Ladies and gentlemen, thank you for standing by and welcome to the Cognizant Technology Solutions Fourth Quarter and Full Year 2007 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. [Operator Instructions] thank you. I would now like to turn the conference over to Scott Hoffman with Financial Dynamics. Please go ahead Sir.

Thank you operator and good afternoon everyone. By now you should have received a copy of the company's fourth quarter 2007 earnings release. If you have not, please call over offices at 212-850-5600 and we will be sure to send the copy to you. The speakers we have in the call today are Francisco D'Souza, President and Chief Executive Officer, Gordon Coburn, Chief Financial and Operating Officer of Cognizant Technology Solutions. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. I would now like to turn the call over to Francisco D'Souza. Please go ahead Francisco.

Thank you Scott and good afternoon everyone. Thank you all for joining us today for Cognizant's fourth quarter and full-year 2007 earnings call. On the call this afternoon, I will provide an overview of our fourth quarter and full-year results, discuss the key drivers of our performance and outline our outlook and strategic priorities for the year ahead. My comments are focused on three main scenes. First a snapshot of Cognizant's business today. Second the key areas of focus and the flexibility of our business model. And third, Cognizant's long-term strategy and our priorities for 2008. I'm joined on today's call our by Chief Financial and Operating Officer, Gordon Coburn, who will take you through our financial and operating results in greater detail in a few moments. I would like to begin today's call by discussing highlights of the fourth quarter and full-year 2007. And providing you with an update on what we are seeing in the business and the market overall today. Our fourth quarter and full-year 2007 financial results marked another year of exceptional growth for Cognizant across our business segments, service offerings and geographies. Our results also reflect execution of key company wide strategic initiatives, that we laid out at the beginning of last year, specifically building truly distinctive capabilities in each of the markets we serve, secondly, expanding our platform globally to capitalize on the growth opportunities ahead for the company, thirdly, focusing on enhancing the environment of Cognizant where the best talent in the world can thrive, and finally making the investments in the infrastructure processes and intellectual capital that enable us to scale the business. Looking at our financial results I am pleased to report that we surpassed the $2 billion annual revenue milestone exceeding our internal forecast by recording close to $2.14 billion…

Thank you Francisco and good morning to... good evening to everyone. I'd like to provide some additional information on our 2007 results and then discuss our financial expectations for the first quarter as well as full year 2008. Revenue for the fourth quarter exceeded our prior guidance and expectations due to continued strength in Europe and the earlier than anticipated closure of the marketRx acquisition. Quarterly revenue grew 7.4% sequentially and 41% year-over-year. MarketRx contributed $5 million of revenues in the fourth quarter. For the full year 2007, revenue was up 50% compared to 2006. Throughout 2007, we continued to see healthy volume growth across a broad range of services and industries. During the fourth quarter, our Financial Services' segment, which includes our practices and insurance, banking and transaction processing grew by over $84 million year-over-year and represented 47% of revenue for the quarter. Healthcare grew almost $38 million and represented 24% of revenues. Retail, manufacturing and logistics grew by over $29 million, representing approximately 15% of revenues for the quarter. The remaining 14% of revenues came primarily from other service-oriented industries of communications, media, and new technology, which grew by over $24 million, compared to Q4 last year. During the quarter, Financial Services grew 42% year-over-year and about 9% sequentially. Healthcare grew 35% year-over-year and almost 12% sequentially. Growth in our healthcare segment was driven by continued expansion of work we do for our life sciences clients as well as earlier than anticipated closing of the marketRx acquisition. We saw manufacturing logistics grew by over 50% year-over-year and was up slightly sequentially and our other segment grew 40% year-over-year and 4% sequentially. For the full year, Financial Services grew 47%, Healthcare up 52%, retail, manufacturing and logistics 53%, and our other segment grew 52%. As you can see a…

[Operator Instructions]. Your first question comes from the line of Joseph Vafi of Jefferies & Company. Joseph Vafi - Jefferies & Co.: Great results here this afternoon.

