Cognizant Technology Solutions, which is to acquire healthcare IT Company Trizetto, may not cut jobs in the target company, said a top company official.
“TriZetto already runs a streamlined organisation; so this acquisition is all about opportunity and growth, not cost reduction. As such, there are no layoffs planned,” said Gordon Coburn, President, Cognizant.
On Monday, Cognizant struck its largest deal to date by agreeing to pay $2.7 billion in cash to buy US-based TriZetto from private equity group Apax. The move will boost the Nasdaq-listed company’s revenue from the healthcare business.
“TriZetto and its 3,700 employees will be a part of Cognizant’s existing healthcare business. We look forward to welcoming the TriZetto team into the Cognizant family,” said Coburn.
Trizetto, which has staffers in the US and India, serves about 350 healthcare plans and supplies software to almost 245,000 healthcare providers.
Terming the deal as a ‘smart one’, Ray Wang, Principal Analyst & Founder at Constellation Research, said the acquisition will enable Cognizant to differentiate itself in the US healthcare market.
“The healthcare space is undergoing a massive tech overhaul as it moves from mainframes, charge masters, and legacy tech to a push for electronic medical records because of ObamaCare and other requirements.
“As healthcare goes through digital transformation amidst an aging US population, it helps create a pathway to short and mid-term growth for Cognizant,” said Wang.
Cognizant’s healthcare unit currently renders services to about 200 customers. The company generates about 26 per cent of its total revenue of $8.84 billion (as on December 31,2013) from the healthcare space.