Scott Hoffman(?) – Financial Dynamics: Thank you, Operator, and good morning, everyone. By now you should have received a copy of the company’s Q3 2006 earnings release. If you have not, please call our offices at 212 850 5600 and we’ll be sure to get a copy sent to you. On the call, we have Lakshmi Naravanan, President and Chief Executive Officer, Francisco D’Souza, Chief Operating Officer, and Gordon Coburn, Chief Financial Officer of Cognizant Technology Solutions. Before we begin, I’d 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 call like to turn the call over to Lakshmi. Please go ahead, Lakshmi. Lakshmi Naravanan – President, Chief Executive Officer : Thank you, Scott, and good morning everyone. Thank you for joining us today for our conference call. This morning I’ll provide an overview of the highlights of Q3 and the strategic enrichment we are steadily making in the business as well as our industry-leading growth that keeps us ahead of the curve in meeting customer demands. I’ll be joined on today’s call by our COO, Francisco D’Souza, who will give color on the drivers of our success here in the quarter, and our Chief Financial Officer, Gordon Coburn, who will take us through our numbers in greater detail. Turning to highlights of Q3, we are pleased with our strong financial performance and tremendous growth across the company. Our success this quarter was driven by our ability to leverage Cognizant’s leadership in our core vertical markets and service offerings, to bring new business from both new and existing customers.…

Q - Julio Quinteros – Goldman Sachs : Real quickly, Gordon, on the increase in the employee turnover, one of the things that I want to understand is how you look at the increase in employee turnover relative to how your hiring plans have changed. Can you relate it to lateral hires versus college hires? How has that profile changed and have we seen a high correlation in that change relative to the increase in turnover?

Julio, that’s a good question. I think the turnover continues to be predominantly at the people who are under two years in the organization. The turnover at the senior levels and the mid levels continues to be consistent with the prior quarter, there’s no significant increase. As we have stepped up the hiring of college graduates, we see a slight up tick in the attrition rates there. Primarily one of the key drivers appears to be people going for higher education after completing a certain time there. We have to do some more analysis to get to the bottom of what the other influences are. The point that you’re making, it’s primarily at that low tenure level. Q - Julio Quinteros – Goldman Sachs : Can you compare where you were a year or two ago on laterals versus college hires, and where you are right now?

In terms of the overall concentrations, a year ago – I mean, I’d be able to give an approximate, but there’s a slight shift towards an increased number of college graduates that are coming into the company compared to laterals, compared to the year-ago number. Q - Julio Quinteros – Goldman Sachs : Okay, then one last question for Gordon: on the tax impact of the new SEC bill, as we look at that in 2009 and beyond, how do we think about the tax rate as we go into the 2009 and 2010 timeframe and the holiday comes to an end for some of the other facilities?

It’s difficult to project it, Julio, as discussed in the past. The key will be how much of our growth between now and 2009 will go into special economics zones. Obviously the more of our growth we get into special economic zones, the less the impact will be of the phase out of the current tax holidays. Obviously that’s the big reason why we’re doing this construction program and why it’s focused on special economic zones. You would certainly expect, assuming that there’s no changes in current regulations, you would certainly expect a jump in our tax rate in 2009 and by moving as quickly as we can, our growth towards special economic zones, the idea is that will help mitigate the jump.

Your next question comes from Alan Hellawell – Lehman Brothers. Q - Alan Hellawell – Lehman Brothers : Thanks, this is (inaudible) here from Lehman. Just a quick question for you guys, with the headcount additions, can you give us more color on which regions those were in?

Sure, the headcount additions are across the board. Overall, our mix shifted slightly offshore in Q3, but we are hiring – obviously we’re investing heavily in Europe, we’re hiring in Europe, we’re hiring in the US – both local hiring we have increased substantially as well as obviously we transfer experienced people from our development operations in India, so the hiring is global.

Your next question comes from George Price – Stifel Nicolaus. Q - George Price – Stifel Nicolaus : Nice results. Just a couple of questions. Gordon, first up, in the interest income, that was actually down QoverQ, I believe, despite the higher cash balances. Was I reading that right?

No, you’re probably combining foreign exchange losses and – last quarter we had a big FX gain, interest income was actually up about $900,000 sequentially. Q - George Price – Stifel Nicolaus : Could you talk a bit about what you’re seeing in early signs, as you’re looking into 2007? Obviously we’ve been seeing what appears to be some demand acceleration recently. If you could maybe give us your thoughts on whether there’s anything in particular that’s driving that now and how you see it extending next year? A - Francisco D’Souza: This is Frank. We continue to see strong demand across all of our industry verticals. We’ve talked about the key drivers in the past. There are three drivers we are seeing, one is expansion, acceleration as customers in Europe start getting comfortable with the off-shoring phenomenon. The second is the increasing portfolio of services that we’re taking back to our client base, so we’re extending the service offerings. We talked about BPO and IT infrastructure services, for example, on this call, so as those service lines start to emerge and mature for us, we’re taking those across our existing client base and of course new clients as well. Then of course the third driver is new industries that historically have not adopted off-shoring or have been limited adopters of off-shoring are now coming online and we’re seeing traction in new industries like media and entertainment and so on and so forth, that historically perhaps didn’t do as much as the more mature industries like financial services and healthcare. Q - George Price – Stifel Nicolaus : Last thing, levels of pricing in the quarter and your view on pricing trends for existing business as it rolls and new business that’s coming on? Thank you.

