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 June 30, 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 July 27, 2001:

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

Class A Common Stock, par 7,824,594
value $.01 per share

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

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

TABLE OF CONTENTS
-----------------

Page
----
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
and Six Months Ended June 30, 2001 and 2000............... 2

Condensed Consolidated Statements of Financial
Position (Unaudited) as of June 30, 2001 and
December 31, 2000 ........................................ 3

Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended June 30, 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 4. Submission of Matters to a Vote of Security Holders....... 17

Item 6. Exhibits and Reports on Form 8-K.......................... 17

SIGNATURES........................................................ 18

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

- 1 -

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- --------------------------
2001 2000 2001 2000
--------- ---------- ---------- ---------

Revenues........................................ $ 40,414 $ 28,052 $ 80,400 $ 51,616
Revenues - related party........................ 4,997 3,749 8,415 7,255
--------- ---------- ---------- ---------
Total revenues......................... 45,411 31,801 88,815 58,871

Cost of revenues................................ 23,381 16,376 45,750 30,315
--------- ---------- ---------- ---------
Gross profit.................................... 22,030 15,425 43,065 28,556

Selling, general and administrative expenses.... 11,657 8,358 22,865 15,395
Depreciation and amortization expense........... 1,499 1,026 2,937 1,997
--------- ---------- ---------- ---------
Income from operations.......................... 8,874 6,041 17,263 11,164

Other income:
Interest income.............................. 617 542 1,363 1,047
Other income/(expense) - net................. (150) (166) (395) (264)
---------- ---------- ---------- ---------
Total other income..................... 467 376 968 783
--------- ---------- ---------- ---------

Income before provision for income taxes........ 9,341 6,417 18,231 11,947
Provision for income taxes...................... (3,494) (2,400) (6,819) (4,468)
---------- ---------- ---------- ---------
Net income...................................... $ 5,847 $ 4,017 $ 11,412 $ 7,479
========= ========== ========== =========

Basic earnings per share........................ $ 0.31 $ 0.22 $ 0.61 $ 0.40
========= ========== ========== =========
Diluted earnings per share...................... $ 0.29 $ 0.20 $ 0.56 $ 0.37
========= ========== ========== =========

Weighted average number of common shares
outstanding - Basic.......................... 18,913 18,535 18,801 18,518
========= ========== ========== =========
Dilutive Effect of Shares Issuable as of
Period-End Under Stock Option Plans.......... 1,551 1,640 1,528 1,676
========= ========== ========== =========
Weighted average number of common shares
outstanding - Diluted........................ 20,464 20,175 20,329 20,194
========= ========== ========== =========

Comprehensive Income:
Net Income...................................... $ 5,847 $ 4,017 $ 11,412 $ 7,479

Foreign Currency Translation Adjustments........ 7 (29) (109) (25)
--------- ----------- ---------- ---------
Other Comprehensive Income/(Loss), net of Tax... $ 7 $ (29) $ (109) $ (25)
========= =========== ========== =========

Comprehensive Income............................ $ 5,854 $ 3,988 $ 11,303 $ 7,454
========= ========== ========== =========

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

- 2 -

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

JUNE 30, DECEMBER 31,
2001 2000
------------ -----------
ASSETS

Current assets:
Cash and cash equivalents............................................ $ 67,659 $ 61,976
Trade accounts receivable, net of allowance of $767 and $516,
respectively......................................................... 20,142 19,187
Trade accounts receivable-related party.............................. 3,081 1,361
Unbilled accounts receivable......................................... 4,322 1,941
Unbilled accounts receivable-related party........................... 34 --
Other current assets................................................. 4,483 3,758
------------ -----------
Total current assets............................................. 99,721 88,223
------------ -----------

Property and equipment, net of accumulated depreciation of $13,738 and
$10,997, respectively.................................................. 18,370 15,937
Goodwill, net............................................................. 1,036 1,195
Investments............................................................... 1,955 1,955
Other assets.............................................................. 2,201 2,230
------------ -----------
Total assets..................................................... $ 123,283 $ 109,540
============ ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 1,990 $ 2,849
Accounts payable-related party....................................... 30 8
Accrued and other current liabilities................................ 18,171 23,865
------------ -----------
Total current liabilities........................................ 20,191 26,722

Deferred income taxes..................................................... 20,139 16,702
------------ -----------
Total liabilities................................................ 40,330 43,424
------------ -----------

