Cognizant Technology Solutions Corporation (CTS), the US-based applications outsourcer that draws on over 1,500 IT professionals spread around seven offshore development centers in India, has announced first quarter revenues for 1999 of $20.4m, double that for the same period in 1998. Operating income increased 262% to $4.1m against $1.1m this time last year.
The company does most its business in the US but is hoping to increase European penetration on the back of a deal with Computer Sciences Corporation. The strategic agreement allows the operating entities of CSC throughout Europe to use Cognizant’s offshore application outsourcing capabilities. CTS has worked with CSC in the US on a number of systems integration projects over the past few years, and in Europe the relationship began in 1998 after Cognizant was selected by CSC to support a UK contract with Anglian Water. By working with CSC, we will be able to broaden our customer base in Europe providing services such as application maintenance and development, and Euro related work, Seshadri Venkatesan , UK operations manager for CTS told us.
CTS completed its first project with CSC for the UK utility in March 1999. It was completed ahead of schedule and under budget, Venkatesan claimed. As a result the CTS role at Anglian Water has been expanded. Cognizant currently provides support, maintenance and Y2K duties to the water supplier’s Regional Income Management System (RIMS), a billing system for some 2 million customers. Cognizant will help support the live application and develop future enhancements in order to improve performance and reduce the cost of maintenance.
Cost reductions are promised through the use of CTS’s 7×24 operating schedule. It is thought that a further three or four CSC clients may be attracted to this type of arrangement. We hope to diversify into other industry sectors such as manufacturing and financial services in the near future and we see partnerships such as the CSC tie-up as a useful strategy for facilitating this, said Venkatesan.
European revenue for year-end 1998 was reported as being $10.48m, up from $3.18m for the year ending 1997. Operating income stood at $2.098m up from $400,000 for 1997. CTS has 65 developers in UK, 14 in Germany and a small presence in both the Netherlands and Belgium. These figures do not accurately reflect the size of CTS operations however as only 10%-15% of work is done on-site.
CTS was originally formed in 1994 as the in-house technology development division of Dun & Bradstreet Corporation with specific interest in the IT needs of healthcare and media industry sectors. In 1996 the subsidiary was spun off to pursue non-Dun & Bradstreet business and listed on Nasdaq in July 1998. In September 1998 it became one of only a handful of application development outfits to achieve SEI level 4 certification, for the high quality of its software development practices.
More than 50% of its European work is based in the UK with a further 35% in the Netherlands – a third of which is Y2K related. Venkatesan points out that although Y2K work is far from cutting edge it has proved to be a successful strategy for building new business. Once customers know we know their systems feel happy for us to do other types of work, he said. For 1999 and 2000 CTS is turning its attention to Euro conversion work.
CTS offers a range of services covering the entire application development lifecycle. The company says it’s able to assume end-to-end responsibility for the analysis, design, implementation and testing of systems. Alternatively, developers may work alongside in-house IT staff and share responsibility for the analysis, design, implementation and testing of new systems. CTS is also a strategic partner working on software development, testing and support projects for independent software vendors such as Geac, Manugistics and Pilot Software.
CTS also maintains applications on behalf of a number of companies assuming full responsibility for ensuring that legacy software systems are operational, in addition to ensuring ongoing needs such as bug fixes and user support are met. Using its on-site/offshore delivery model, CTS provides a range of support. On-site team members are available to assist with emergency service requests around the clock; while routine maintenance services such as modifications, enhancements and documentation, are completed offshore using satellite telecommunications and the resources of six development centers in India.
Re-hosting and re-engineering services includes migration, conversion, and porting to migrate legacy computing environments to open systems-based platforms and client/server architectures. The work is carried out using a proprietary set of re-engineering and migration tools to automate many of the processes inherent in the migration. CTS claims this can substantially reduce the time and costs normally associated with performing these services. Using these tools, CTS can perform source code analysis, redesign target databases and convert programming languages. If necessary, software engineers also redesign and convert user interfaces.
Within its EuroSolutions methodology CTS provides a full range of services to manage transition and ensure systems are compliant. EuroConsult is an inventory, assessment and impact analysis of applications affected, that leads to a detailed design customized to customer requirements and standards. EuroFix modifies affected code, tests data preparation, and undertakes unit and system testing, and technical documentation updates. EuroStart meanwhile implements the converted system in the user environment, covering data conversion, updating of user documentation and maintenance support.