Pricing for 2006, that’s the current year, is coming in right about where we expected with average realized rates up 1-2%. We’re currently in the process of discussing potential rate improvements for 2007 with our clients. Similar to many others in the industry, we are seeking to achieve on average an increase slightly higher than what we achieved in 2006. Obviously it will be another two months or so before we finish up this 2007 planning process with our clients and know where things are likely to end up. One of the nice things about the relationships we had with our clients is it’s very much a collaborative planning process, which goes on in the fourth quarter of each year. We sit down, look at what the client wants to achieve and help them do that. That helps to give us a good picture into what 2007 will look like.

Your next question comes from Joseph Foresi – Janney Montgomery Scott. Q - Joseph Foresi – Janney Montgomery Scott : My first question is, Gordon, can you give me some idea of what the onsite/offshore revenue split is this quarter?

Sure. The onsite/offshore headcount split, we’ve shifted slightly offshore. We moved about one percentage point offshore so we’re roughly 75% offshore, 25% onsite for headcount. We don’t track revenue on an onsite/offshore basis, but if you eyeball it, it’s around 40% of our revenue that’s offshore, 60% onsite. Obviously there’s a differential on the billing rates, but that’s not a number we track exactly. We focus more on the headcount mix. Q - Joseph Foresi – Janney Montgomery Scott : Has that trended towards more offshore over the last couple of quarters?

Very slightly. We’ve been running at about 24.5%-27% over the last 12 quarters. Q - Joseph Foresi – Janney Montgomery Scott : Two more quick questions here, on the pricing front, I know you said you’re going back to the client and you’re raising it 1% of 2%, I was wondering if you could give us some rough idea of what that was up sequentially, both onsite and offshore?

Sure. The 1% to 2% is what we have achieved for 2006. As we’re going back to the clients for 2007, we’re trying to potentially get rate improvements a little bit stronger than that, so we’re just starting those conversations. For this year, on a sequential basis, our onsite rate was up about 2%, our offshore rate was up about 0.5%. On a full year basis, about the same percentage or so. We’re running about 1.5% average rate improvement compared to the same time last year. Q - Joseph Foresi – Janney Montgomery Scott : My last question is on the attrition rate. Could you give us some idea of how, if there is any impact on any particular contracts with the turnover moving up, or are you being able to actually view that as the numbers would be inclined and is there anything you haven’t placed a handle on the situation going forward? Maybe just a little more color there? A - Francisco D’Souza: This quarter we’ve been able to manage the delivery to clients despite the increase in attrition in the quarter without impacting quality. As we said, we’ve recently concluded both employee and customer satisfaction surveys, which are conducted by third parties independently on an annual basis. Both of those numbers are holding and the employee stats are trending upwards. The customer stats historically are very high and continue to be very high. We believe that the attrition has not impacted our delivery to clients. What we do and we’ve done this for some time, we deliberately have maintained the utilization levels in India at strategically lower levels and we’ve consciously made the decision over some time to keep utilization managed at lower levels in order to be able to deal with attrition, unexpected ramp ups and so on and so forth. I think that bench that we built over time has helped us to manage this spike in attrition.

Your next question comes from Julie Santoriello – Morgan Stanley. Q - Julie Santoriello – Morgan Stanley : A follow up on the issue with the new facilities and the investment that you’re making there. Some of the cities where you’ll be building out are, I guess, we can call them tier two cities in India at this point. I’m wondering if you think that will be able to help the employee turnover number?

If you look at some of the locations where we plan to build out, Coimbatore, Hyderabad, Pune are locations where we have found the attrition is lower than the company average. We believe that these university towns which produce a lot of engineering graduates and business school graduates will help us in terms of both being able to hire increased numbers as well as keep the attrition low as we build out these complexes there. Traditionally, they enjoyed low attrition levels in places like Chennai and Coimbatore, which are the places where we tend to dominate. Q - Julie Santoriello – Morgan Stanley : In terms of other geographies, are customers at this point asking you to begin to look to expand into other areas, especially as you grow BPO? We’re hearing more and more about eastern Europe and China and less about the US – is there something that’s on your radar screen for the next year?