Commitments and Contingencies
(See Note 7 to the Condensed Consolidated Financial 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,
7,775 shares and 7,362 shares issued and outstanding at
June 30, 2001 and December 31, 2000, respectively...................... 78 73
Class B common stock, $.01 par value, 25,000 shares authorized,
11,290 shares issued and outstanding at June 30, 2001 and
December 31, 2000, respectively........................................ 113 113
Additional paid-in-capital................................................ 34,623 29,094
Retained earnings......................................................... 48,298 36,886
Cumulative translation adjustment......................................... (159) (50)
------------- -----------
Total stockholders' equity....................................... 82,953 66,116
------------ -----------
Total liabilities and stockholders' equity....................... $ 123,283 $ 109,540
============ ===========

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

- 3 -

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

FOR THE SIX MONTHS ENDED JUNE 30,
---------------------------------
2001 2000
---- ----

Cash flows from operating activities:
Net income................................................................ $ 11,412 $ 7,479
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.................................... 2,937 1,997
Provision for doubtful accounts.................................. 1,081 53
Deferred income taxes............................................ 3,437 3,504
Tax benefit related to option exercises.......................... 2,421 794
Changes in assets and liabilities:
Trade accounts receivable........................................ (3,756) (6,018)
Other current assets............................................. (3,140) (2,221)
Other assets..................................................... 104 (436)
Accounts payable................................................. (859) 88
Accrued and other liabilities.................................... (5,694) 1,265
---------- ----------
Net cash provided by operating activities................................. 7,943 6,505
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment........................................ (5,286) (2,874)
Investments............................................................... -- (1,955)
---------- ----------
Net cash used in investing activities..................................... (5,286) (4,829)
---------- ----------

Cash flows from financing activities:
Proceeds from issued shares/contributed capital........................... 3,113 917
Payments to related party................................................. 22 --
---------- ----------
Net cash provided by financing activities................................ 3,135 917
---------- ----------

Effect of currency translation........................................... (109) (25)
---------- ----------

Increase in cash and cash equivalents ................................... 5,683 2,568
Cash and cash equivalents, beginning of year............................. 61,976 42,641
---------- -----------
Cash and cash equivalents, end of period......................... $ 67,659 $ 45,209
========== ==========

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

- 4 -

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.

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 made a direct investment in Questra
Corporation. The Company's investment is being accounted for under the cost
basis of accounting.

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 June 30, 2001 and 2000 are as follows:

Cumulative
Translation
Adjustment
Balance, December 31, 2000................... $ (50)
Period Change................................ (109)
-------
Balance, June 30, 2001....................... $ (159)
======

Balance, December 31, 1999................... $ (9)
Period Change................................ (25)
-------
Balance, June 30, 2000....................... $ (34)
======

- 5 -

NOTE 4 - RELATED PARTY TRANSACTIONS

As of June 30, 2001, IMS Health Incorporated ("IMS Health") owned
approximately 59.2% of the outstanding Common Stock of the Company (representing
all of the Company's Class B Common Stock) and held approximately 93.6% 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 IMS Health's insurance and
employee benefit plans. Costs for these services for all periods prior to the
IPO were allocated to the Company based on utilization of certain specific
services. All subsequent services were performed under an intercompany services
agreement with IMS Health. Total costs in connection with these services were
approximately $220 and $71 for the six-month periods ended June 30, 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

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 adoption of these
pronouncements.

- 6 -

of a business acquisition. Goodwill will no longer be amortized, rather, tested
for impairment by comparing the asset's fair value to its carrying value. SFAS
No. 142 is effective January 1, 2002. Management is in the process of analyzing
and assessing the impact of the adoption of these statements.

NOTE 6 - SEGMENT INFORMATION

The Company delivers 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: 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 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 period ended June 30,
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 JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2001 2000 2001 2000
---- ---- ---- ----
REVENUES (1)
North America............ $ 39,063 $ 26,175 $ 76,296 $ 48,750
Europe................... 5,329 5,338 11,160 9,555
Asia..................... 1,019 288 1,359 566
-------- -------- -------- --------
Consolidated............. $ 45,411 $ 31,801 $ 88,815 $ 58,871
======== ======== ======== ========

OPERATING INCOME (1)
North America............ $ 7,634 $ 4,972 $ 14,830 $ 9,244
Europe................... 1,041 1,014 2,168 1,812
Asia..................... 199 55 265 108
-------- -------- ------- -------
Consolidated............. $ 8,874 $ 6,041 $ 17,263 $ 11,164
======== ======== ======== ========

AS OF JUNE 30,
--------------
IDENTIFIABLE ASSETS 2001 2000
---- ----
North America............ $ 80,918 $ 53,556
Europe................... 5,841 4,901
Asia..................... 36,524 24,591
-------- --------
Consolidated............. $123,283 $ 83,048
======== ========
- ------------
(1) Revenues and resulting operating income are attributed to regions based upon
customer location.

