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 September 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 October 17, 2001:

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

Class A Common Stock, par
value $.01 per share 7,965,614

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

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 Nine Months Ended September 30, 2001 and 2000......... 2

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

Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Nine Months Ended September 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 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 Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----

Revenues.................................................... $ 40,403 $ 33,376 $ 120,803 $ 84,992
Revenues - related party.................................... 5,099 3,731 13,514 10,986
--------- ----------- ----------- -----------
Total revenues........................................... 45,502 37,107 134,317 95,978

Cost of revenues............................................ 23,109 19,110 68,859 49,425
--------- ----------- ----------- -----------
Gross profit................................................ 22,393 17,997 65,458 46,553

Selling, general and administrative
expenses................................................. 11,441 9,673 34,306 25,068
Depreciation and amortization expense....................... 1,629 1,245 4,566 3,242
--------- ----------- ----------- -----------
Income from operations...................................... 9,323 7,079 26,586 18,243

Other income (expense):
Interest income.......................................... 643 732 2,006 1,779
Other expense - net...................................... (209) (167) (604) (431)
--------- ----------- ----------- -----------
Total other income................................. 434 565 1,402 1,348
--------- ----------- ----------- -----------

Income before provision for income taxes.................... 9,757 7,644 27,988 19,591
Provision for income taxes.................................. (3,649) (2,859) (10,468) (7,327)
--------- ----------- ----------- -----------
Net income.................................................. $ 6,108 $ 4,785 $ 17,520 $ 12,264
========= =========== =========== ===========

Basic earnings per share.................................... $ 0.32 $ 0.26 $ 0.93 $ 0.66
========= =========== =========== ===========
Diluted earnings per share.................................. $ 0.30 $ 0.24 $ 0.86 $ 0.61
========= =========== =========== ===========

Weighted average number of common
shares outstanding - Basic............................... 19,184 18,584 18,896 18,538
========= =========== =========== ===========
Dilutive Effect of Shares Issuable as of Period-End
Under Stock Option Plans................................. 1,331 1,525 1,486 1,688
========= =========== =========== ===========
Weighted average number of common
shares outstanding - Diluted............................. 20,515 20,109 20,382 20,226
========= =========== =========== ===========

Comprehensive Income:
Net Income.................................................. $ 6,108 $ 4,785 $ 17,520 $ 12,264

Foreign Currency Translation Adjustments.................... 50 (20) (59) (45)
--------- ----------- ------------ -----------
Other Comprehensive Income/(Loss), net of Tax:.............. $ 50 $ (20) $ (59) $ (45)
========= =========== ============ ===========

Comprehensive Income........................................ $ 6,158 $ 4,765 $ 17,461 $ 12,219
========= =========== ============ ===========

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)

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

Current assets:
Cash and cash equivalents....................................................... $ 79,767 $ 61,976
Trade accounts receivable, net of allowance of $1,074 and
$516, respectively.............................................................. 19,006 19,187
Trade accounts receivable-related party......................................... 1,474 1,361
Unbilled accounts receivable.................................................... 6,449 1,941
Unbilled accounts receivable-related party...................................... 277 --
Other current assets............................................................ 4,291 3,758
----------- -----------
Total current assets........................................................ 111,264 88,223
----------- -----------

Property and equipment, net of accumulated depreciation of $15,308 and
$10,997, respectively.............................................................. 22,197 15,937
Goodwill, net........................................................................ 957 1,195
Investment........................................................................... 1,955 1,955
Other assets......................................................................... 2,200 2,230
----------- -----------
Total assets................................................................ $ 138,573 $ 109,540
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................................ $ 2,995 $ 2,849
Accounts payable-related party................................................ 16 8
Accrued and other current liabilities........................................... 20,689 23,865
----------- -----------
Total current liabilities................................................... 23,700 26,722

Deferred income taxes................................................................ 22,377 16,702
----------- -----------
Total liabilities........................................................... 46,077 43,424
----------- -----------

Commitments and Contingencies (Note 7)