It is very much on our radar, we continue to see on the IT side, demand for clients expressing interest in China and doing work out of China. China represents a very large talent pool, as you know, and we’re beginning to now see clients increasingly dipping a toes in that water and trying to get some experience on the ground. We have not seen large scale ramp up in China as yet, but there are a lot of clients now who are saying let’s put some pilot projects into China to understand what the dynamics of doing business in that part of the world are. We’re also starting to see, in building our offshore presence in places like Canada and also in the Netherlands, plus certain countries in Europe. On the BPO side, at this point our focus in BPO is in India. We are looking at geographies, but given that our BPO business is relatively nascent, I don’t think you’ll see us moving into other geographies for the next few quarters. Q - Julie Santoriello – Morgan Stanley : Finally, I know you’re in the midst of your year-end customer conversations, but can you give us an early read on what you’re hearing, what your sense is of the discretionary spending environment for 2007.

It’s a little too early to have that read. We’re not – we’re certainly having very positive conversations with our clients. They’re still in the process of finalizing their budgets. They’re in the same cycle that we are, where they have their budgets under review right now, so I’m not sure if they have all the answers. We’re certainly not hearing anything negative. Are things up a little, are they up more than a little – it’s a little too early to know that.

Your next question comes from Adam Frisch – UBS. Q - Adam Frisch – UBS : Quick housekeeping, Gordon the 60% revenue growth, was that YoverY or sequential?

Hang on… that was… Q - Adam Frisch – UBS : I’m just kidding, I’m trying to make a point. On attrition, obviously that’s the one negative data point, but it’s just in one quarter. It’s kind of too early to start questioning execution here given your company’s track record, but it is going to be a point that people are looking at. Can you just give us a little bit more color on whether obviously October is down, was this a one quarter thing? Was it just a spike and you have it under control? How are you trying to mitigate it? Most importantly, does it threaten future growth or your margin outlook?

A couple of things, first of all this is not the first time this has happened. Each year we’ve had a spike like this once or twice in the past. It is coming right back down or not? It’s a little too early to know. October is a bit better than Q3, we’re still watching it. We’ve been very successful in the past when it’s spiked up at getting it back under control. We feel good that we can lash it down. We don’t want to do anything that’s a knee jerk reaction. We want to thoroughly understand what’s caused it and get rid of the problem. We have a very good track record of doing that. In terms of it impacting growth, I think the answer’s no. I don’t see that impacting growth. We carry a very deep bench, we’ve been very successful in meeting our recruiting targets. Obviously we’ve taken our target headcount for the year up which is a testament to the fact that obviously we believe we should be able to hit those goals. Are we disappointed that it went up in Q3? Yes. Are we addressing it directly and making sure that we manage it to where we want? The answer’s yes to that as well. Q - Adam Frisch – UBS : So no threat to growth or margins mid-term?

At this point we don’t know. Q - Adam Frisch – UBS : Thanks for the clarification there. Your strategy for headcount growth and utilization, specifically the 58% on the offshore, kind of popped out at me. In the past you’ve been wanting to build your bench because your product and services offering was expanding. What’s your strategy? You’re pretty clear on those things, but what’s your strategy heading into 2007, maybe even into 2008 in terms of what you guys are thinking about your headcount and mix of utilization?

We will continue to carry a deep bench while we’re in a high growth mode. It’s the right thing to do for the client. Obviously we have the luxury of running a bit lower margin of many of our competitors so we can make that investment and do what’s right for the client. So we’ll continue the strategy of having a deep bench. Obviously we’ll bounce it about from quarter to quarter depending on when the trainees come in and all that kind of stuff, but in 2004 and 2005, we brought utilization down substantially. Strategically, we’re not trying to change it from where we are. Q - Adam Frisch – UBS : Okay, the past couple of quarters it’s been around 53% including trainees offshore. Do you see that in Q4 and into 2007 or is this like a one quarter balance or something?

In Q2 and Q3 it was up around – I think Q2 was 57% and Q3 was 58% but Q1 was only 53%. The idea is to keep it in the 50s somewhere. I’m not saying exact numbers but it can bounce around with seasonality. If you look at the guidance of headcount additions to revenue growth for Q4, obviously it would indicate that Q4 was trying to bring it back down a little bit. Q - Adam Frisch – UBS : Sounds good. In the past, when the stock has gotten to higher levels, you guys have decided to split it. Any discussions about that recently? Does that kind of go away with the use of options going lower?

It’s something we always think about, something that there’s no current discussions on. Q - Adam Frisch – UBS : Final question on the M&A strategy, looking forward we’ve seen some combinations like Cap Gemini Kanbay, before we had Kanbay, a consulting firm for domain expertise, so we’re seeing the domain expertise/offshore mix kind of coming together a bit more. Do you guys plan on growing that internally or are you sticking with, if you see an opportunity for a bolt on you’ll do it but you don’t want to do anything too big, because obviously you’re demonstrating good organic growth? Is your outlook changing there at all?

