Cognizant to acquire ER&D services firm Belcan for $1.3 billion

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“Belcan’s deep engineering capabilities and domain expertise across the aerospace & defence market will be complemented by Cognizant’s scale and own multi-decade digital engineering expertise, providing Belcan’s blue-chip client roster access to our advanced AI, cloud and data technologies," said Kumar.Cognizant ended with $19.35 billion in revenue last year. It expects its full-year revenue to be between $18.9 billion and $19.7 billion.

One former executive maintains this acquisition is being done to backfill the loss in revenue. "Considering the company will book about one quarter of revenue ($200 million), it appears it is being done more to offset the loss in revenue for this year," said the executive.This is the second-largest acquisition by Cognizant.

In 2014, Cognizant spent $2.7 billion to buy Trizetto, a healthcare software firm.Trizetto had $700 million in revenue at an operating margin of 18.5% and about 3,700 employees. In contrast, Belcan has $800 million in revenue and 6,500 employees.

The company did not disclose its profitability but in a call with analysts after the acquisition on Monday, Cognizant's management said that the acquisition will impact its profitability by 40 basis points this year.Cognizant reported a revenue of $4.76 billion for the three months ended March 2024, which was marginally higher than the December 2023 quarter. Its operating margin fell 60 basis points to 14.6%.