SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-----------------

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001
Commission File No. 0-24429

Cognizant Technology Solutions Corporation
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)

Delaware 13-3728359
- -------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

500 Glenpointe Centre West, Teaneck, New Jersey 07666
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

(201) 801-0233
-------------------------------
(Registrant's Telephone Number,
Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes: X No:
----- -----

Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of May 2, 2001:

Class Number of Shares
----- ----------------

Class A Common Stock, par
value $.01 per share 7,547,626

Class B Common Stock, par
value $.01 per share 11,290,900

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

TABLE OF CONTENTS
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Page
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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).... 1

Condensed Consolidated Statements of Income and
Comprehensive Income (Unaudited) for the Three Months
Ended March 31, 2001 and 2000.............................. 2

Condensed Consolidated Statements of Financial
Position (Unaudited) as of March 31, 2001 and
December 31, 2000.......................................... 3

Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Three Months Ended March 31,
2001 and 2000.............................................. 4

Notes to Condensed Consolidated Financial Statements
(Unaudited)................................................ 5

Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition.............. 9

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K........................... 15

SIGNATURES......................................................... 16

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

THREE MONTHS ENDED MARCH 31,
----------------------------
2001 2000
---- ----

Revenues........................................... $39,986 $23,564
Revenues - related party........................... 3,418 3,506
------- -------
Total revenues................................... 43,404 27,070

Cost of revenues................................... 22,369 13,939
------- -------
Gross profit ..................................... 21,035 13,131

Selling, general and administrative
expenses......................................... 11,208 7,037
Depreciation and amortization expense.............. 1,438 971
------- -------
Income from operations............................. 8,389 5,123

Other income:
Interest income.................................. 746 505
Other income / (expense) - net................... (245) (99)
------- -------
Total other income........................... 501 406
------- -------

Income before provision for income taxes........... 8,890 5,529
Provision for income taxes......................... (3,325) (2,068)
------- -------
Net income......................................... $ 5,565 $ 3,461
======= =======

Basic earnings per share........................... $ 0.30 $ 0.19
======= =======
Diluted earnings per share......................... $ 0.28 $ 0.17
======= =======

Weighted average number of common
shares outstanding - Basic....................... 18,698 18,500
Dilutive effect of shares issuable as of period-end
under stock option plans......................... 1,534 1,687
------- -------
Weighted average number of common
shares outstanding - Diluted..................... 20,232 20,187
======= =======

Comprehensive income:
Net income......................................... $ 5,565 $ 3,461

Foreign currency translation adjustments........... (116) 4
------- -------
Other comprehensive (loss) / income, net of tax.... (116) 4
------- -------
Comprehensive income............................... $ 5,449 $ 3,465
======= =======

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.

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COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
(IN THOUSANDS, EXCEPT PAR VALUES)

MARCH 31, DECEMBER 31,
2001 2000
----------- ------------
ASSETS

Current assets:
Cash and cash equivalents.............................................. $ 60,966 $ 61,976
Trade accounts receivable, net of allowance of $1,069 and
$516, respectively................................................... 18,430 19,187
Trade accounts receivable-related party................................ 1,514 1,361
Unbilled accounts receivable........................................... 3,726 1,941
Other current assets................................................... 4,137 3,758
--------- ---------
Total current assets............................................... 88,773 88,223
--------- ---------

Property and equipment, net of accumulated depreciation of $12,290 and
$10,997, respectively.................................................... 17,641 15,937
Goodwill, net............................................................... 1,116 1,195
Investment.................................................................. 1,955 1,955
Other assets................................................................ 2,310 2,230
--------- ---------
Total assets....................................................... $ 111,795 $ 109,540
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................................... $ 2,230 $ 2,857
Accrued and other current liabilities.................................. 18,306 23,865
--------- ---------
Total current liabilities.......................................... 20,536 26,722

Deferred income taxes....................................................... 18,415 16,702
--------- ---------
Total liabilities.................................................. 38,951 43,424
--------- ---------

Commitments and Contingencies (See Note 7 to the Condensed
Consolidated Financials Statements)

