OREANDA-NEWS. “Cognizant is no stranger to the acquisitions game,” writes Investor’s Business Daily. “The provider of information technology, consulting and business process outsourcing has made 16 buys since 2010…Until recently, most buys had been tuck-in acquisitions for \\$200 million or less. The exception came in November, when Cognizant closed on the \\$2.7 billion purchase of TriZetto, a privately held provider of health-care IT software that helps payers and providers work more efficiently together.”

Gordon Coburn informs that the Company’s acquisition strategy has been to focus on geographic expansion and strengthening its industry knowledge or technological abilities. “TriZetto further strengthened our position in health care,” he says. “TriZetto is the leading platform in health care administration. Most important, TriZetto brought us (software) platforms (complementing) technology and business process services that Cognizant already offered.”

Coburn says that with TriZetto in the mix, Cognizant is expanding from being a services provider to a combination of providing both services and platform products. “That’s a key component of our growth for the future in the healthcare industry as well as other industries,” he says, adding that Cognizant’s strategy is to “buy, build and partner” using those platforms across various industries. He says there will be “similar (growth) opportunities” in financial services and pharmaceuticals due to “changes in the regulatory environment, cost pressures and changing industry dynamics.”

How has Cognizant kept up such a fast pace of growth? “When we went public in 1998, we made the decision to keep margins at between 19% and 20%, which was lower than many of our competitors at the time, and use that money to invest for the long term and deliver industry leading revenue growth,” Coburn explains. “We’ve continued to successfully execute on this strategy ever since.”

He says Cognizant has invested in having “strong global delivery capabilities combined with deep industry knowledge and strong client relationships.” He adds: “Our customers today have a dual mandate. They have to run their businesses better by becoming more efficient and effective. And they have to run their businesses different through digital (transformation) and how they interact with customers, employers and the supply chain. They do this by taking the money they’ve freed up from running better and investing it in running different.”

“We’re one of only a small number companies that can do both of those things at once,” says Coburn. “The core of our strategy is to serve clients on both sides of the dual mandate.” In the last year or so, he adds, Cognizant has seen “very strong demand” from customers in implementing digital transformation within their businesses. “We’ve experienced explosive growth in this area,” he says.

“This is a company where revenue growth is by far the main driver of its valuation,” says Robert Baird’s David Koning. Year-to-year “revenue growth in Q2 was the strongest in almost two years in both reported and organic and constant currency revenue.” Koning says the “backdrop” to support strong revenue growth is Cognizant’s “good execution and willingness to invest in growth along with an industry backdrop that’s still in a secular growth mode.” Koning adds, “The combination of all the changes related to the Affordable Care Act and the aging of the population creates a nice backdrop for growth in Cognizant’s healthcare segment.”