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Cognizant Set to Acquire Digital Engineering Firm Softvision

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Cognizant Technology Solutions (CTSH - Free Report) is set to buy privately-held digital engineering and consulting company, Softvision for an undisclosed amount. The deal is expected to close in the fourth quarter of 2018.

Softvision’s delivery teams called pods comprise a global network of design, technical and engineering experts. They work collaboratively in studios to develop customised digital solutions for Fortune 500 clients in financial services, retail, consumer products, healthcare and other industries. The company’s network includes 2,850 creative technologists.

Softvision Buyout to Strengthen Cognizant’s Domain Expertise 

Softvision’s pods are known for their agility in developing innovative as well as customised software solutions that enhance customers’ experience. Softvision will speedup Cognizant’s solution delivery procedure that will help it attract new customers.

Moreover, the acquisition is expected to fortify Cognizant’s hold in areas like artificial intelligence (AI), virtual reality (VR), Internet of Things (IoT) and human science. The company already has significant exposure to the fast-growing verticals like financial services and healthcare. The addition of Softvision will further strengthen Cognizant’s domain expertise.

In fact, Cognizant is gaining from steady demand across payer clients and increasing interest in the company’s digital, analytics, cloud and virtualization solutions. The company is consistently developing its capabilities to gain from the ongoing digital transition, especially from the integration of the new digital framework with legacy technology platforms.

Cognizant Technology Solutions Corporation Revenue (TTM)

Cognizant Technology Solutions Corporation Revenue (TTM) | Cognizant Technology Solutions Corporation Quote

Acquisitions: Key Growth Catalyst

Further, accretive acquisitions such as the Adaptra, TriZetto, Bolder Healthcare, Mirabeau BV, and the technology and business process services unit of Frontica Business Solutions AS are benefiting the company. Cognizant has not only gained new customers from these buyouts but also expanded its digital delivery capabilities.

Notably, acquisitions like Netcentric and Mirabeau strengthened Cognizant’s digital leadership in Europe in the last reported quarter. Outsourcing growth benefited from the acquisition of Bolder Healthcare.

Most recently, Cognizant announced the acquisition of Advanced Technology Group (ATG), which has deep Quote-to-Cash (Q2C) domain expertise and offers extensive Salesforce (CRM - Free Report) based CPQ and Billing solutions. The acquisition strengthens Cognizant’s cloud solutions portfolio.

Moreover, the acquisition of privately-held consulting firm, SaaSfocus expands Cognizant’s end-to-end digital transformation services in the Asia-Pacific (APAC) region, particularly Australia and India. Notably, SaaSfocus is one of the largest independent Salesforce Platinum consulting partners in this fast growing region.

Zacks Rank & Other Stocks to Consider

Currently, Cognizant has a Zacks Rank #3 (Hold).

Aspen Technology (AZPN - Free Report) and Paylocity Holding (PCTY - Free Report) are better-ranked stocks in the broader computer and technology sector. Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long term earnings growth rate for Aspen and Paylocity is currently pegged at 16.52% and 22.50%, respectively.

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