Absolutely. Our growth has been very strong. The organic growth has been extremely strong. It’s very, very strong within the organization, which we want to retain, and that’s given us a great growth story. We continue to focus on some of these niche companies and have had some type of acquisitions which bring in some capability in industry verticals. That has helped us in the past and working that is a very good strategy for us. It’s starting some new offerings for industry verticals. That will continue to be our strategy, it’s unlikely that we’ll go for any large type of acquisition.

Your next question comes from Moshe Katri – Cowen and Company. Q - Moshe Katri – Cowen and Company : Can you comment on the relationship between headcount growth, especially as an indicator for revenue growth, and just again you were saying you’re going to end up this year at 38,000 for head count. There’s a 56% increase YoverY. This year you’re going to grow revenues roughly 58.6%. If you go back another year, I think in 2005 you ended at 24,300, and that was your headcount up 58%. Your growth was 51%. Can you kind of say in terms of how we should focus on headcount growth as a proxy for revenue growth, especially when we’re looking into next year?

In 2004 and 2005, we grew headcount faster than revenue. That was part of what was coming out earlier. Strategically we were trying to reduce utilization. We finished that process by the end of 2005. Now, give or take a bit, headcount and revenue should track somewhere close and then obviously rate increases and the impact of the onsite/offshore mix. We’ll have some seasonality in that, obviously utilization can impact just a little. There will never be a perfect correlation particularly since we carry such a deep bench, because obviously in quarters where revenue is strong we can reach into the bench and other quarters obviously we’ll replenish the bench. On a long-term basis, there certainly should be some correlation. That would be on a long-term basis rather than on a short term basis. Q - Moshe Katri – Cowen and Company : On the comment about pricing, it seems that most of your competitors are – it seems you’re sending signals to one another at a tier one level that you’re planning to raise bill rates. When do you think you’re going to have a good indicator of whether these bill rate increases are going to stick with your existing clients?

As we said, we’ve a very collaborative process with our clients. This quarter, when we’re sitting down with each of our clients, both our account managers, our client partners and the executive team, and having a discussion in terms of what are their strategic objectives, what additional services do we want, what pricing makes sense for everyone, when those discussions are done we’ll have a sense of – or at least an initial view on where pricing will be for 2007. That process sort of finishes up at the end of the year, beginning of January. Q - Moshe Katri – Cowen and Company : Then finally, looking at your 82 strategic clients, is there a way to quantify the percentage of revenues that are generated from those 82 strategic clients today?

I don’t have the exact number, but it would certainly be a significant majority of our revenue. Q - Moshe Katri – Cowen and Company : What do you think is Cognizant’s penetration today, within these strategic client bases, in terms of their potential IT services spending budget?

That’s probably one of the most interesting questions, because it’s a moving target. As we’re expanding our service offerings, the slice of the client’s budget that we’re eligible for keeps expanding. Therefore the penetration rate keeps getting reset. Now we’ve moved a whole lot, when we look at a macro level, we’re 20-30% penetrated in terms of what clients think they want to do with us.

Your last question comes from Mark Marostica – Piper Jaffray. Q - Mark Marostica – Piper Jaffray : Just back on attrition again, you mentioned October attrition was better than Q3, but how does it compare to a year ago period, October of 2005?

I’ve not looked at that, sorry. We don’t track exactly – it’s mostly on a monthly basis. Q - Mark Marostica – Piper Jaffray : I wanted to ask a question on AimNet and the degree of customer overlap you currently have and any progress on the initiatives to gain more overlap? A - Francisco D’Souza: The overlap between AimNet’s customer base and Cognizant’s customer base was relatively small. We had just a small handful of common customers. Those customers obviously we continue to focus on, and in general have viewed the Cognizant acquisition of AimNet as a very positive thing. AimNet have a lot of smaller customers and they also have a lot of indirect customers through channel partners, that they had established. We are focusing on taking the AimNet capability to Cognizant’s core customers, the strategic customers of Cognizant that we’ve been talking about. That conversation has been very positive. The combination of the offshore network operation center that Cognizant had already established with the AimNet network operation center here in the US, that combination is extremely powerful and we’re seeing good interest from our client base for that offering. Lakshmi Naravanan : All right. Thank you again for joining our call today. In conclusion, we are very pleased with our financial and operating performance in Q3 and the first nine months of 2006. We continue to be very confident in our business strategy and the platform we have in place to take the companies forward through the mixed phase of our growth into 2007. We look forward to talking to you all in the next quarter. Thank you very much.

That concludes today’s conference call. You may now disconnect.