Thanks, Joe. Joseph Vafi - Jefferies & Co.: [inaudible] circle back to the guidance here real quick for '08 as we kind of look at the visibility for the year versus other years and obviously the guidance here for '08 is pretty important relative to where people are looking at the stock right now, if you could kind of comment on the year along visibility, that's one thing? And then secondly at your user event this year, your client event, I know Francisco commented about a lot of customers have their budget in place. But, maybe any commentary at a macro level at least on how they're viewing Cognizant in '08 and if they're going to be spending more with Cognizant that would be great.

Sure. Joe, I'll say a couple of things. On the... on the outlook for '08. The outlook that we provided today is based on a number of factors. Detailed conversations with our clients has been out in about… the management team has been out with clients for the last month and a half having detailed conversations. We've done a thorough review of our pipeline, we've done our own assessment of the macroeconomic environment and factored that into our thinking as we've provided you with our outlook for 2008. And all of that of course is supported by the usual process we go through coming into any year which is a very granular level, bottoms up forecast from our field on what we think we can do with each of our clients in the upcoming years. So, we feel very confident that we can achieve our outlook for 2008 that we've provided with you… to you today.

And let me just add one more thing there, that's probably important. The base line full year revenue guidance that we’ve provided today includes assumptions at some client specific unexpected issues will arise due to the economy. So, we've got it… we've given assumes not everything is going to go perfect.

And then the... you know the other part of your question was around as... client budget. As we said, we did a couple of things to get a little bit more clarity around this issue. The first is that, about two weeks ago, when we did our Global Field Kick-Off Meeting, our Sales Kick-Off Meeting we pulled or the client partners who represent the top 50 accounts at Cognizant and we asked them about the status of client budgets, have the budgets being finalized, are they locked down at this point? And over 80% of the clients essentially represented by these client partners budget were locked down. So that points to minimum ambiguity in spending plans going in to 2008 and that's very consistent with what we would've expected and we've seen at this point in the year in prior years. And then of course, we expect and have already started to see that offshoring has become more of a lever that clients are pulling to achieve their goals as they go into 2008, as budgets are flat to modestly up, offshoring becomes a great way to do more with a smaller or same set of dollars. Joseph Vafi - Jefferies & Co.: Okay great and then just on the BPO front real quick, how many points of revenue, if you can break it out in Q4 was BPO.

We don't break out revenue by vertical. BPO, as a revenue contributor is still relatively small. On a headcount basis we are starting to... as we go into 2008 it's starting to ramp up. Remember we are focused not on the lower end activities, we are focused on pretty high-ends stuffs so, you don't see thousand person deals at a time. But what we are very excited about is we are starting to win some real high quality sustainable BPO, where it is a differentiated work and with high switching costs and high value add. So we are… the market where we want to go after is finally there and we are capturing some [inaudible]. Joseph Vafi - Jefferies & Co.: Okay. Great. And then just a house-keeping question, how many cents in ‘08 is the fringe benefit tax?

The combination of the normal 123R cost and fringe benefit tax is $0.17. I’ll have to get back to you offline, I don't have the breakdown here, I apologize. Joseph Vafi - Jefferies & Co.: Okay. Thanks a lot.

Your next question comes from the line of Abhi Gami of Banc Of America.

Hi thanks and [inaudible] about the great quarter and good guidance. In your tax rate assumptions for 2009 that you have offered up can you tell us what percentage of work is being done within SEZs or there tax advantaged locations at the high end and the low end of that assumption range.

Yes. We are not breaking that out but clearly, that's… you are hearing the key issues, how much of the work do we get in to SEZs, we are bringing some very significant facilities online this quarter. So we certainly expect a material portion, a very material portion of our growth and for the remaining three quarters this year and for '09 as well as a portion of our growth from last year and Q1 of this year to be going to SEZ. Our construction programs both owned facilities as well as leased facilities in SEZs are coming outline very nicely at this point.

Do you have sufficient SEZ based locations either under lease or under ownership to cover your total potential revenues during 2009, is that already earmarked today?

With the exception of one location, yes, just one location we're working on.

Okay, great. And then finally, once you have a location up and built, how long do you anticipate it taking to populate it get to kind of full revenue run?

