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Cognizant Technology Solutions resumed its aggressive acquisition strategy this year to strengthen its focus on digital space and expand footprint in Nordic region. In 2014, it did four acquisitions, including that of TriZetto for $2.7 billion.
For the US-based IT company, which has over 75 per cent of its employees working in India, the acquisitions in 2014 were in the healthcare technology domain, which contributes nearly 30 per cent of its revenue.
Between January and October this year, Cognizant acquired privately-held KBACE Technologies, Inc., a global consulting and technology services company, to expand Cognizant’s digital capabilities with 400 KBACE consultants and implementation experts across industry and business functions; it took a 49 per cent ownership interest in ReD Associates, a strategic consulting firm specialising in use of human sciences to understand customer behaviour; Idea Couture, a privately-held firm that offers a broad range of digital innovation with 170 employees across the US, Canada, Europe, Latin America; and Norway-based IT and business process outsourcing vendor, Frontica , to bolster its portfolio of outsourcing and SAP consulting services tailored to clients in oil and gas sector.
Ryan Blanchard, Research Analyst, Professional Services, in the US-based Technology Business Research, told BusinessLine that Cognizant resumed its ‘aggressive’ acquisition pace in early 2016, announcing tuck-in purchases to bolster its digital consulting bench and expand its Nordic footprint.
During first three quarters of 2016, Cognizant maintained its aggressive acquisition pace as it aims to rapidly build out its digital portfolio and support its consulting-led Digital Works program.
TBR believes the acquisition reinforces Cognizant’s dedication to leveraging niche buys to expand their core outsourcing services into under penetrated markets and geographies. But given Cognizant’s relatively underdeveloped presence in the oil and gas sector, “we believe the firm will need to acquire consulting expertise specifically dedicated to the space to maximise its value proposition when competing against industry stalwarts, including TCS and Wipro,” he said.
Francisco D’Souza, CEO, Cognizant, told analysts while discussing the company’s third quarter financial results , “We look at traditionally smaller tuck-in acquisitions. That's been the primary focus. We will continue to do that.We would be more focused on digital and making digital acquisitions as we look to next few quarters to bolster our digital capability.”
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