Near-shoring At Genpact And Cognizant

Near-shoring for offshore services is a trend that can no longer be ignored. My recent interview with Neeraj Gupta, CEO of Systems In Motion, a near-shore outsourcing focused organization, showed how smaller companies are stepping up efforts to get in on this trend. In the recent quarters, bigger players have also strengthened their focus on expanding in these regions.

Genpact’s Financials
Genpact’s (NYSE:G) Q2 revenue grew 29% over the year and 20% over the quarter to $398 million.  Higher revenue was driven by growth in Global Clients revenue. Over the year, revenue from Global Client’s business process management grew 22% over the year, and the company’s information technology outsourcing revenues grew 5% over the year. For the quarter, EPS grew 42% over the year to $0.22.

At the end of the quarter, Genpact had 51,300 employees worldwide. Attrition for the quarter remained flat sequentially at 29% while declining 2% over the year.

Genpact Continues To Make Acquisitions
As part of their continued acquisition strategy, Genpact recently bought Nissan Motor’s HR operations in Japan. As part of the deal, Nissan Human Information Services in Yokohama have become a part of Genpact Japan to provide HR services to Nissan’s more than 54,000 employees worldwide. The acquisition will help strengthen Genpact’s presence in Japan and expand their global HR offerings.

Earlier last quarter, they also acquired Akritiv Technologies, a California-based provider of Software as a Service solutions for working capital optimization. Genpact will now own Akritiv’s technology platform and software as a service (SaaS) delivered solution for functions such as credit and accounts receivable management and will be able to provide end-to-end offering to clients for receiving and processing customer sales.

Genpact’s Near-Shore Expansion
Recently, Genpact opened a new center of operations in Brazil. The Sao Paulo center is initially planned to help address near short requirements of their existing client, Astra Zeneca. They plan to expand its operations to other global clients and also to cater to local Brazilian clients through the center.

Genpact’s stock is trading at $16.04 with a market capitalization of $3.56 billion. It touched a 52-week high of $18.71 in October of last year.

Cognizant’s Financials
Cognizant’s (NASDAQ:CTSH) Q2 revenues grew 34% over the year to 1.49 billion, ahead of the market’s expectations of 1.45 billion. EPS of 0.67 was ahead of the market’s projected earnings of $0.66 and the previous year’s 0.56.

For the current quarter, Cognizant projected revenue of at least $1.57 billion with EPS of $0.70. They expect to end the year with revenue of at least $6.06 billion with EPS of at least $2.78.

During the quarter, they added 7,100 employees to end the quarter with a total of 118,300 worldwide. The attrition rate of 15% was the lowest in the IT services industry.

Cognizant’s International Expansion
Cognizant continued to expand their geographic footprint by opening an additional center in the Philippines. They also expanded their development center in Budapest to cater to service oriented structure management clients in Europe, and they are adding another location in Argentina to cater to near-shore clients in the Americas.

Cognizant’s Acquisitions
Cognizant recently announced the acquisition of CoreLogic’s India operations to expand their presence in the mortgage services segment for $50 million. Through the acquisition, the two companies will provide end-to-end business process and analytics solutions spanning the mortgage value chain including loan origination, escrow, title and closing services through secondary markets, loan administration, and loan default management. CoreLogic’s Indian operations of 4,000 employees cater to customers in the U.S. mortgage and real estate markets.

Cognizant’s stock is trading at $63.93 after having touched a 52-week high of $83.48 in February of this year. Its market capitalization stands at $19.41 billion.