Stockholders' equity:
Preferred stock, $.10 par value, 15,000 shares authorized, none issued............... -- --
Class A common stock, $.01 par value, 100,000 shares authorized,
7,962 shares and 7,362 shares issued and outstanding at
September 30, 2001 and December 31, 2000, respectively.......................... 80 73
Class B common stock, $.01 par value, 25,000 shares authorized,
11,290 shares issued and outstanding at September 30, 2001 and
December 31, 2000, respectively................................................ 113 113
Additional paid-in-capital........................................................... 38,006 29,094
Retained earnings.................................................................... 54,406 36,886
Cumulative translation adjustment.................................................... (109) (50)
----------- -----------
Total stockholders' equity.................................................. 92,496 66,116
----------- -----------
Total liabilities and stockholders' equity.................................. $ 138,573 $ 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 NINE MONTHS ENDED
SEPTEMBER 30,

2001 2000
---- ----

Cash flows from operating activities:
Net income........................................................................ $ 17,520 $ 12,264

Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................ 4,566 3,242
Provision for doubtful accounts.......................................... 1,388 269
Deferred income taxes.................................................... 5,675 5,065
Tax benefit related to option exercises.............................. 4,101 1,095
Changes in assets and liabilities:
Trade accounts receivable................................................ (1,320) (8,621)
Other current assets..................................................... (5,318) (2,264)
Other assets............................................................. 133 (473)
Accounts payable......................................................... 146 468
Accrued and other liabilities............................................ (3,176) 6,148
------------- -----------
Net cash provided by operating activities......................................... 23,715 17,193
------------- -----------
Cash flows from investing activities:
Purchases of property and equipment-net........................................... (10,691) (6,355)
Investment........................................................................ -- (1,955)
------------- -----------
Net cash used in investing activities............................................. (10,691) (8,310)
------------- -----------

Cash flows from financing activities:
Proceeds from issued shares/contributed capital................................... 4,818 1,357
Payments to related party......................................................... 8 --
------------- -----------
Net cash provided by financing activities......................................... 4,826 1,357
------------- -----------

Effect of currency translation.................................................... (59) (45)
------------- -----------

Increase in cash and cash equivalents ............................................ 17,791 10,195
Cash and cash equivalents, beginning of year...................................... 61,976 42,641
------------- -----------
Cash and cash equivalents, end of period.......................................... $ 79,767 $ 52,836
============= ===========

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 in
the United States 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 September 30, 2001 and September 30, 2000 are as follows:

Cumulative
Translation
Adjustment
Balance, December 31, 2000......................... $ (50)
Period Change...................................... (59)
------
Balance, September 30, 2001........................ $ (109)
======

Balance, December 31, 1999......................... $ (9)
Period Change...................................... (45)
------
Balance, September 30, 2000........................ $ (54)
======

-5-

NOTE 4 - RELATED PARTY TRANSACTIONS:

As of September 30, 2001, IMS Health Incorporated ("IMS Health") owned
approximately 58.6% of the outstanding Common Stock of the Company (representing
all of the Company's Class B Common Stock) and held approximately 93.4% 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, tax planning and compliance,
and permits the Company to participate in certain of 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 $330 and $162 for the nine-month periods ended September 30, 2001
and September 30, 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 2001, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("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, but will instead be tested for impairment by comparing the asset's
fair value to its carrying value. SFAS No. 142 is effective January 1, 2002. The
Company is in the process of analyzing and assessing the impact of the adoption
of these statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 144 eliminates the
requirement for discontinued operations to be measured on a net realizable value
basis and future operating losses to be recognized before they occur. Instead,
it requires that assets held for sale be valued at the lower of carrying amount
or fair value less cost to sell. SFAS 144 extends the reporting requirements for
discontinued operations to certain components of an entity. Under the provisions
of SFAS No. 144, spin-offs and exchanges of similar productive assets are
required to be recorded at the lower of carrying value or fair value and such
assets classified as held and used until they are disposed of. Any resultant
impairment loss is required to be recognized when the asset is disposed of. For
assets that are grouped when an entity is developing estimates of future cash
flows, SFAS No. 144 requires that the remaining useful life of the "primary
asset" be used for the entire group. In addition, SFAS No. 144 permits the use
of a probability-weighted approach in developing estimates of future cash flows
used to test for recoverability and in estimating fair value. The Company will
adopt SFAS No. 144 beginning January 1, 2002 and is currently evaluating the
impact of the adoption.

