Ed Caso - Wachovia Joseph Vafy - Jefferies & Co. Ashwin Shirvaikar - Citigroup Brain Keane - Prudential Abby Gami - Banc of America Andrew Steinerman - Bear Stearns Adam Frisch - UBS Julio Quinteros - Goldman Sachs

At this time I would like to welcome everyone to the Cognizant Technology Solutions fourth quarter and full year 2006 earnings conference call. (Operator Instructions) Thank you. Now I’d like to turn the conference over to Mr. Scot Hoffman of Financial Dynamics. Please go ahead, sir.

Thank you, operator and good morning, everyone. By now you should have received a copy of the company’s fourth quarter 2006 earnings release. If you have not, please call our office at 212-850-5600, and we’ll be sure to get a copy sent to you. The speakers we have on the call today are Francisco D’Souza, President and Chief Executive Officer; and 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 that are described in the company’s earnings release and other filings with the SEC. I would now like to turn the call over to Francisco. Please go ahead, Francisco.Francisco D’Souza: Thank you, Scot and good morning everyone. Thank you for joining us today for Cognizant’s fourth quarter and full year 2006 earnings call. We are very pleased with our record fourth quarter and full year 2006 results, which marked another year of exceptional growth for Cognizant. This morning I will discuss the drivers of our growth and highlight the investments we are making in the business to capitalize on the strong demand in the market that we expect will take us to over $2 billion in revenue in 2007. I will be joined on today’s call by our Chief Financial Officer and Operating Officer, Gordan Coburn, who will take you through our numbers in greater detail, and also by our Vice Chairman, Lakshmi Narayanan. Before we get started, I would like to thank Lakshmi for his tremendous leadership of Cognizant as CEO over the last three years, as Cognizant has grown into a top-tier leader in the global IT…

Thank you Francisco, and good morning to everyone. I would like to provide some additional information on 2006 fourth quarter, and then discuss our financial expectations for the first quarter as well as full year 2007. Revenue for the fourth quarter very significantly exceeded our prior guidance and expectations due to strength in health care, life sciences, and Europe, and a general year-end surge in discretionary spending. Quarterly revenue grew 12% sequentially and 65% year over year. The fourth quarter sequential growth was our highest since 1998. For full year 2006, revenue was up 61% compared to 2005, also our strongest full year growth since 1998. Throughout 2006, 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 in insurance, banking, and transaction processing, grew by over $70 million year over year and represented 47% of revenue for the quarter. Healthcare grew over $53 million and represented 25% of revenues. Retail, manufacturing and logistics grew by over $17 million, representing approximately 14% of revenues for the quarter. The remaining 14% of our revenues came primarily from other service-oriented businesses including telecom, media, and new technology, which grew by over $26 million compared to the fourth quarter of 2005. During the quarter, financial services grew 54% year over year and 10% sequentially; healthcare grew 99% year over year and 23% sequentially. Growth in our healthcare segment was driven by numerous life sciences clients we have recently won and are now ramping up, as well as expansion of the work we are doing for our health care payer clients. Retail, manufacturing and logistics grew 42% year-over-year and 3% sequentially and our other segment grew 81% year-over-year and 14% sequentially. For the full year, financial services…

(Operator Instructions) Your first question comes from Ed Caso - Wachovia. Ed Caso - Wachovia: Good morning and congratulations. I have a sense that your operating margin year-over-year is guided a little bit lower, and I was curious how much that was the swing in foreign exchange, how much might be a comp issue potentially outside of India, how much is conservatism and how much is something I didn’t ask? Gordon Coburn: I would put it, almost all, on something you didn’t ask: our long-term strategy, one that we followed for many years has been to be in a 19% to 20% operating range, excluding options expensing. This year we ended up at 20.3%, so we were above our range. We don't view that as a good thing for the business. We want to continue to invest very heavily for the long-term revenue growth and differentiate ourselves in our market, so our goal is to get back into our range for 2007. Now, also included in that is we have to cover things such as the rupee depreciation that we experienced and wage inflation and that's all built into that, but the underlying premise is we want to be back in our range and reinvest heavily back in to the business. Ed Caso - Wachovia: Just a quick follow-up, on the domestic, the U.S., and European wages, what is happening there? Is the growth rate accelerating or not? Gordon Coburn: We certainly expect there to be continued wage inflation in 2007. As you know we give our raises April 1st. We are still in the process of finalizing the exact size of the increases. The increases we give will ensure we remain an employer of choice in India. Our budget and our guidance assumed that the wage increases, particularly for India, are higher than what we gave in 2006 but we have not finalized the numbers yet. Ed Caso - Wachovia: Thank you. Operator: Your next question comes from Joseph Vafy - Jefferies & Co.

Great results. I was wondering if we could talk a little bit about the Europe business and the bank deal. Would you expect to see more of these types of strategic relationships popping up with maybe some of these European and maybe other multinational IT firms where maybe those firms don't have a good footprint in India, and they might be looking around to partner? Francisco D’Souza: I think on a selective basis, where it makes sense for both parties, you'll see us entering in to these kind of arrangements. In the case of the Ordina and the Rabobank situation, there was a specific requirement there for staff transfer from Rabobank over to Ordina and so it made logical sense for us to partner there in the Netherlands because we don't have the size and scale in the Netherlands to undertake the magnitude of staff transfer that was involved in that particular case. In situations like that where there's a good reason, you'll see us do those selectively more and more.

To follow up on that, it sounds like selectively that might be the strategy, but overall, the real strategy here is to bid and to go after business as much as you can alone, even in environments that might be a little different than what you might be used to in your current book of business? Francisco D’Souza: Clearly, we are committed, as I said, to building out our local management teams across Europe and in fact across the world, and our strategy has always been to essentially be local in the countries in which we operate. Hire teams locally in countries that can adapt to the changing requirements and essentially modify the Cognizant model for the local needs in each market. So our goal is to definitely build out local teams, local presence and bid on customers directly.

