Narayan AmmachchiCognizant has wrapped up a deal to acquire U.S. software maker TriZetto Corp for US$2.7 billion, a deal analysts predict will help the outsourcing giant gain a large share of the North American healthcare technology services market.
The Englewood, Colorado-based TriZetto offers several technology services in addition to care management and the administration of benefits. In a press release, TriZetto said that it reaches 245,000 healthcare providers, representing more than half of the insured population in the United States.
The deal confirms that Cognizant is betting big on the healthcare sector, which accounts for 17% of U.S. GDP. Cognizant already has 200 clients in the healthcare sector that serve 16 of the top 20 U.S. health plans. The acquisition of TriZetto, which works with more than 300 health plans, will now take Cognizant deeper into this lucrative market.
Though headquartered in the United States, Cognizant was founded by a non-resident Indian and a large portion of its employees are in India. According to a press release, healthcare currently represents approximately 26% of its revenue.
“This acquisition is a natural fit for us,” said Gordon Coburn, President of Cognizant. “It represents a great opportunity to integrate services across our three horizons—traditional IT services; high-growth businesses such as management consulting, business process services and IT infrastructure services; and emerging delivery models.”
Following the acquisition, all 3,700 of TriZetto’s employees will now work for Cognizant. The combined company, Cognizant says, has about US$1.5 billion of potential revenue synergies over the next five years.
“This acquisition will uniquely position us to help clients drive higher levels of operational efficiency, while re-imagining care for the future,” said Francisco D’Souza, CEO of Cognizant.
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