Stockholders' equity:
Preferred stock, $.10 par value, 15,000 shares authorized, none issued...... -- --
Class A common stock, $.01 par value, 100,000 shares authorized,
7,474 shares and 7,362 shares issued and outstanding at
March 31, 2001 and December 31, 2000, respectively..................... 74 73
Class B common stock, $.01 par value, 25,000 shares authorized,
11,291 shares issued and outstanding at March 31, 2001 and
December 31, 2000, respectively........................................ 113 113
Additional paid-in-capital.................................................. 30,373 29,094
Retained earnings........................................................... 42,450 36,886
Cumulative translation adjustment........................................... (166) (50)
--------- ---------
Total stockholders' equity......................................... 72,844 66,116
--------- ---------
Total liabilities and stockholders' equity......................... $ 111,795 $ 109,540
========= =========

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.

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COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)

FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
2001 2000
--------- ---------

Cash flows from operating activities:
Net income................................................................. $ 5,565 $ 3,461
Adjustments to reconcile net income to net cash provided
by / (used in) operating activities:
Depreciation and amortization..................................... 1,438 971
Provision for doubtful accounts................................... 755 13
Deferred income taxes............................................. 1,713 1,639
Tax benefit related to option exercises....................... 523 30
Changes in assets and liabilities (increase) / decrease:
Trade accounts receivable......................................... 51 (4,589)
Other current assets.............................................. (2,366) (1,538)
Other assets...................................................... (35) (128)
Accounts payable.................................................. (627) 336
Accrued and other liabilities..................................... (5,559) (2,046)
--------- ---------
Net cash provided by / (used in) operating activities...................... 1,458 (1,851)
--------- ---------
Cash flows from investing activities:
Purchase of property and equipment......................................... (3,108) (793)
--------- ---------
Net cash provided by / (used in) investing activities...................... (3,108) (793)
--------- ---------

Cash flows from financing activities:
Proceeds from stock plans / compensatory grant............................. 756 351
Payments to related party.................................................. -- 8
--------- ---------
Net cash provided by / (used in) financing activities...................... 756 359
--------- ---------

Effect of currency translation............................................. (116) 4
--------- ---------

Increase / (decrease) in cash and cash equivalents ........................ (1,010) (2,281)
Cash and cash equivalents, beginning of year............................... 61,976 42,641
--------- ---------
Cash and cash equivalents, end of period.......................... $ 60,966 $ 40,360
========= =========

Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes.......................... $ 832 $ 227

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.

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COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)

NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

The accompanying unaudited condensed consolidated financial statements
included herein have been prepared by Cognizant Technology Solutions Corporation
(the "Company") in accordance with generally accepted accounting principles and
Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as
amended and should be read in conjunction with the Company's consolidated
financial statements (and notes thereto) included in the Company's 2000 Annual
Report on Form 10-K. In the opinion of the Company's management, all adjustments
considered necessary for a fair presentation of the accompanying condensed
consolidated financial statements have been included, and all adjustments are of
a normal and recurring nature. Operating results for the interim period are not
necessarily indicative of results that may be expected to occur for the entire
year. Certain prior period amounts have been reclassified to conform with the
2001 presentation.

On February 11, 2000, the Board of Directors declared a 2-for-1 stock split
effected by a 100% dividend payable on March 16, 2000 to stockholders of record
on March 2, 2000. The stock split has been reflected in the accompanying
financial statements, and all applicable references as to the number of common
shares and per share information have been restated. Stockholder equity accounts
have been restated to reflect the reclassification of an amount equal to the par
value of the increase in issued common shares from the additional
paid-in-capital account to the common stock accounts.

NOTE 2 - INVESTMENT

In June 2000, the Company announced a strategic relationship with Trident
Capital, a leading venture capital firm, to jointly invest in emerging
e-business service and technology companies. In accordance with this strategy,
the Company invested approximately $2,000 in Questra Corporation, an e-business
consulting firm headquartered in Rochester, New York, in return for a 5.8%
equity interest. Trident Capital also independently made a direct investment in
Questra Corporation. The Company's investment is being accounted for under the
cost basis of accounting.

