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Cognizant (CTSH) Boosts Presence in India With NICL Deal

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Cognizant Technology Solutions (CTSH - Free Report) recently announced that the company has been selected as a strategic technology provider for National Insurance Company Ltd. (“NICL”) to help in its digital transformation.

NICL is a public sector insurer in India and one of the leading companies in the industry. NICL has signed a multi-year contract with Cognizant, which will help the former to improve the operational efficiency of the business.

Cognizant will aid NICL in centralizing web-based core insurance solutions, develop technology infrastructure and solution and security, and help in leveraging digital technologies like AI, machine learning, automation and microservices-based architecture.

Cognizant’s services will enable NICL to provide more personalized services to clients and enhance customer experience at every step, including initial insurance applications, claims processing and underwriting.

Clients globally are transitioning to digital operating models to increase profitability. As such, Cognizant is well-poised to benefit from the new trends in the market amid the fourth industrial revolution.

Cognizant Investing in AI to Address Changing Trends

Cognizant shares have been negatively impacted by the current macro-economic situation and geopolitical tensions.

In the last reported quarter, Cognizant’s top line improved by 11.3% year over year and is anticipated to grow by 9.3-10.3% on a cc basis in the second quarter of 2022. This has not impacted the stock markets positively.

Various factors like global inflation, FED rate hike and the Russia-Ukraine war have negatively impacted the outlook regarding Cognizant.

Shares of Cognizant, which currently carries a Zacks Rank #4 (Sell), have fallen 23.7% year to date compared with the Zacks Business-Sofware Services industry’s decline of 34%.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Cognizant is facing a significant threat in the AI industry and the cloud space from companies like International Business Machines (IBM - Free Report) , Wipro Limited (WIT - Free Report) and Accenture (ACN - Free Report) .

IBM is poised to benefit from strong demand for hybrid cloud and AI, which will drive its top-line growth. IBM has recently expanded collaboration with the U.S Federal government to address current problems such as cybersecurity and supply chain sustainability via IBM’s data fabric solutions and IBM Watson.

Wipro recently expanded its partnership with VMware to help customers move data to the cloud at a reduced cost and operate in a multi-cloud infrastructure for no additional cost and protect data while operating in a multi-cloud architecture. This is expected to help Wipro attract more customers amid rising competition.

Accenture is improving its market share in the industry with its recent acquisition of digital engineering and operational technology from Trancom ITS. This, in turn, will help Accenture to provide customers with cloud-based logistics systems and merge warehouse operations with IoT and sensor technology.

Amid tough competition and rising volatility in the tech industry, Cognizant is looking to address the changing dynamics in the insurance industry to counter competitors in the AI space.

The repeated occurrences of black swan events like pandemics and war have altered the way these events were perceived earlier. Most of these events are now becoming increasingly common, and hence, their impact and how people adapt are also changing.

This has altered the operational dynamics of insurance companies, which need to reduce processing time and shift operations to the cloud supported by AI and automation as daily operations can get hindered by these events.

As such, Cognizant’s recent investments in developing its digital business model will help the company address the changing dynamics and contribute to top-line growth, thus impacting shareholders' wealth positively in the long term.