-6-

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; and
re-engineering. 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 September 30, 2001
and September 30, 2000 are presented in accordance with SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information," as
follows:

THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
REVENUES (1) 2001 2000 2001 2000
---- ---- ---- ----

North America............................ $ 39,432 $ 31,263 $ 115,729 $ 80,013
Europe................................... 5,665 5,530 16,824 15,085
Asia..................................... 405 314 1,764 880
----------- ----------- ------------- -----------
Consolidated............................. $ 45,502 $ 37,107 $ 134,317 $ 95,978
=========== =========== ============= ===========

OPERATING INCOME (1)
North America............................ $ 8,079 $ 5,963 $ 22,909 $ 15,207
Europe................................... 1,161 1,056 3,329 2,868
Asia..................................... 83 60 348 168
----------- ----------- ------------- -----------
Consolidated............................. $ 9,323 $ 7,079 $ 26,586 $ 18,243
=========== =========== ============= ===========

AS OF SEPTEMBER 30,
IDENTIFIABLE ASSETS 2001 2000
---- ----
North America............................ $ 89,576 $ 61,740
Europe................................... 5,946 6,177
Asia..................................... 43,051 27,461
----------- -----------
Consolidated............................. $ 138,573 $ 95,378
=========== ===========

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

In the third quarter of 2001, sales to one related party customer accounted
for 11.2% of revenues. In the third quarter of 2000, sales to one related party
customer accounted for 10.1% of revenues and one third-party customer accounted
for 11.1% of revenues. During the nine months ended September 30, 2001, sales to
one related party customer accounted for 10.1% of revenues.

-7-

During the nine months ended September 30, 2000, sales to one related party
customer accounted for 11.4% of revenues and one third-party customer accounted
for 9.3% of revenues.

NOTE 7 - CONTINGENCIES AND COMMITMENTS:

As of September 2001, the Company has entered into fixed capital
commitments related to its India development center expansion program of
approximately $8.6 million, of which $5.7 million has been spent to date. 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.

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 Inc., IMS International Inc., Nielsen Media Research, Pilot
Software Inc. and Strategic Technologies and certain other entities, plus a
majority interest in Gartner Group Inc. 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.

The tragic events of September 11, 2001 have significantly impacted our
travel industry customers, which represent approximately 5% of revenues. In
addition, we expect short-term logistical delays in launching new initiatives
for existing and new customers. There is no evidence that these events have
changed our customers' strategy of doing business in India.

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 September 30, 2001, IMS Health owned approximately 58.6% of the
outstanding stock of the Company and held approximately 93.4% of the combined
voting power of the Company's common stock.

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, in the United States, India and
Europe; (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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2001 2000 2001 2000
---- ---- ---- ----

Total revenues.................................... 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................................. 50.8 51.5 51.3 51.5
-------- --------- -------- --------
Gross profit.................................. 49.2 48.5 48.7 48.5
Selling, general and administrative
expense....................................... 25.1 26.1 25.5 26.1
Depreciation and amortization expense............. 3.6 3.4 3.4 3.4
-------- --------- -------- --------
Income from operations........................ 20.5 19.1 19.8 19.0
Other income (expense):
Interest income............................... 1.4 2.0 1.5 1.9
Other (expense) income........................ (0.5) (0.5) (0.5) (0.5)
-------- --------- -------- --------
Total other income................................ 0.9 1.5 1.0 1.4
-------- --------- -------- --------
Income before provision for income taxes.......... 21.4 20.6 20.8 20.4
Provision for income taxes........................ (8.0) (7.7) (7.8) (7.6)
-------- --------- -------- --------
Net income ....................................... 13.4% 12.9% 13.0% 12.8%
======== ========= ======== ========

