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Information technology service provider Cognizant Technology Solutions Corp (CTSH) reported strong revenue growth for the third quarter, allaying fears that economic slowdown was beginning to affect the offshoring sector.

Profit for third quarter beat market estimates by a penny, helped by better operating margin. The company also stood by its outlook for 2008.

For the third-quarter, net income was $112.8 million, or 38 cents per share, compared with $96.2 million, or 32 cents per share. Revenue rose 31 percent to $734.7 million.

Analysts expected Cognizant to earn 37 cents a share, before special items, on revenue of $722.6 million, according to Reuters Estimates.

"We are working with clients across all sectors, including banking and financial services, to help with the twin challenges of simultaneously driving further cost savings while investing to capture new growth opportunities," Chief Executive Francisco D’Souza said.

The company’s non-GAAP operating margin was 20.8 percent, above its targeted 19 percent to 20 percent range.

Cognizant, which provides low-cost software development services in India, forecast fourth-quarter earnings of 43 cents a share, before items. It expects revenue of at least $746.7 million, which missed market estimates of $750.4 million.

Shares of Cognizant, whose clients include Aetna Inc (AET.N: Quote, Profile, Research, Stock Buzz) and Molina Healthcare (MOH.N: Quote, Profile, Research, Stock Buzz), rose 25 cents to $21.25 in trading before the bell. They closed up 5 percent at $21 Tuesday on Nasdaq.

For the press release, please double click [ID:nPnNY43965] . For the alerts, please double click [ID:nWNAB7965] . (Reporting by Purwa Naveen Raman in Bangalore; Editing by Saumyadeb Chakrabarty)

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