Home >Companies >News >Cognizant acquires US-based digital video solutions firm Itaas

Bangalore: Cognizant Technology Solutions Corp. has bought US-based digital video software firm Itaas for an undisclosed amount, as part of a push to enter the cable industry and tap business from companies such as Comcast Corp. and Time Warner Cable Inc.

The terms of the transaction were not disclosed. A Cognizant spokesperson said the acquisition would “not have a material impact on Cognizant’s 2014 revenue".

Cognizant also did not disclose Itaas’s revenue.

This is Teaneck, New Jersey-based Cognizant’s third notable acquisition in the past two years. In 2012, it acquired six of Hamburg-based C1 Group of companies, and in October acquired France-based Equinox Consulting to strengthen its foothold in Europe and reduce its reliance on North America, its biggest market.

Analysts tracking Cognizant said the company would have paid much lesser for Itaas than what it did for the C1 Group and Equinox. For Equinox, Cognizant is estimated to have paid about $100 million, according to experts, even though the company did not disclose the deal value.

“Cognizant doesn’t have a huge presence in communications, media and entertainment; so this is an acquisition they can leverage to drive more penetration in those verticals. It’s interesting from a market expansion standpoint," said Jesse Hulsing, an IT analyst at US-based Pacific Crest Securities.

Hulsing said Itaas currently has a revenue run-rate of probably $30-50 million per year. “It’s one of those tuck-in acquisitions that they’ve been making and I expect to see more of those in the near future," said Hulsing.

Cognizant generates over three-fourths of its total revenue from North America, where it recently overtook India’s top outsourcing firm Tata Consultancy Services Ltd in terms of total revenue generated from the region.

“This acquisition continues our long-standing strategy of acquiring sharply focused business capabilities that complement our existing offerings," Rajeev Mehta, chief executive officer of IT services at Cognizant, said in a statement.

Mehta added that Itaas “has long-standing relationships with a marquee client base, including all major North American cable operators".

Atlanta-based Itaas, which was founded in 1999 by three US-based entrepreneurs and currently has about 200 employees on its rolls, provides software services to cable, telecommunications and technology companies. Itaas also provides digital video services across traditional cable, broadcast and telecommunications networks, as well as on consumer devices such as set-top boxes, tablets and smartphones.

“We are delighted to join Cognizant," said Vibha Rustagi, chief executive of Itaas. “International expansion is critical to continue our strong growth and provide greater opportunities for employees."

Itaas currently has engineering and testing centres in the US, Canada and India, and has worked with companies such as Cisco Systems Inc., Comcast and Time Warner, according to its website.

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