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

REVENUE. Revenue increased by 22.6%, or $8.4 million, from $37.1 million
during the three months ended September 30, 2000 to $45.5 million during the
three months ended September 30, 2001. This increase resulted primarily from an
increase in application management services. 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 third quarter of 2001, sales to one related party customer accounted for
11.2% of revenues and no third party customer accounted for sales in excess of
10% of revenues. In the third quarter of 2000, sales to one related party
customer accounted for 10.1% of revenues and one third-party customer accounted
for 11.1% 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 20.9%, or approximately $4.0 million, from approximately $19.1
million during the three months ended September 30, 2000 to approximately $23.1
million during the three months ended September 30, 2001. The increase was due
primarily to costs resulting from an increase in the number of the Company's
technical professionals from approximately 2,600 employees at September 30, 2000
to approximately 3,500 employees at September 30, 2001. The increased number of
the Company's technical professionals

-11-

is a direct result of greater demand for the Company's services. The Company's
gross profit increased by 24.4%, or approximately $4.4 million, from
approximately $18.0 million during the three months ended September 30, 2000 to
approximately $22.4 million during the three months ended September 30, 2001.
Gross profit margin increased from 48.5% of revenues during the three months
ended September 30, 2000 to 49.2% of revenues during the three months ended
September 30, 2001 primarily due to an increased reliance on fixed bid
contracts, which generally have higher margins, and an increased focus on cost
containment.

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 19.7%, or approximately $2.2 million, from approximately $10.9
million during the three months ended September 30, 2000 to approximately $13.1
million during the three months ended September 30, 2001, and decreased as a
percentage of revenue from 29.4% to 28.7%. The dollar increase in such expenses
was due primarily 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, which outpaced
the increase in selling, general and administrative expenses.

INCOME FROM OPERATIONS. Income from operations increased 31.7%, or
approximately $2.2 million, from approximately $7.1 million during the three
months ended September 30, 2000 to approximately $9.3 million during the three
months ended September 30, 2001, representing 19.1% and 20.5% of revenues,
respectively. The increase in operating margin was due primarily to an increased
reliance on fixed bid contracts, which historically have higher gross margins
and an increased focus on cost containment.

OTHER INCOME. Other income consists primarily of interest income offset, in
part, by foreign currency exchange losses. Interest income decreased by $89,000
from $732,000 during the three months ended September 30, 2000 to $643,000
during the three months ended September 30, 2001. The decrease in such interest
income was attributable primarily to declining interest rates, offset, in part,
by generally higher operating cash balances. The Company recognized a net
foreign currency exchange loss of $209,000 during the three months ended
September 30, 2001 as compared to a loss of $167,000 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 $2.9 million in the three months ended September 30, 2000 to
approximately $3.6 million in the three months ended September 30, 2001, with an
effective tax rate of 37.4% for the three months ended September 30, 2000 and
2001.

NET INCOME. Net income increased from approximately $4.8 million for the
three months ended September 30, 2000 to approximately $6.1 million for the
three months ended September 30, 2001, representing 12.9% and 13.4% of revenues,
respectively.

-12-

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

REVENUE. Revenue increased by 39.9%, or approximately $38.3 million, from
approximately $96.0 million during the nine months ended September 30, 2000 to
approximately $134.3 million during the nine months ended September 30, 2001.
This increase resulted primarily from an increase in application management
services. 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 nine months ended September
30, 2001, sales to one related party customer accounted for 10.1% of revenues
and no third party accounted for sales in excess of 10% of revenues. During the
nine months ended September 30, 2000, sales to one related party customer
accounted for 11.4% of revenues and no third party accounted for sales in excess
of 10% of revenues.