- 5 -

NOTE 3 - COMPREHENSIVE INCOME:

The Company's Comprehensive Income consists of net income and foreign
currency translation adjustments. Accumulated balances of Cumulative Translation
Adjustments, as of March 31, 2001 and 2000 are as follows:

Cumulative
Translation
Adjustment
----------
Balance, December 31, 2000................... $ (50)
Period Net Change............................ (116)
----------
Balance, March 31, 2001...................... $ (166)
=========

Balance, December 31, 1999................... $ (9)
Period Net Change............................ 4
---------
Balance, March 31, 2000...................... $ (5)
=========

NOTE 4 - RELATED PARTY TRANSACTIONS:

As of March 31, 2001, IMS Health Incorporated ("IMS Health") owned
approximately 60.2% of the outstanding Common Stock of the Company (representing
all of the Company's Class B Common Stock) and held approximately 93.8% of the
combined voting power of the Company's Common Stock.

IMS Health currently provides the Company with certain administrative
services including payroll and payables processing, e-mail, tax planning and
compliance and permits the Company to participate in certain of IMS Health's
business insurance plans. In 2000, the Company initiated its own employee
benefit plans for its employees. Costs for these services for all periods prior
to the IPO were allocated to the Company based on utilization of certain
specific services. Services provided subsequent to the IPO were performed under
an intercompany services agreement with IMS Health. Total costs in connection
with these services were approximately $110 and $26 for the three-month periods
ended March 31, 2001 and 2000, respectively.

Other related party disclosures are included in Note 6 to the Condensed
Consolidated Financial Statements.

NOTE 5 - ADOPTION OF STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS:

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derivative may be specifically designated as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variability in cash flows
attributable to a particular risk, or (c) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available for sale security and a forecasted transaction. In June
2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities, an amendment of FASB Statement No.
133", which amends certain provisions of SFAS No. 133. As a result of SFAS No.
137, the Company has implemented SFAS No. 133 and the corresponding amendments
of SFAS No. 138 for the fiscal quarter ended March 31, 2001. There was no
material impact on the Company's results of operations, financial position or
cash flows as a result of the adoption of these pronouncements.

NOTE 6 - SEGMENT INFORMATION

The Company delivers full life cycle solutions to complex software
development and maintenance challenges that companies face as they transition to
e-business. These services are delivered through the use of a seamless on-site
and offshore consulting project team. The Company's primary service offerings
include: application development and integration; application management;
re-engineering; and mass change. North American operations consist primarily of
software development and maintenance consulting services in the United States
and Canada. European operations consist primarily of software development and
maintenance consulting services principally in the United Kingdom and Germany.
Asian operations consist primarily of software development and maintenance
consulting services principally in India. Information about the Company's
operations and total assets in North America, Europe and Asia for the three
month period ended March 31, 2001 and 2000 are presented in accordance with SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information,"
as follows:

THREE MONTHS ENDED
------------------
MARCH 31,
---------
2001 2000
REVENUES (1) ---- ----
North America............... $ 37,233 $ 22,575
Europe...................... 5,831 4,217
Asia........................ 340 278
-------- --------
Consolidated................ $ 43,404 $ 27,070
======== ========

OPERATING INCOME (1)
North America............... $ 7,196 $ 4,272
Europe...................... 1,127 798
Asia........................ 66 53
-------- --------
Consolidated................ $ 8,389 $ 5,123
======== ========

AS OF MARCH 31,
---------------
2001 2000
IDENTIFIABLE ASSETS ---- ----
North America............... $ 73,291 $ 46,111
Europe...................... 6,241 3,841
Asia........................ 32,263 22,857
-------- --------
Consolidated................ $111,795 $ 72,809
======== ========

(1) Revenues and resulting operating income are attributed to regions based
upon customer location.

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In the first quarter of 2001, sales to one related party customer accounted
for 7.9% of revenues and one third-party customer accounted for 10.2% of
revenues. In the first quarter of 2000, sales to one related party customer
accounted for 13.0% of revenues and one third-party customer accounted for 10.9%
of revenues.

