Good performance of all IT firms points to a recovery in the sector
Cognizant Technology Solutions, on Tuesday, confirmed expectations of a strong recovery in the software services sector when it raised its full-year forecast and continued its scorching pace of growth with a 19 per cent rise in net profit.
The New Jersey-based IT major, which reported its results for the second quarter ended June 30, 2013, saw its net profit increase to $300.4 million from $251.9 million reported in the second quarter of 2012.
Cognizant follows a January-December reporting period.
Revenue for the quarter, at $2.161 billion, was also up 20.4 per cent from the year-ago quarter—the company had earlier said it expected second quarter revenue of $2.13 billion.
The icing on the cake, however, is that Cognizant now expects revenue for the full-year to grow at least 19 per cent to about $8.74 billion—up from the previous forecast of $8.6 billion.
“We are delighted to yet again deliver industry-leading revenue growth. Our 15 year record of revenue and earnings growth is a testament to our long-term strategy of reinvesting in our business. Our reinvestment strategy continues to enable Cognizant to excel in our core services while simultaneously investing in multiple horizons of growth,” said Francisco D’Souza, Chief Executive Officer, in a statement.
The company has also given a strong guidance for the September quarter. It expects $2.25 billion in revenue, a 4.2 per cent increase sequentially.
“Economic pressures and long-term secular industry shifts have been driving fundamental changes in client demands,” said Gordon Coburn, President, in a statement.
“Clients are increasingly turning to Cognizant to address their dual mandate of running better, or enhancing performance in their current businesses, and running different, or helping improve the positioning of their businesses for future success.
As a result of Cognizant’s ability to address this dual mandate from one integrated platform, we are seeing strong market demand for our services which is allowing us to increase our revenue guidance for the full year,” he added.
Cognizant’s net employee addition for the quarter was approximately 1,600.
With these results, Cognizant has widened the revenue and profitability growth gap over its closest Indian peer, Infosys, and also capped off a strong quarter for most Indian IT firms.
Tata Consultancy Services, Infosys, HCL Technologies and Wipro all reported strong results, raising investor hopes of a strong recovery in the $108-billion IT sector.