It depends on the growth in that area, because you're not... you don't move people, existing people over.... so it really is for the growth that's purely depending on the growth in that city.

One more quick question if I could is, do you consider your attrition rates unusually low or I didn't do the sustainable. I think the last time we saw a number this strong, I think it was kind of unsustainable and you did so later on.

Yes. Our goal has always been to have an attrition in the low teens. We think that 12% was probably a little bit better than normal, I am not sure I would set the expectation on a full year basis will be down there. But clearly we fixed some of the issues that we had so we're going back to... you've always got some seasonality and stuff, and as always Q2, Q3 are bigger quarterly [ph] attrition in Q1 and Q4 it’s bonus payouts. But it feels like we're kind of back in the right range again.

All right. Thanks. Good job.

Your next question comes from the line of Andrew Steinerman of Bear Stearns. Andrew Steinerman - Bear Stearns & Co.: Hi, there? When you're thinking about your overall growth ambitions for this year. Do you feel like the financial services vertical to keep up with average growth rate?

I think that the finance and BFSI segment of our business is because of the law of large numbers, it might be little a bit lower than the overall company average growth rate, some of the newer verticals and the less penetrated verticals will probably grow faster as well Europe as a geography.

And that's the trend we've seen for a number of years.

Yes. That's the trend we've seen over several quarters at this point, so that's not new for 2008. What we're seeing though as I mentioned during the call is that we really are starting to see a relook, if you will, by existing financial services customers at both new lines of service that can move offshore and also expanding their existing offshore programs to do more within those programs. The reality is that financial services industry is probably facing one of the most difficult competitive times in many years within that industry and so, they are looking at ways to tighten their belts and offshoring is a great lever for them to execute on. Andrew Steinerman - Bear Stearns & Co.: All right. So maybe if I could just try the question just one other angle, if you think about that the work that was awarded over the last two month, January and February does the Financial Services vertical stand out as growthy?

I am sorry stand out as? Andrew Steinerman - Bear Stearns & Co.: Growthy.

I am not sure there is… I would distinguish it from the rest of the business, we are not sort of just given or take it, in line with what we are seeing for the rest of the business, so [inaudible] because they are running into some obviously unique problems. Andrew Steinerman - Bear Stearns & Co.: Forward sales pretty normal?

Yes. Andrew Steinerman - Bear Stearns & Co.: Okay. Thanks so much.

You next question comes from the line of Rod Bourgeois of Bernstein.

Hi guys. I know this may sound odd but instead of taking about demand I want to talk about margins for a second. It looks like your revenue guidance is great and it’s normally conservative, so, on the margin side Gordon just to clarify, I am assuming when you guided last the fringe benefit tax was not included in your guidance?

Yes the fringe benefit tax is a new thing and the way you really should think about it is against two pieces. We run the business with a non-GAAP margin target of 19% to 20%, that's how we are going to run the business. The123R cost, that we can predict pretty well, the fringe benefit taxes, the reality is I can't control, I can't mathematically predict it, but I can't control it because there is someone, a bunch of people to [inaudible]. So, as the investors are thinking about it, they really have to think about it without that fringe benefit tax, which is totally and completely non-cost. It’s just because the way the law was read in, one side hit the equity, one side hit the P&L. But our guidance includes an assumption for the fringe benefit tax, but the reality is that might be high or low. I Just pick a number, but we are not going to run the business to try to either spend the extra money if fringe benefit tax comes in low or save money if it comes in high because in our view it is completely and totally non-economic and it’s just kind of a accounting entry.

Right. Well, I guess what I am trying to clarify, you beat consensus by a penny with your GAAP number but...

So we really beat it by more because the GAAP guidance we gave was without fringe benefit tax, the reported GAAP number included the fringe benefit tax, yes, that is correct.

Got it. So your upside for Q4 and '08 is even greater that it appears when you account for the fringe benefit tax.

I am sorry if that’s the question you are asking, absolutely yes. And the upside for Q4 of '07 was greater because there was $5.9 million of fringe benefit tax in there, which by the way has no tax benefit until August 2009.