NOTE 7 - CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the outcome of such
claims and legal actions, if decided adversely, is not expected to have a
material adverse effect on the Company's quarterly or annual operating results,
cash flows, or consolidated financial position. Additionally, many of the
Company's engagements involve projects that are critical to the operations of
its customers' business and provide benefits that are difficult to quantify. Any
failure in a customer's computer system could result in a claim for substantial
damages against the Company, regardless of the Company's responsibility for such
failure. Although the Company attempts to contractually limit its liability for
possible damages arising from negligent acts, errors, mistakes, or omissions in
rendering its software development and maintenance services, there can be no
assurance that the limitations of liability set forth in its contracts will be
enforceable in all instances or will otherwise protect the Company from
liability for damages. Although the Company has general liability insurance
coverage, including coverage for errors or omissions, there can be no assurance
that such coverage will continue to be available on reasonable terms or will be
available in sufficient amounts to cover one or more large claims, or that the
insurer will not disclaim coverage as to any future claim. The successful
assertion of one or more large claims against the Company that exceed available
insurance coverage or changes in the Company's insurance policies, including
premium increases or the imposition of large deductible or co-insurance
requirements, could have a material adverse effect on the Company's business,
results of operations and financial condition.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

GENERAL

Cognizant Technology Solutions Corporation (the "Company") delivers
high-quality, cost-effective, full life cycle solutions to complex software
development and maintenance problems that companies face as they transition to
e-business. These services are delivered through the use of a seamless on-site
and offshore consulting project team. The Company's primary service offerings
include:

o application development and integration;

o application management; and

o re-engineering.

The Company began its software development and maintenance services
business in early 1994, as an in-house technology development center for The Dun
& Bradstreet Corporation and its operating units. In 1996, the Company, along
with Erisco, IMS International, Nielsen Media Research, Pilot Software and Sales
Technologies and certain other entities, plus a majority interest in Gartner
Group were spun-off from The Dun & Bradstreet Corporation to form a new company,
Cognizant Corporation. In 1997, the Company purchased the 24.0% minority
interest in its Indian subsidiary from a third party for $3.4 million, making
the Indian subsidiary wholly owned by the Company.

In June 1998, the Company completed its initial public offering. On June
30, 1998, a majority interest in the Company, Erisco, IMS International and
certain other entities were spun-off from Cognizant Corporation to form IMS
Health. At March 31, 2001 IMS Health owned approximately 60.2% of the
outstanding stock of the Company and held approximately 93.8% of the combined
voting power of the Company's common stock.

On February 11, 2000, the Board of Directors declared a 2-for-1 stock split
effected by a 100% dividend payable on March 16, 2000 to stockholders of record
on March 2, 2000. The stock split has been reflected in the accompanying
consolidated financial statements, and all applicable references as to the
number of common shares and per share information have been restated.
Appropriate adjustments have been made in the exercise price and number of
shares subject to stock options. Stockholder equity accounts have been restated
to reflect the reclassification of an amount equal to the par value of the
increase in issued common shares from the additional paid-in-capital account to
the common stock accounts.

On May 23, 2000, the stockholders of the Company approved an increase in
the number of authorized Class B common stock from 15,000,000 shares to
25,000,000 shares.

The Company's services are performed on either a time-and-materials or
fixed-price basis. Revenues related to time-and-materials contracts are
recognized as the service is performed. Revenues related to fixed-price
contracts are recognized using the percentage-of-

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completion method of accounting, under which the sales value of performance,
including earnings thereon, is recognized on the basis of the percentage that
each contract's incurred cost to date bears to the total estimated cost.
Estimates are subject to adjustment as a project progresses to reflect changes
in expected completion costs or dates. The cumulative impact of any revision in
estimates of the percentage of work completed is reflected in the financial
reporting period in which the change in the estimate becomes known, and any
anticipated losses are recognized immediately. Since the Company bears the risk
of cost over-runs and inflation associated with fixed-price projects, the
Company's operating results may be adversely affected by significant changes in
estimates of contract completion costs and dates.

