INDIA BUSINESS WORLD - March 1^st - March 15^th - 2008

COGNIZANT IN DEAL WITH T-SYSTEMS, TAKES OVER T-SYSTEMS' INDIA OPS

COGNIZANT Technology Solutions has taken over the operations TSystems India and its 1,150 employees as part of a system integration alliance with the company's parent, Deutsche Telekom. In effect, Cognizant will become T-Systems' supplier for offshore services from India. The financial component and asset transfer involved in the transaction was not disclosed. T-Systems India, which operates out of Pune and Bangalore, provides system integration services for the telecommunication and automotive verticals.

Last year, German telecom major Deutsche Telekom said it was seeking a partner for the system integration business of its IT division, T-Systems. The race for the system integration business was closely contested between TCS and Cognizant. Initially, the odds seemed to be in favour of TCS because Deutsche Telekom's former chairman, Ron Sommer, is a non-executive board member of TCS. Also, in terms of verticals, while T-Systems and TCS both have a significant presence in the automotive sector, Cognizant is more focused on healthcare and manufacturing.

However, Cognizant president and MD R Chandrasekaran said in an e-mail interview, "This (the alliance) complements the capabilities of two leaders in two different sets of industries, and combined through partnership, they are stronger powerhouses." Also while T-Systems is focused in consulting, IT and telecommunications, Cognizant has capabilities in consulting, systems integration and maintenance, BPO and IT Infrastructure services.

About the growth prospects for Cognizant through the tie-up, Mr. Chandrasekaran said, "we expect the partnership to generate material revenue from both growing our offshore operations to support T-Systems' existing clients, as well as revenue resulting from jointly winning new clients. In aggregate, we expect to generate at least $40 million in the first year of the partnership."

Geography-wise, the deal will help Cognizant strengthen its presence in the European market. In terms of verticals, the company can gain access to segments such as automotive and telecommunications. At the same time, T-Systems will be able to leverage on its internally developed processes and serve more clients. "T-Systems was functioning as a shared services center of Deutsche Telekom in India and developed very good processes internally. But it was restricted in the number of clients it served. The alliance would enable the company serve a wider basket of clients," said Frost & Sullivan head-IT Kaustubh Dhavse.