In the second quarter of 2001, sales to one related party customer
accounted for 11.0% of revenues. In the second quarter of 2000, sales to one
related party customer accounted for 11.8% of revenues and one third-party
customer accounted for 10.1% of revenues. During the six months ended June 30,
2000, sales to one related party customer accounted for 12.3% of revenues and
one third-party customer accounted for 10.5% of revenues. During the six months
ended June 30, 2001, sales to one related party customer accounted for 9.5% of
revenues.

- 7 -

NOTE 7 - CONTINGENCIES AND COMMITMENTS

As of June 30, 2001 the Company has entered into fixed capital commitments
related to its India development center expansion program of approximately $7.7
million. The multi-phase program will encompass the construction of three fully
owned development centers containing approximately 600,000 sq. ft. of space in
Pune, Chennai and Calcutta. Total costs related to this program are expected to
be approximately $32.6 million, of which $3.5 million has been spent to date.

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
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.

- 8 -

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

GENERAL

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 June 30, 2001, IMS Health owned approximately 59.2% of the
outstanding stock of the Company and held approximately 93.6% of the combined
voting power of the Company's common stock.

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-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 changes in estimates of contract completion costs
and dates.

- 9 -

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.

- 10 -

RESULTS OF OPERATIONS

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

THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2001 2000 2001 2000
---- ---- ---- ----

Total revenues............................ 100.0% 100.0% 100.0% 100.0%
Cost of revenues.......................... 51.5 51.5 51.5 51.5
----- ----- ----- -----
Gross profit......................... 48.5 48.5 48.5 48.5
Selling, general and administrative
expense................................... 25.7 26.3 25.7 26.1
Depreciation and amortization
expense................................... 3.3 3.2 3.4 3.4
----- ----- ----- -----
Income from operations................ 19.5 19.0 19.4 19.0
Other (expense) income:
Interest income....................... 1.4 1.7 1.5 1.7
Other (expense) income................ (0.3) (0.5) (0.4) (0.4)
----- ----- ----- -----
Total other income........................ 1.1 1.2 1.1 1.3
----- ----- ----- -----
Income before provision for
income taxes........................... 20.6 20.2 20.5 20.3
Provision for income taxes................ (7.7) (7.6) (7.7) (7.6)
----- ----- ----- -----
Net income ............................... 12.9% 12.6% 12.8% 12.7%
===== ===== ===== =====

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000

Revenue. Revenue increased by 42.8%, or $13.6 million, from $31.8 million
during the three months ended June 30, 2000 to $45.4 million during the three
months ended June 30, 2001. This increase resulted primarily from an increase in
application management services. The percentage of revenues derived from
unrelated parties increased from 88.2% during the three months ended June 30,
2000 to 89.0% during the three months ended June 30, 2001. This increase
resulted primarily from the Company's continued efforts to pursue unaffiliated
third-party customers. For statement of operations purposes, revenues from
related parties only include revenues recognized during the period in which the
related party was directly affiliated with the Company. In the second quarter of
2001, sales to one related party customer accounted for 11.0% of revenues. In
the second quarter of 2000, sales to one related party customer accounted for
11.8% of revenues and one third-party customer accounted for 10.1% 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 42.8%, or approximately $7.0 million, from approximately $16.4
million during the three months ended June 30, 2000 to approximately $23.4
million during the three months ended June 30, 2001. The increase was due
primarily to the increased cost resulting from the increase in the number of the
Company's

