3 Tech Services Stocks Worth Downloading

Companies in the information technology services industry have seen some tough
times lately. The combination of a weak dollar and reduced corporate tech
spending (due to the economic recession) resulted in a decline of 5.6% in 2009
(the industrys worst ever year) and a paltry growth figure of 3.3% in 2010.
Well-diversified large-cap companies such as IBM (NASDAQ: IBM ) and
Hewlett­­-Packard (NYSE: HPQ ) escaped relatively unscathed. However,
companies such as Wipro (NASDAQ: WIT ) felt the pinch as their stocks dropped
from a high of $18.41 in January 2007 to $5.11 in March 2009.   Things may
change this year, however. Gartner forecasts that worldwide IT spending will
total $3.6 trillion in 2011, a 5.6% increase from last year. Typically, this
rise should translate into increased business for IT services companies as more
work is outsourced. In addition, new financial regulations such as the
Dodd-Frank law should increase demand for software and IT consultants as
investment firms scramble to comply with new reporting requirements.   But
keep in mind: Gartners figures comprise corporate expenditure on enterprise
software, hardware and consumer technology such as tablets. In fact, corporate
spending on tablets is expected to increase by an annual compound growth rate of
52% by 2015. In comparison, IT services spending will only grow 5%. Similarly,
according to the TPI, a Connecticut-based data and information advisory firm,
the total commercial value of outsourcing contracts during the first quarter of
2011 was $17.5 billion, a decline of 25 percent as compared to the last quarter
and 28 percent during the same period last year. Still, the tech services
industry is a high-margin business with a well-established presence across all
seftors   Here are three IT services companies that could be good buys for
investors:  Wipro : This Bangalore-based outsourcing firm recently underwent a
management change. After bottoming out through most of 2009, its stock price has
clawed back up to a respectable $14 $15 range. With a well-diversified client
base across geographies (Europe accounted for double-digit growth for the second
successive time this quarter) and projected increased demand, the company is
poised to reap the rewards of an uptick in the world economy.  Computer
Sciences  (NYSE: CSC ) One of the largest and oldest players in the IT services
industry, CSC was in the news last year after it failed to install its first
patient administration system for the National Health Service in the U.K. The
contract was worth $1.3 billion. However, the news barely caused a ripple in the
companys stock price. Given the breadth of its business, which includes a
high-margin consulting business and a deep knowledge and experience of customer
systems (which increases switching costs for existing customers), increased
demand should be good news for this company. Cognizant Tech (NASDAQ: CTSH ):
Although it is a relatively young company, Cognizant has been among the
fastest-growing services firms. Its stock price has zoomed to $81.95, an
increase of about 173% since 2007. Incidentally, the stock was trading at
similar price levels when it was split. A presence in almost all sectors
(including a fast-growing and lucrative financial services practice),
initiatives in so-called cloud computing and healthy operating margins of 20%
should make sure that Cognizant keeps investors happy.