All right. Which means margins are coming in clearly above your plan and above what the Street was expecting here and so can you talk about why margins are strong I am assuming utilization has something to do with it, but maybe a little bit of revenue upside. But is there something going on with margins that gave you a tailwind in Q4 that may also carry into '08?

Yes. Let's separate the two. For Q4 is very simple. Revenue came in a little bit stronger than we expected on the discretionary and development side. So, given we have the people that flow through pretty well. And because we are on economic uncertainty, we decided to be a little careful on SG&A spending because we didn't know where in that range we are going to come in. So we had them obviously coming in at the high-end, so we held back a little bit on sort of real discretionary SG&A stuff. And that's the reason we came in at 20.3%. I would... to be very clear that is not our goal, that was just a fluke in the quarter. Our goal is to be 19% to 20% and our guidance is based on the assumption we will be back in our normal range.

Right. But it looks like you have plenty of capacity to invest pretty aggressively even though people are worried about the slow down because your margin run rate right now is at the high-end of your range and unless there's something that's going to reverse next year, you have got a pretty good margin.

Yes, Rod I think you hit a really important point there. That's just a material movement in the rupee and it’s just the word material. We are not losing a whole lot of sleep over margin.

Right. Pricing is remaining positive on both, on average basis and also on a like for like deals?

Yes, I think that's the way to think about it. The average realized rate for '07 basically came in where we expect. We expect the average realized rate for '08 to go up slightly. But there has been no change in our pricing expectations for '08 from a few months until now due to all the economic uncertainty.

You are not seeing customers push back on price and that the pushing back on price building up as the year goes on?

Are we seeing customers push back our prices? Of course and we have seen that for ten years. Really the important question is, are we seeing any difference in behavior than we have seen in the past? The answer is no.

Okay.

Did you work out challenge of pricing discussions? Of course, but that's nothing new.

All right. One other question on the margin front. There has been some chatter than wage inflation could attenuate over the courses of the next year, particularly if there is a slow down from a demand perspective, how do you weigh in on that?

Yes. Let me give you our very direct and clear thoughts on this. As you know, we make our wage decisions in the... for the second quarter of each year. So we haven't made our decisions yet. However, based on our current view of the labor market in India, we expect the wage inflation to moderate from 2007 levels... or 2007 increased levels I should say. Now the actual wage inflation will depend on the actions of our key competitors. If any of them seek a competitive advantage, pay some compensation, we will certainly not allow that to occur. However we certainly do not plan to seek a competitive advantage based on compensation since we do not believe such advantage would be sustainable either in the long term or in the short term.

All right. And why do you think wage inflation is going down? Is it just... most of the competitors are signaling that it is possible and since you guys will all follow suite.

I think you are viewing it from other competitors. You are seeing in the market very importantly this bifurcation between Tier-1 and Tier-2 occurring. I am not sure I would make the same claims or expectations if I wasn't a Tier 1 player. But, yeah people want to work for the Tier-1 players, which means there is probably a little bit...less wage inflation for the Tier-1 players now. So, it's a little too early to know but this is our current expectations.

Thanks guys.

Your next question comes from the line of Adam Frisch of UBS.

Thanks guys for rewarding the faithful here. It’s got a little lonely in the bunker during the quarter but very, very nice results. Three things I want to talk about. One, in terms of the mix of your business, the slowdown in the more mature or challenged areas... I know you said it's not really all that different from rest of the business, but I wanted to highlight, is it the slowdown there in those areas, is it more or less or equal to the growth that you are seeing in new geographies, verticals, services and clients that you signed. So, people are worried about the mature business, is the new stuff coming online faster.