The statements contained in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements (within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended) that involve risks and
uncertainties. Such forward-looking statements may be identified by, among other
things, the use of forward-looking terminology such as "believes," "expects,"
"may," "will," "should" or "anticipates" or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy that
involve risks and uncertainties. From time to time, the Company or its
representatives have made or may make forward-looking statements, orally or in
writing. Such forward-looking statements may be included in various filings made
by the Company with the Securities and Exchange Commission, or press releases or
oral statements made by or with the approval of an authorized executive officer
of the Company. These forward-looking statements, such as statements regarding
anticipated future revenues, contract percentage completions, capital
expenditures, and other statements regarding matters that are not historical
facts, involve predictions. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Potential risks and uncertainties that
could affect the Company's future operating results include, but are not limited
to: (i) the significant fluctuations of the Company's quarterly operating
results caused by a variety of factors, many of which are not within the
Company's control, including (a) the number, timing, scope and contractual terms
of software development and maintenance projects, (b) delays in the performance
of projects, (c) the accuracy of estimates of costs, resources and time to
complete projects, (d) seasonal patterns of the Company's services required by
customers, (e) levels of market acceptance for the Company's services, and (f)
the hiring of additional staff; (ii) changes in the Company's billing and
employee utilization rates; (iii) the Company's ability to manage its growth
effectively, which will require the Company (a) to increase the number of its
personnel, particularly skilled technical, marketing and management personnel,
and (b) to continue to develop and improve its operational, financial,
communications and other internal systems, both in the United States and India;
(iv) the Company's limited operating history with unaffiliated customers; (v)
the Company's reliance on key customers and large projects; (vi) the highly
competitive nature of the markets for the Company's services; (vii) the
Company's ability to successfully address the continuing changes in information
technology, evolving industry standards and changing customer objectives and
preferences; (viii) the Company's reliance on the continued services of its key
executive officers and leading technical personnel; (ix) the Company's ability
to attract and retain a sufficient number of highly skilled employees in the
future; (x) the Company's ability to protect its intellectual property rights;
and (xi) general economic conditions. The Company's actual results may differ
materially from the results disclosed in such forward-looking statements.

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RESULTS OF OPERATIONS

The following table sets forth certain results of operations as a
percentage of total revenue:

THREE MONTHS ENDED
MARCH 31,
---------------------
2001 2000
---- ----

Total revenues....................................... 100.0% 100.0%
Cost of revenues..................................... 51.5 51.5
------ ------
Gross profit...................................... 48.5 48.5
Selling, general and administrative expense.......... 25.8 26.0
Depreciation and amortization expense................ 3.3 3.6
------ ------
Income from operations............................ 19.3 18.9
Other (expense) income:
Interest income................................... 1.7 1.9
Other (expense) income............................ (0.5) (0.4)
------ ------
Total other income 1.2 1.5
------ ------
Income before provision for income taxes............. 20.5 20.4
Provision for income taxes........................... (7.7) (7.6)
------ ------
Net income .......................................... 12.8% 12.8%
====== ======

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

Revenue. Revenue increased by 60.3%, or $16.3 million, from $27.1 million
during the three months ended March 31, 2000 to $43.4 million during the three
months ended March 31, 2001. This increase resulted primarily from a $16.8
million increase in application development and integration, application
management, reengineering and other services from $26.6 million during the three
months ended March 31, 2000 to $43.4 million during the three months ended March
31, 2001. Partially offsetting this increase was an approximately $0.5 million
decrease in Year 2000 Compliance Services from $0.5 million during the three
months ended March 31, 2000 to $0 million during the three months ended March
31, 2001. The percentage of revenues derived from unrelated parties increased
from 87.0% during the three months ended March 31, 2000 to 92.1% during the
three months ended March 31, 2001. This increase resulted primarily from the
Company's continued efforts to pursue unaffiliated third-party customers and
expand service offerings to existing unaffiliated customers. For statement of
operations purposes, revenues from related parties only include revenues
recognized during the period in which the related party was affiliated with the
Company. In the first quarter of 2001, sales to one related party customer
accounted for 7.9% of revenues and one third-party customer accounted for 10.2%
of revenues. In the first quarter of 2000, sales to one related party customer
accounted for 13.0% of revenues and one third-party customer accounted for 10.9%
of revenues.