- 11 -

technical professionals from approximately 2,300 employees at June 30, 2000 to
approximately 3,200 employees at June 30, 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 42.8%, or
approximately $6.6 million, from approximately $15.4 million during the three
months ended June 30, 2000 to approximately $22.0 million during the three
months ended June 30, 2001. Gross profit margin was 48.5% of revenues during the
three months ended June 30, 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 40.2%, or approximately $3.8 million, from approximately $9.4
million during the three months ended June 30, 2000 to approximately $13.2
million during the three months ended June 30, 2001, and decreased as a
percentage of revenue from 29.5% to 29.0%. 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 46.9%, or
approximately $2.8 million, from approximately $6.0 million during the three
months ended June 30, 2000 to approximately $8.9 million during the three months
ended June 30, 2001, representing 19.0% and 19.5% 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 $75,000
from $542,000 during the three months ended June 30, 2000 to $617,000 during the
three months ended June 30, 2001. The increase in such interest income was
attributable primarily to generally higher operating cash balances, offset, in
part, by declining interest rates. The Company recognized a net foreign currency
exchange loss of $150,000 during the three months ended June 30, 2001 as
compared to a loss of $170,000 in the prior period, 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 $2.4 million in the three months ended June 30, 2000 to
approximately $3.5 million in the three months ended June 30, 2001, with an
effective tax rate of 37.4% for the three months ended June 30, 2000 and 2001.

Net Income. Net income increased from approximately $4.0 million for the
three months ended June 30, 2000 to approximately $5.8 million for the three
months ended June 30, 2001, representing 12.6% and 12.9% of revenues,
respectively.

- 12 -

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

Revenue. Revenue increased by 50.9%, or approximately $29.9 million, from
approximately $58.9 million during the six months ended June 30, 2000 to
approximately $88.8 million during the six months ended June 30, 2001. This
increase resulted primarily from an increase in application development and
integration, application management, reengineering and other services. The
percentage of revenues derived from unrelated parties increased from 87.7%
during the six months ended June 30, 2000 to 90.5% during the six months ended
June 30, 2001. This increase resulted primarily from the Company's continued
efforts to pursue unaffiliated third-party customers. For statement of
operations purposes, revenues from related parties only include revenues
recognized during the period in which the related party was directly affiliated
with the Company. During the six months ended June 30, 2001, sales to one
related party customer accounted for 9.5% of revenues. During the six months
ended June 30, 2000, sales to one related party customer accounted for 12.3% of
revenues and one third-party customer accounted for 10.5% of revenues.

Gross profit. The Company's cost of revenues increased by 50.9%, or
approximately $15.4 million, from approximately $30.3 million during the six
months ended June 30, 2000 to approximately $45.8 million during the six months
ended June 30, 2001. The increase was due primarily to increased costs resulting
from the increase in the number of the Company's technical professionals from
approximately 2,300 employees at June 30, 2000 to approximately 3,200 employees
at June 30, 2001. The Company's gross profit increased by 50.8%, or
approximately $14.5 million, from approximately $28.6 million during the six
months ended June 30, 2000 to approximately $43.1 million during the six months
ended June 30, 2001. Gross profit margin was 48.5% of revenues during the six
months ended June 30, 2000 and 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses, including depreciation and amortization, increased by
48.4%, or approximately $8.4 million, from approximately $17.4 million during
the six months ended June 30, 2000 to approximately $25.8 million during the six
months ended June 30, 2001, and decreased as a percentage of revenue from 29.5%
to 29.1%. The increase in such expenses in absolute dollars 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 54.6%, or
approximately $6.1 million, from approximately $11.2 million during the six
months ended June 30, 2000 to approximately $17.3 million during the six months
ended June 30, 2001, representing 19.0% and 19.4% 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. Interest income increased by approximately $316,000 from
approximately $1.0 million during the six months ended June 30, 2000 to
approximately $1.4 million during the six months ended June 30, 2001. The
increase in such interest income was attributable primarily to generally higher
operating cash balances, offset, in part, by declining interest rates. The
Company recognized a net foreign currency exchange loss of $395,000 during the
six months

- 13 -

ended June 30, 2001 compared to a loss of $264,000 in the prior period, as a
result of changes in exchange rates on the Company's transactions.

Provision for Income Taxes. The provision for income taxes increased from
approximately $4.5 million for the six months ended June 30, 2000 to
approximately $6.8 million for the six months ended June 30, 2001, with an
effective tax rate of 37.4% for the six months ended June 30, 2000 and 2001.

Net Income. Net income increased from approximately $7.5 million for the
six months ended June 30, 2000 to approximately $11.4 million for the six months
ended June 30, 2001, representing 12.7% and 12.8% of revenues for the six months
ended June 30, 2000 and 2001, respectively.

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
Company's then owner and controlling parent company. 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
non-trade related party balances to Cognizant Corporation. The Company has used
and will continue to use the remainder of the net proceeds from the offering 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. At June 30, 2001 the Company had cash and
cash equivalents of $67.7 million.

