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Cognizant Technology Seeks Acquisitions
Following its purchase of AimNet Solutions, the outsourcer will continue to look for other acquisitions in the U.S., Europe, and India.
Posted Sep 6, 2006
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Cognizant Technologies today announced its acquisition of AimNet Solutions, a privately held infrastructure and professional services firm, for an undisclosed sum. The acquisitions won't stop there, either; the company's vice chairman has stated more purchases are only a matter of time. The network operations center (NOC) of AimNet Solutions will be a complementary fit to Cognizant's NOC in Bangalore, India, according to Cognizant. This includes enabling Cognizant to better service its outsourcing customers, which include Indian call centers, and improving the consultant's ability to do high end infrastructure and consulting work, including network architecture (like SOA and .NET), planning and design, and infrastructure security solutions. All told, Cognizant will add approximately 100 people and about 80 customers from AimNet, with revenues being accrued once the transaction is completed later this year. Lakshmi Narayanan, vice president of Cognizant, said the firm would continue to look at acquiring other companies, specifically those with capabilities in specific verticals like financial services, healthcare, retail, and manufacturing. The company would be willing to spend up to $60 million on future acquisitions, almost double what the company has paid in previous deals to buy technology firms abroad. "All the buys we have made till now have been in the $25 to $30 million range," Narayanan said in a written statement. "Given our size and the resources, we are willing to spend between $50-60 million for acquisitions." Though it's headquartered in Teaneck, New Jersey, the company is run by Indian nationals and offers most of its services from centers in India, where it employs some 23,000 people. Cognizant will increase its workforce by thousands to over 35,000 by December, according to Narayanan. This recent growth surge for Cognizant is representative of the growth many of the offshore service providers have been experiencing in recent years, as enterprises have taken a strong liking to the global delivery model's (GDM) cost benefits. "Companies have watched offshore professional service providers diversify into new areas for years, from legacy application maintenance to leading edge technology implementations, infrastructure management, and BPO," says Bill Band, principal analyst for enterprise applications at Forrester Research. "Many buyers now believe these players are ready to complete the transition to business process consulting and will provide these services at a fraction of the cost of U.S. and European consultancies."
Band says as GDM takes hold, buyers will start to "receive better value for their investments in professional services support and will use even more of these types of resource in the future." Related articles: Gartner Hears CRM Accents Across the Pond The Hype Surrounding BPO
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