Information technology provider Cognizant Technology Solutions Corp (CTSH.O) is in talks to buy application developer Softvision for about $550 million to boost Cognizant’s digital business, people familiar with the matter said on Thursday.
The negotiations come as Cognizant seeks to expand its offerings in digital and cloud services to take on outsourcing services rivals Accenture (ACN.N) and IBM (IBM.N) more effectively. Its profitability is under pressure as corporate clients demand more work for less money.
The sources cautioned that the talks may not result in a deal and asked not to be identified because the matter is confidential.
Cognizant, Softvision and Softvision’s private equity owner, Salt Lake City, Utah-based Tower Arch Capital, did not respond to requests for comment.
Teaneck, New Jersey-based Cognizant has been increasingly focused on cloud computing, cyber-security and analytics consulting aimed at helping reduce its reliance on traditional information technology (IT) services.
Cognizant, which has a market capitalization of $44.6 billion, said in early August that its digital business now accounts for 30 percent of its revenue.
Softvision, founded in 1994, consults for large companies on technology products. One of its recent projects was creating a video-streaming platform and an iPad app to be used in the waiting rooms at Kaiser Permanente, the large non-profit health provider based in California, according to its website.
An acquisition of Softvision would be the latest in a string of small acquisitions for Cognizant. Last month it acquired SaaSfocus, a consulting firm focused on digital transformation, for an undisclosed sum. In May, it bought Hedera Consulting, a data analytics service provider based in Belgium.
The acquisition of Softvision would also expand Cognizant’s footprint in Romania, a country where Softvision has significant engineering operations.