data compiled by Bloomberg. Infosys meanwhile has announced 12 acquisitions, including outsourcing back-offices of Citigroup Inc. and Koninklijke Philips Electronics NV, and the consulting firm Lodestone Holding AG. Rather than raising the share of revenue from consulting, Infosys has set a goal to expand revenue by selling software products.

‘Unreasonable Terms’

Cognizant has projected revenue of at least $7.34 billion for 2012. Infosys, which cut its forecast for sales in the year ending March 31 to no less than $7.34 billion, has emphasized profitability over revenue expansion and turned down projects that would trim margins.

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