) extended its relationship with ING U.S., whereby the former can
offer a broad array of insurance business process services to the
latter. The agreement valued at $330 million spans seven
The U.S. arm of Dutch-based
ING Groep N.V.
), ING U.S. family of companies, offers a widespread array of
financial services to retail and institutional clients in the U.S.
These services include life insurance, retirement plans, mutual
funds, managed accounts, alternative investments, institutional
investment management, annuities, employee benefits and financial
As per the expanded agreement, Cognizant will now employ more
than 1,000 ING U.S. employees in Minot, North Dakota and Des
Moines, Iowa with the intent of creating a U.S.-based center of
excellence for insurance and finance business process services. The
expanded agreement is expected to build on Cognizant's ongoing
success in providing specific technology systems management for ING
Being an integral part of the Cognizant's global delivery
network, the center will empower the company to provide a broad
range of business process services spanning the insurance and
financial services industries. The company already provides
business process services to more than 40 clients in these
Under the multiyear agreement, Cognizant will buy ING U.S.'s
existing facility in Minot, North Dakota. The company will also
sub-lease offices in the current ING U.S. facility in Des Moines,
Iowa, thereby providing business and workplace continuity for ING
U.S. customers and the employees transitioning to Cognizant.
Meanwhile, earnings estimates for 2012 have dropped marginally
in the last few days as management trimmed its outlook for 2012.
Cognizant did not experience a strong acceleration in growth as it
normally does at the end of the first quarter.
Also, contradictory to management's expectations, North America
was weaker. In particular, the banking portion of the financial
services segment and the pharmaceuticals portion of the healthcare
segment were the laggards.
We continue to maintain a Neutral recommendation on Cognizant in
the long run. However, the near-term weakness forces us to have a
Zacks #4 Rank, which translates into a short-term rating of
COGNIZANT TECH (CTSH): Free Stock Analysis
ING GROEP-ADR (ING): Free Stock Analysis Report
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