UK growth at New Jersey-headquartered but India-centric Cognizant is still lagging that of the rest of the business, but by our estimates there is still chance that Cognizant UK could make it into double-digit growth by the end of the year.
Cognizant’s headline revenues in Q3 (to 30th Sept.) grew by 18% yoy to $1.89bn, 5.4% higher than the prior quarter. As ever, operating margins remained rock solid – in fact at 18.8% they were 50bps higher yoy and 30bps higher qoq. Management has very slightly uplifted FY EPS guidance from $3.38 to $3.42 though has kept revenue outlook the same as for the past 3 quarters at no less than $7.34bn, representing 20% growth over 2011.
By the way, this is now the second successive quarter that Cognizant’s revenues have exceeded those at Infosys (see Infosys lowers guidance – and changes CFO). Based on both companies’ forecasts it seems inevitable that Cognizant will succeed Infosys as the second largest India-based offshore services supplier for the year. That said, Cognizant’s revenues will still trail those of mighty Mumbai-based TCS by some 35% (and see TCS tops Infosys on growth and margin).
But this is not the case for Cognizant’s UK operations, where Q3 revenues (on my estimates) grew by a tad under 10% to £125m, less than those for Infosys and TCS. If Cognizant UK can grow headline revenues in Q4 at least as fast as the rest of the business – predicted around 2.6% qoq – then there is a goodly chance that its UK FY revenue growth (in local currency) will hit 10%. Tough – but not impossible.
We’ll have a full comparison of the UK performance of the leading India-based players in the next edition of OffshoreViews.