Can Cognizant replace Infy at No. 2 spot?

The focus has now turned on to Cognizant Technology Solutions. Will the US-based IT major beat Infosys in quarterly revenue to attain the number two position in the March quarter?

In its guidance released last quarter, Cognizant said that it was anticipating revenue of $1.70 billion in the first quarter ended March 2012. This will be just $0.7 million short of Infosys' number of $1.77 billion. If Cognizant beats its own expectations, it will be the second top revenue earner in the March quarter.

“It will also be interesting to see how Infosys responds as Cognizant surpasses Infosys on revenues. We estimate that Cognizant will overtake Infosys on revenues in this calendar year (most likely in the current June quarter itself),” says a JP Morgan report.

Overtaking by Cognizant,

per se , should not worry Infosys' investors. However, even good companies are prone to panicking and embarking on some ill-advised moves. So far, Infosys has been disciplined and we expect that the company will continue to stick to its knitting and maintain prudence, the report said.

On a year-on-year comparison, the top companies have done well during the March quarter. However, the critical issue is the quarter-on-quarter increase of just 2 plus per cent as against double digit growth rate in the last few quarters.

Assuming a 23 per cent revenue growth rate on Cognizant and a 15 per cent growth rate on Infosys, the former will surpass Infosys in 2012. This will help Cognizant move in to the number two position (after TCS) of the offshore IT services provider, unless Infosys makes an acquisition to boost the top line, says a Gartner report.

Well, one has to wait till May 7, when Cognizant will announce its first quarter results.

> raja@thehindu.co.in