Teaneck, New Jersey, is an unlikely stop on the way to Bangalore. But even as politicians aim their election-year rhetoric at India and China, Teaneck is where you'll find one of the fastest-growing outsourcers, Cognizant Technology Solutions Corp. (CTSH). Independent since 1996, the former information-technology unit of Dun & Bradstreet Corp. (DNB) has snared 193 clients for such IT services as programming and Web design.
Thanks to juicy contracts with customers such as J.P. Morgan Chase (JPM), ADP (ADP), First Data (FDC), and Nielsen Media Research, Cognizant landed the No. 13 spot on this year's Hot Growth list. Its revenues grew at a 38% average annual clip over the past three years, while profits increased almost 50% a year. A dollar invested in Cognizant in January, 1999, would have returned $90 at the end of 2003. "The results are unmatched," says analyst Ashish R. Thadhani of investment bank Brean Murray & Co.
Cognizant, like such India-based rivals as Wipro (WIT), Tata Consultancy Services, and Infosys Technologies (INFY), has taken advantage of an army of well-trained, inexpensive IT programmers and project managers scattered throughout India to provide cost savings for clients. But Cognizant has outpaced those older peers by pioneering a border-straddling structure that includes American nationals and Indians with extensive exposure to U.S. business culture in key customer-relations roles. The headquarters and sales force and some programmers in the U.S. -- about 30% of employees -- makes deals and takes care of clients, while the staff in India delivers the work.
SCHEDULE CONSCIOUS "We essentially converted what was a 100-person Indian company into a U.S.-based company so that we could be closer to customers and build relationships," explains CEO Lakshmi Narayanan, who left rival Tata in 1994 to join the outfit when it was a unit of D&B. The Bangalore native oversaw Cognizant's Indian operations until December, when he inherited the CEO mantle from retiring founder Kumar Mahadeva.
Clients like the local attention. They also respect the fact that Cognizant stays on schedule -- and unlike many rivals doesn't nickel-and-dime on extra work that pops up in the course of a project. The company even keeps smaller customers such as the Philadelphia Stock Exchange happy. The regional bourse is spending less than $500,000 this year on a back-office redesign. "They treat us just like we were one of their big customers," says Melva S. Demmer, vice-president for business-systems development at the exchange. Clients also laud Cognizant's expertise in the financial and health-care industries, the source of an estimated 70% of its revenue. "They have about the most satisfied set of customers I've ever seen," says Gartner (IT) analyst Rita Terdiman. That means a lot to Cognizant, whose future growth depends on expanding relationships with its current customer base.
No wonder the political rumblings have had little effect. "We haven't felt any impact of this," Narayanan says. He's more worried about rising wages in India, a threat to his cost advantage. So Cognizant is expanding its horizons once again by moving into China, where a vast pool of educated technology workers is still cheap.
By Brian Hindo in New York