Cognizant Buys Pepperweed Advisors

Cognizant Technology Solutions Corp. (CTSH - Analyst Report) recently announced that it has acquired almost all of the assets of Pepperweed Advisors, the IT consulting services division of Pepperweed Consulting. Management expects that the acquisition will strengthen Cognizant's IT Infrastructure Services (IT IS) practice in two areas - IT Service Management (ITSM) and IT Asset Management (ITAM). Cognizant clients should benefit from a broader process consulting portfolio with the addition of Pepperweed’s capabilities. Other terms of the transaction were not disclosed.

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

Yesterday, at a technology conference, management stated that the demand environment remains positive and the increase in demand for the company’s services continued into the third quarter as well after a strong second quarter.

Last 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 tone going forward. Peers like Tata Consultancy Services Ltd and Infosys Technologies Ltd ( INFY - Analyst Report) had also posted strong results for the quarter but maintained a cautious outlook.

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 more than 70% in the past six months and remains attractive at current levels too.

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