Cognizant Beats Infosys in Technology Outsourcing by Spending in U.S.

Cognizant Technology Solutions Corp. is outspending competitors to win more business from clients such as Royal Philips Electronics NV, with 22 percent of revenue going on costs that included higher wages and putting more people into customers’ sites in the U.S. and Europe. That’s more than double the proportion at closest rival Bangalore-based Infosys Ltd. (INFY), the annual financial reports of both companies show.

Even Tata Consultancy Services Ltd. (TCS) is taking note. India’s IT-outsourcing leader has also increased spending as revenue more than doubled in the past five years with companies such as Citigroup Inc. and Volkswagen AG (VOW) giving more work. While Cognizant and Tata bolster sales teams at client locations, Infosys has ceded its mantle as industry standard-bearer: revenue fell behind its U.S. rival for the first time in the quarter ended June 30.

“The Indian IT-services guys have come across a wall, and that wall is essentially your ability to sell into higher echelons of an organization,” said Daud Khan, head of IT and software research at Berenberg Bank in London. “Cognizant has managed to overcome that, and it’s because of their onshore presence relative to the likes of Infosys.”

Cognizant’s U.S. shares have jumped 18 percent since the end of June, compared with 6.9 percent for the American depositary receipts of Infosys. In dollar terms, Tata Consultancy’s India-traded stock is up 14 percent.

Source: Bloomberg