Gross profit. The Company's cost of revenues consists primarily of the cost
of salaries, payroll taxes, benefits, immigration and travel for technical
personnel, and the cost of sales commissions. The Company's cost of revenues
increased by 60.5%, or approximately $8.4 million, from approximately $13.9
million during the three months ended March 31, 2000 to approximately $22.4
million during the three months ended March 31, 2001. The increase was

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due primarily to the increased cost resulting from the increase in the number of
the Company's technical professionals from approximately 2,140 employees at
March 31, 2000 to more than 2,950 employees at March 31, 2001. The increased
number of the Company's technical professionals is a direct result of greater
demand for the Company's services. The Company's gross profit increased by
60.2%, or approximately $7.9 million, from approximately $13.1 million during
the three months ended March 31, 2000 to approximately $21.0 million during the
three months ended March 31, 2001. Gross profit margin remained constant at
48.5% of revenues in each of the three months ended March 31, 2000 and 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses consist primarily of salaries, employee benefits,
travel, promotion, communications, management, finance, administrative and
occupancy costs as well as depreciation and amortization expense. Selling,
general and administrative expenses, including depreciation and amortization,
increased by 57.9%, or approximately $4.6 million, from approximately $8.0
million during the three months ended March 31, 2000 to approximately $12.6
million during the three months ended March 31, 2001, and decreased as a
percentage of revenue from 29.6% to 29.1%, respectively. The dollar increase in
such expenses was primarily due to expenses incurred to expand the Company's
sales and marketing activities and increased infrastructure expenses to support
the Company's revenue growth. The decrease in such expenses as a percentage of
revenue resulted from the Company's increased volume of revenue.

Income from Operations. Income from operations increased 63.8%, or
approximately $3.3 million, from approximately $5.1 million during the three
months ended March 31, 2000 to approximately $8.4 million during the three
months ended March 31, 2001, representing 18.9% and 19.3% of revenues,
respectively. The increase in operating margin was primarily due to the
increased third-party revenue and the shift toward newer higher margin customer
services.

Other Income. Other income consists primarily of interest income offset, in
part, by foreign currency exchange losses. Interest income increased by $241,000
from $505,000 during the three months ended March 31, 2000 to $746,000 during
the three months ended March 31, 2001. The increase in such interest income was
attributable primarily to generally higher operating cash balances. The Company
recognized a net foreign currency exchange loss of $99,000 and $245,000 during
the three months ended March 31, 2000 and 2001, respectively, as a result of the
effect of changing exchange rates on the Company's transactions.

Provision for Income Taxes. The provision for income taxes increased from
approximately $2.1 million in the three months ended March 31, 2000 to
approximately $3.3 million in the three months ended March 31, 2001, with an
effective tax rate of 37.4% in each period.

Net Income. Net income increased from approximately $3.5 million for the
three months ended March 31, 2000 to approximately $5.6 million for the three
months ended March 31, 2001, representing 12.8% of revenues in each period.

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LIQUIDITY AND CAPITAL RESOURCES

Historically, through the date of the IPO, the Company's primary sources of
funding had been cash flow from operations and intercompany cash transfers with
its majority owner and controlling parent company Cognizant Corporation and IMS
Health. In June 1998, the Company consummated its initial public offering of
5,834,000 (2,917,000 pre-split) shares of its Class A Common Stock at a price to
the public of $5.00 ($10.00 pre-split) per share, of which 5,000,000 (2,500,000
pre-split) shares were issued and sold by the Company and 834,000 (417,000
pre-split) shares were sold, at that time, by Cognizant Corporation. The net
proceeds to the Company from the offering were approximately $22.4 million after
$843,000 of direct expenses. The funds received by the Company from the IPO were
invested in short-term, investment grade, interest bearing securities, after the
Company used a portion of the net proceeds to repay approximately $6.6 million
of then-existing non-trade related party balances to Cognizant Corporation. The
Company has used and plans to use the remainder of the net proceeds from the
offering as well as other cash for (i) expansion of existing operations,
including the Company's offshore software development centers; (ii) continued
development of new service lines and possible acquisitions of related
businesses; and (iii) general corporate purposes, including working capital.