Yeah, I think, Adam I want to be clear, at this point we don't see demand in any specific area of our business slowing. If you look at growth in financial services in the fourth quarter we grew 9% above company average in Financial Services, which is probably from a macro economic standpoint, the most challenged sector of the economy right now. So we have not seen demand slow even in the most challenged of our sectors. In fact as I mentioned, what we are seeing is customers coming to us and looking at additional ways of offshoring within their IT portfolios even in those sectors. So we have banks coming to us saying we are working with you for a while in application outsourcing, application development, let's look at business process outsourcing, let's look at IT infrastructure services, let's look at testing. So looking at the broader portfolio of services that we have to offer these clients. When I look at emerging areas, for example, our growth in Europe. Growth in Europe is very, very strong. What's driving that is across industry sectors, Europe is relatively underpenetrated, particularly in the continent, the offshoring has not hit most of the sectors of the continental European economy, that’s starting to change. We are starting to see a lot of interest not just in Financial Services but across the range of industries that we serve. So, I think those two... you've got sort of different drivers but a similar trend. And I want to emphasize that at this point, I wouldn't characterize any aspect of our business as being one of slowing demand.

Okay great, And then, Gordon, I don't know if you said that’s in your comments, but the utilization target for '08 for offshore including Chinese where do you expect that to be and we've kind of seen a flip down, headcount always outpaced revenue growth this past year, head count growth was lower than revenue growth with the increase in utilization. So, what are you expecting for '08 and what does that ultimately say about the future growth in may be '09?

It is very important to separate what our head count growth will be in '08 from what our revenue will be in '09. The vast majority of the head count we're adding in '08 will be to support '08 revenue growth, plus obviously we have a bench of 8600 people in training plus the bench of qualified people. Through the year, we will decide how many laterals to bring on, and that's why obviously there is a range that we gave. We certainly expect to increase the utilization compared to '07 number. Now there is some seasonality in, and then obviously and you saw that in Q4, you see lot of freshers come in. So with trainees utilization went down Q4 totally expected, but we'll bring utilization up for two reasons. One, there's financial benefits, but much more importantly, the business is running better. It was… it is one of the key things that help with attrition because we are hiring all these really smart kids from the best schools and we run through this grade-training program, as they want to go do some really good stuff. They don't want to be sitting around the bench. So taking our utilization up in '07 was I think one of the big contributors to attrition going down. So we'll take up some more the exact number... we'll see as we go through the year. But be very careful in taking '08 head count growth and projecting into '09 revenue growth, because all these small portions is always higher are for '09 revenue.

Just add to that, a different of saying what Gordon made… the point that Gordon made is that you know, the market is going to dictate what our growth prospects in '09 are, not the head count that we added in 2008, I want to make that clear.

Our next question comes from the line of Tim Sen Wang [ph] of JPMorgan.

I will just start, [inaudible] this will be the last questions, get home to dinner, go ahead.

Thanks for taking me. Question on cash, primary use the cash including your FX, share repurchases and I was curious how much cash do you need to run the business currently?

Sure. We currently have about $95 million left in our current share repurchase authorization and that's good through I think... probably fourth quarter of 2008. We finished the year with about $670 million of cash, we continue to look for small acquisitions, we'll probably use some cash for that, having a healthy balance sheet is very important. We're doing mission critical work for very large corporation. They want to know we're here for the long-term. So we will clearly continue to maintain a balance sheet. The speed in which we might use the remaining authorization on the share repurchase haven’t made any specific decisions. But our goal is to continue to have that a healthy balance sheet.

And can you remind us what the...what your revenue expectations are for market Rx again?

We don't guide to the future, but if you kind of do the math, we have in perhaps the quarter, $5 million and as we've said there... let me acquire… they were roughly a $40 million run rate business.

Okay. Got it. And the last one I had was... I think in the past in the case you disclosed how much revenue you achieved from your new customers to added in the year. Do you actually have that metric handy?

I don't have that handy, but I believe it will be somewhere similar to last year. I just don't have it handy unfortunate.

Very good. I'll follow up. Thanks, congrats.

Great.

Thank you all again for joining our call today. In conclusion, we are very pleased with our strong financial performance in the fourth quarter and for the full year 2007. Moving forward, we will continue to focus on managing our business model to generate long-term value for our shareholders, while investing in the business to further differentiate Cognizant for our customers. We are confident that our focused strategy will ensure, we continue to perform well during 2008 and grow faster than the industry overall. We look forward to speaking with you again next quarter. Good evening.

Thank you. That does conclude today's Cognizant Technology Solutions fourth quarter and full-year 2007 earnings conference call. You may now disconnect.