You said you had 5,000 unbilled people in the training program. How many of those do you expect to become billable here in the first quarter? Gordon Coburn: Joe, they obviously phase. We hire trainees throughout the year, obviously Q3 and Q4 are big quarters for the trainees. Typically they become billable about six months after they join, so they'll get phased in throughout Q1 and Q2.

Thanks, I'll turn it over. Operator: Your next question comes from the line of Ashwin Shirvaikar - Citigroup.

Fabulous results. Could you talk about how many people you can hire and train each quarter, including the impact of new areas like testing and BPO, not just ADM? To what extent will you need to hire laterally for '07? Gordon Coburn: Our basic strategy is, obviously as you know, there is a long lead time with college hires so we put out a significant number of college offers and then depending on where growth ends up we fill in with additional lateral hires. You saw that this year, obviously we grew much faster than expected coming in to the year, so as a result the mix between college and laterals wasn't quite as high on the college side as we would have projected. It is one of the things each week we continue to evaluate and we speed up and slow down the lateral hiring as necessary to build off of the base of college kids that we recruit. For college recruiting, we're in very good shape. We recruit at an expanding number of universities. Our brand has become very well recognized. So we continue to feel very good about our ability to recruit off campus.

Can you comment on the new areas like testing in BPO and ERP? What are your hiring needs there? Is it different training? Gordon Coburn: Certainly for things like ERP there's a longer training cycle. BPO, there's such a wide range of activities, sometimes the training is short, sometimes it's more involved. Testing would be pretty similar to our normal training patterns.

Any comments on pricing before I turn it over? Gordon Coburn: Pricing, our average realized rate was up about 1.5% for 2006 right in line with what we expected when we began the year. For 2007 we expect our average realized rate to increase at a slightly faster pace, which is in line with the expectations we had as the started the budget process. You know, is it going to be dramatically faster? No, but we think it will be slightly higher than what we experienced in 2006. The expected change that we believe will be able to achieve in our average realized rates for 2007 also reflects the fact that not all of our clients are eligible for rate increases during the year so you only get the increase on part of your client base and that we believe will average out to a realized change of about 2%.

Your next question comes from Brian Keane - Prudential. Brian Keane – Prudential: I just wanted to follow up on that. Is that being helped by the mix of business change or are you seeing actual increases on like-for-like renewals and new deals? Gordon Coburn: This is primarily the like-for-like renewals plus the new deals ramping up. The business mix changes, I think, is going both directions, so it kind of nets out. Brian Keane – Prudential: Are you seeing better pricing in renewals that than you have over the last 12 months, more recently? Gordon Coburn: On average, yes. Obviously it's a scattergram. Some no, some much better, but on average certainly, it's slightly better-- the adjective ‘slightly’ in there-- slightly better than '05 and '06. Brian Keane – Prudential: Can you quantify the positives and negatives of FX in the fourth quarter? Also, the tax rate it looks like going to stay pretty low -- just some thoughts about that going forward. Gordon Coburn: Certainly, In the fourth quarter, the rupee moved on average by about 3% that cost us, everything else being held equal, about 60 basis points. Now obviously, that didn't all flow through because we have lots of other levers. Brian Keane – Prudential: Back on the rupee, there was also a 400,000 gain, right? Gordon Coburn: That was in operating margin, we have always had some gains and losses below the line and that has to do with our primarily our rupee cash balances and inter company balances, and that could go either way depending on whether that balance is positive or negative on a particular quarter, so that's when it always bounces around, not dramatically, but that's much harder to predict. On the tax rate we came in 10 basis points for the…

Hi, Gordon, just a quick clarification. When you say surge of discretionary spending in fourth quarter and then you called out tough comp sequential in first quarter, do you think that fourth quarter strong revenues in anyway robbed from first quarter? Gordon Coburn: We're trying to figure that out a little bit, it is always a little tough to tell. Clearly there was some budget flush in the fourth quarter which often makes the comps tougher.

Any client concentrations right now? Gordon Coburn: We continue to move in a positive direction, the top five clients were a little over 28%, top ten clients were about 38.5% and I think you'll continue to see those ratios come down just as we get bigger.

You don't have any 10% clients, right? Gordon Coburn: No 10% clients.

Excellent, thanks very much. Operator: Your next question from the line of Adam Frisch – UBS. Adam Frisch - UBS: Thanks, good morning. Gordon that green bag still has some magic left in it, right? Everything has pretty much been asked, but the second half increase in utilization, how much of that was by design and how much of that was from timing when people moved in and out of training classes? Gordon Coburn: I say it's not by design; it's a combination of you have some seasonality because of vacations in the fourth quarter. You have some seasonality when people are hired but I think, Abby asked, are we trying strategically trying to move utilization one way or the other, the answer is no to that. Francisco D’Souza: I think it's also important to note that it is tied to growth, we grew fast so that's we ate into the bench a little bit -- that's why we maintain the bench; so you expect to see as we grow we hit a surge in the fourth quarter-- our bench is essentially a rapid response force, we can respond quickly and that's why you saw utilization go up a little bit. Adam Frisch - UBS: Just to follow-up on Abby's question, we shouldn't take that as a sense of some of the leverages being eased out of the system, so to speak? Francisco D’Souza: No. No. Not at all. Adam Frisch - UBS: Do you expect the sources of headcount growth to remain in the same in '07 as in '06? I am speaking in terms of college versus laterals. Gordon Coburn: Let me hit the college versus lateral and maybe Francisco can comment for the college, and give a little more color on that. For 2006 our target was…