Net cash provided by operating activities was approximately $1.5 million
during the three months ended March 31, 2001 as compared to net cash used in
operating activities of approximately $1.9 million during the three months ended
March 31, 2000. The increase results primarily from a lower level of trade
accounts receivables and increased net income, partially offset by larger
decreases in accrued liabilities and accounts payable versus the prior period.
Trade accounts receivable, net of allowance, decreased from $19.2 million at
December 31, 2000 to $18.4 million at March 31, 2001 due to increased collection
activity. The Company monitors turnover, aging and the collection of accounts
receivable through the use of management reports which are prepared on a
customer basis and evaluated by the Company's finance staff. At March 31, 2001,
the Company's day's sales outstanding, including unbilled receivables, was
approximately 50 days.

The Company's investing activities used net cash of approximately $3.1
million for the three months ended March 31, 2001, as compared to net cash used
of approximately $0.8 million for the same period in 2000. The increase in cash
used primarily reflects an increase in purchases of property and equipment for
the Company's offshore development centers.

The Company's financing activities provided net cash of approximately
$756,000 for the three months ended March 31, 2001, as compared to net cash
provided by financing activities of approximately $359,000 for the same period
in 2000. The increase in net cash provided by financing activities was primarily
related to a higher level of cash proceeds from the exercise of stock options
during 2001, as compared to the prior year.

As of March 31, 2001, the Company had no significant third-party debt.

The Company had working capital of $68.2 million at March 31, 2001 and
$61.5 million at December 31, 2000.

The Company believes that its available funds and the cash flows expected
to be generated from operations, will be adequate to satisfy its current and
planned operations and needs through at least the next 12 months.

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FOREIGN CURRENCY TRANSLATION

The assets and liabilities of the Company's Canadian and European
subsidiaries are translated into U.S. dollars at current exchange rates and
revenues and expenses are translated at daily exchange rates. The resulting
translation adjustments are recorded in a separate component of stockholders'
equity. For the Company's Indian subsidiary, the functional currency is the U.S.
dollar since its sales are made primarily in the United States, the sales price
is predominantly in U.S. dollars and there is a high volume of intercompany
transactions denominated in U.S. dollars between the Indian subsidiary and its
U.S. affiliates. Non-monetary assets and liabilities are translated at
historical exchange rates, while monetary assets and liabilities are translated
at current exchange rates. A portion of the Company's costs in India are
denominated in local currency and subject to exchange fluctuations, which to
date, has not had any material adverse effect on the Company's results of
operations.

EFFECTS OF INFLATION

The Company's most significant costs are the salaries and related benefits
for its programming staff and other professionals. Competition in India and the
United States for professionals with advanced technical skills necessary to
perform the services offered by the Company have caused wages to increase at a
rate greater than the general rate of inflation. As with other IT service
providers, the Company must adequately anticipate wage increases, particularly
on its fixed-price contracts. There can be no assurance that the Company will be
able to recover cost increases through increases in the prices that it charges
for its services in the United States and elsewhere.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of the FASB Statement No. 133, an Amendment of FASB Statement No. 133". SFAS No.
137 defers the effective date of SFAS No. 133, which establishes accounting and
reporting standards for derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS No.
133 requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. If certain conditions are met, a derivative may be specifically
designated as (a) a hedge of the exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, (b) a hedge of
the exposure to variability in cash flows attributable to a particular risk, or
(c) a hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available for sale security and a
forecasted transaction. In June 2000, the FASB issued SFAS No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities an amendment
of FASB Statement No. 133", which amends certain provisions of SFAS No. 133. As
a result of SFAS No. 137, the Company has implemented SFAS No. 133 and the
corresponding amendments of SFAS No. 138 for the fiscal quarter ended March 31,
2001. There was no material impact on the Company's results of operations,
financial position or cash flows as a result of the adoption of these
pronouncements.

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits.

None.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the quarter for which
this report on Form 10-Q is filed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Cognizant Technology Solutions Corporation

DATE: May 11, 2001 By: /s/ Wijeyaraj Mahadeva
-------------------------------
Wijeyaraj Mahadeva,
Chairman of the Board and Chief Executive
Officer (Principal Executive Officer)

DATE: May 11, 2001 By: /s/ Gordon Coburn
-------------------------------
Gordon Coburn,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)

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