Cognizant calls time on the IT era, bets future on AI built delivery

Cognizant

Cognizant is no longer pitching itself as just an information technology (IT) company, it is now an AI builder, with nearly 30 percent of its code generated by machines, agentic automation moving into production, and a fresher-heavy workforce being trained to engineer software alongside AI.

The shift comes amid its strongest sequential growth since 2022 in the third quarter, leading the Nasdaq-listed IT major to raise its full-year revenue and margin outlook. Investors cheered the performance and pivot by sending the stock price up 6 percent.

The company reported a beat of Street estimates on the revenue front, marking its fifth consecutive quarter of year-on-year revenue expansion.

CEO Ravi Kumar S said, while addressing a press conference after declaring the results on October 29, that the performance reflects a structural shift in the company’s delivery model. “We are transitioning ourselves from a system integrator to an AI builder. We invested in capability, intellectual property platforms, and a culture of working alongside machines.”

The comments assume significance as they come at a time when peers have said that the time is out for the traditional IT services industry.

“The business model is ripe for disruption, what we saw in the last 30 years a fairly linear scaling of IT service. I think the time is already out for that model,” HCLTech Chief Executive Officer C Vijayakumar had said at the Nasscom Technology and Leadership Forum in February.

More recently, HCLTech clocked $100 million in advanced AI revenue that accounts for nearly 3 percent of the company’s topline, making the Noida-headquartered firm the first Indian IT services giant to report its AI revenue.

Meanwhile, Kumar added that 30 percent of Cognizant’s code is now written by AI, a figure the company expects to rise further.

“If you create more throughput at lower cost and higher velocity, customers spend more. It is a reinforcing flywheel,” he said.

In the IT services industry, throughput means how much work a team can complete in a given amount of time.

Gen AI adoption moves into scale

The Teaneck-headquartered firm said the number of Gen AI client projects increased to 3,500 in Q3 from 2,500 in Q2, a 40 percent rise.

This signals a shift from experimental pilots to production-grade delivery across application development, infrastructure operations, and business process work.

“Agentic journeys are moving from experimentation to full-blown production-grade work,” Ravi Kumar said.

Also, read: Infosys delivering over 2,500 Gen AI projects: Chief Delivery Officer Satish

Workforce realignment for the AI era

Cognizant ended the quarter with almost 3.5 lakh employees, adding 6,000 sequentially and 9,700 year-on-year. This contrasts with the broader industry, where hiring has been muted or negative.

The firm continues to lean heavily on fresher hiring, targeting 20,000 campus recruits this year, while moving delivery towards AI-assisted development workflows.

“We are increasing our headcount but reducing our cost of human capital by hiring at the bottom of the pyramid. You can create more throughput even with freshers because of AI-assisted engineering,” Kumar added.

Voluntary tech-services attrition stood at 14.5 percent on a trailing twelve-month basis.