Cognizant Plans to Hire in U.S.

Cognizant Technology Solutions (CTSH - Analyst Report) recently announced expansion of operations at its Phoenix delivery center.

New Jersey-based Cognizant is a leading provider of consulting, technology and business process outsourcing (BPO) services.

The company’s Phoenix center will initially provide claims processing services to one of the largest healthcare plans in the U.S. There is a lot of opportunity for growth in the booming healthcare sector. As the company adds BPO services to the existing roster of application development, application maintenance, testing and related services at the Phoenix center, it plans to hire more than 100 professionals in the next twelve months thereby increasing the headcount to 400 in Phoenix.

Phoenix is one of Cognizant's six delivery centers in the U.S. The company also has centers in Eastern Europe, India and China.

Earlier this month, Cognizant posted strong results for the second quarter and upgraded its guidance for 2009. Though the management remains cautions about the macroeconomic environment, visibility and confidence in the demand environment have strengthened over the past two months.

Compared to its competitors, CTSH is setting a more robust mood going forward. Earlier, peers like Tata Consultancy Services Ltd and Infosys Technologies Ltd (INFY - Analyst Report) have posted strong results for the quarter but underscored a cautious outlook. Infosys raised its annual forecast marginally and expects a recovery in IT spending only by mid-2010.

The current economic slowdown has hit the IT industry quite hard resulting in lower to negative growth rates, pricing pressure, project delays and cancellations, and a volatile currency exchange environment. Companies in financial services, manufacturing and retail industries account for a major portion of total outsourced business for IT companies and have already been shaken by bankruptcies. This has led to a slowdown in IT services. Moreover, the volatility in exchange rates has badly hurt the top line of most service providers.

However, Cognizant continues to outperform its peers and remains a leader in IT services. The company remains well diversified among verticals such as financial services, health care and life sciences, retail, manufacturing and logistics. This diversification has helped the company maintain its top line. Demand for outsourcing services also remains strong.

The stock has gained almost 76% in the past six months and remains attractive at current levels, as well.

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