GROSS PROFIT. The Company's cost of revenues increased by 39.3%, or
approximately $19.4 million, from approximately $49.4 million during the nine
months ended September 30, 2000 to approximately $68.9 million during the nine
months ended September 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 2,600 employees at September 30, 2000 to
approximately 3,500 employees at September 30, 2001. The Company's gross profit
increased by 40.6%, or approximately $18.9 million, from approximately $46.6
million during the nine months ended September 30, 2000 to approximately $65.5
million during the nine months ended September 30, 2001. Gross profit margin
increased slightly from 48.5% to 48.7% of revenues during the nine months ended
September 30, 2000 and 2001, respectively. The increase in gross profit margin
was due primarily to an increased reliance on fixed bid contracts, which
generally have higher margins, and an increased focus on cost containment.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses, including depreciation and amortization, increased by
37.3%, or approximately $10.6 million, from approximately $28.3 million during
the nine months ended September 30, 2000 to approximately $38.9 million during
the nine months ended September 30, 2001, and decreased as a percentage of
revenue from 29.5% to 28.9%. The increase in such expenses in absolute dollars
was due primarily 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 45.7%, or
approximately $8.3 million, from approximately $18.2 million during the nine
months ended September 30, 2000 to approximately $26.6 million during the nine
months ended September 30, 2001, representing 19.0% and 19.8% of revenues,
respectively. The increase in operating margin was due primarily to an increased
reliance on fixed bid contracts, which generally have higher gross margins and
an increased focus on cost containment.

OTHER INCOME. Interest income increased by $227,000 from approximately $1.8
million during the nine months ended September 30, 2000 to approximately $2.0
million during the nine months ended September 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 $604,000 during the nine months ended

-13-

September 30, 2001 compared to a loss of $431,000 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 $7.3 million for the nine months ended September 30, 2000 to
approximately $10.5 million for the nine months ended September 30, 2001, with
an effective tax rate of 37.4% for the nine months ended September 30, 2000 and
2001.

NET INCOME. Net income increased from approximately $12.3 million for the
nine months ended September 30, 2000 to approximately $17.5 million for the nine
months ended September 30, 2001, representing 12.8% and 13.0% of revenues for
the nine months ended September 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 September 30, 2001, the Company had cash
and cash equivalents of approximately $79.8 million.

Net cash provided by operating activities was approximately $23.7 million
during the nine months ended September 30, 2001 as compared to net cash provided
by operating activities of approximately $17.2 million during the nine months
ended September 30, 2000. The increase results primarily from a lower increase
in trade accounts receivable, and increased net income partially offset by a
decrease in accrued and other liabilities and an increase in unbilled accounts
receivable. Trade accounts receivable, net of allowance, remained relatively
constant at $20.5 million at September 30, 2001 compared to the corresponding
balance at December 31, 2000. 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 September 30, 2001, the Company's day's sales outstanding, including unbilled
receivables, was approximately 55 days compared to 50 days at September 30,
2000.

The Company's investing activities used net cash of approximately $10.7
million for the nine months ended September 30, 2001 as compared to net cash
used of approximately $8.3 million for the same period in 2000. The increase in
2001 compared to 2000 primarily reflects an increase

-14-

in 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 $4.8
million for the nine months ended September 30, 2001 as compared to net cash
provided by financing activities of approximately $1.4 million for the same
period in 2000. The increase in net cash provided by financing activities was
related primarily 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 600,000 shares in
the Company's outstanding Class A Common Stock during the nine months ended
September 30, 2001.

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

The Company had working capital of $87.6 million at September 30, 2001 and
$61.5 million at December 31, 2000.

As of September 30, 2001, the Company has entered into fixed capital
commitments related to its India development center expansion program of
approximately $8.6 million, of which $5.7 million has been spent to date. 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.

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 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

-15-

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 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.

-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: November 13, 2001 By: /s/ Wijeyaraj Mahadeva
---------------------------------------
Wijeyaraj Mahadeva,
Chairman of the Board and Chief Executive
Officer (Principal Executive Officer)

DATE: November 13, 2001 By: /s/ Gordon Coburn
-----------------------------------------
Gordon Coburn,
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)