Net cash provided by operating activities was approximately $7.9 million
during the six months ended June 30, 2001 as compared to net cash provided by
operating activities of approximately $6.5 million during the six months ended
June 30, 2000. The increase results primarily from increased net income and a
lower increase in accounts receivable partially offset by a decrease in accrued
and other liabilities. Trade accounts receivable, net of allowance, increased
from $20.5 million at December 31, 2000 to $23.2 million at June 30, 2001 due to
increased revenues. 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 June 30, 2001,
the Company's day's sales outstanding, including unbilled receivables, was
approximately 55 days.

The Company's investing activities used net cash of approximately $5.3
million for the six months ended June 30, 2001 as compared to net cash used of
approximately $4.8 million for the same period in 2000. The increase in 2001
compared to 2000 primarily reflects an increase in

- 14 -

purchases of property and equipment partially offset by the fact that there is
no comparable item in 2001 related to the Company's investment in Questra
Corporation in June 2000.

The Company's financing activities provided net cash of approximately $3.1
million for the six months ended June 30, 2001 as compared to net cash provided
by financing activities of approximately $917,000 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 and
employee stock purchase plan shares in 2001, as compared to the prior year. The
exercise of stock options and the purchase of employee stock purchase plan
shares resulted in an increase of approximately 412,000 shares in the Company's
outstanding Class A Common stock during the six months ended June 30, 2001.

As of June 30, 2001, the Company had no significant third-party debt.

The Company had working capital of $79.5 million at June 30, 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.

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 average monthly 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 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

- 15 -

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 2001, the FASB issued SFAS No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Intangible Assets". SFAS No. 141 requires companies
to account for acquisitions entered into after June 30, 2001 using the purchase
method and establishes criteria to be used in determining whether acquired
intangible assets are to be recorded separately from goodwill. This criterion is
to be applied to business combinations completed after June 30, 2001. SFAS No.
142 sets forth the accounting for goodwill and intangible assets after the
completion of a business acquisition. Goodwill will no longer be amortized,
rather, tested for impairment by comparing the asset's fair value to its
carrying value. SFAS No. 142 is effective January 1, 2002. Management is in the
process of analyzing and assessing the impact of the adoption of these
statements.

- 16 -

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Annual Meeting of Stockholders of the Company was held on May 30, 2001.

There were present at the meeting in person or by proxy stockholders
holding an aggregate of 6,636,809 shares of Class A Common Stock and an
aggregate of 11,290,900 shares of Class B Common Stock. Each share of Class A
Common Stock is entitled to one vote and each share of Class B Common Stock is
entitled to ten votes on any matter presented to the stockholders. The results
of the vote taken at such meeting with respect to each nominee for director were
as follows:

Common Stock Nominees For Withheld
--------------------- --- --------
Wijeyaraj Mahadeva 118,993,950 551,859
Robert W. Howe 119,474,992 70,817
John Klein 119,474,992 70,817
Venetia Kontogouris 119,474,992 70,817
David M. Thomas 118,993,250 552,559
James C. Malone 118,992,445 553,364
Robert E. Weissman 119,473,917 71,892

A vote was taken on the proposal to amend the 1999 Incentive Compensation
Plan (the "Incentive Plan") to increase the maximum number of shares of Class A
Common Stock available for issuance under the Incentive Plan from 3,000,000 to
6,000,000 shares and to reserve an additional 3,000,000 shares of Class A Common
Stock of the Company for issuance upon the exercise of stock options granted or
for the issuance of other awards granted under the Incentive Plan. Of the shares
present at the meeting in person or by proxy, 115,575,114 shares were voted in
favor of such proposal, 2,263,589 shares were voted against such proposal and
32,510 shares abstained from voting.

Finally, a vote was taken on the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the independent accountants of the Company for the
fiscal year ending December 31, 2001. Of the shares present at the meeting in
person or by proxy, 119,522,589 shares were voted in favor of such proposal,
19,350 shares were voted against such proposal and 3,870 shares of Common Stock
abstained from voting.

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

(a) Exhibits.

10.1 1999 Incentive Compensation Plan, as amended

(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.

- 17 -

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: August 10, 2001 By: /s/ Wijeyaraj Mahadeva
---------------------------------------
Wijeyaraj Mahadeva,
Chairman of the Board and Chief Executive
Officer (Principal Executive Officer)

DATE: August 10, 2001 By: /s/ Gordon Coburn
---------------------------------------
Gordon Coburn,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)

- 18 -