Cognizant offers reality check on Anthropic AI after Rs 2-lakh-cr IT rout, says value won’t shift magically

Cognizant CEO Ravi Kumar S

• Cognizant says AI adoption in enterprises will be gradual, not an abrupt shift
• Company beat Q4 revenue guidance, reporting $5.3 billion, up 4.9 percent YoY
• AI complexity means sustained demand for IT services, not immediate disruption

Did our AI summary help?

IT major Cognizant Technology Solutions, on February 4, sought to calm investor concerns around artificial intelligence-led disruption after a sharp selloff wiped out nearly Rs 2 lakh crore in market value from IT stocks, following heightened fears triggered by recent developments from Anthropic.

Addressing concerns in the post-earnings press conference, Cognizant CEO Ravi Kumar S said the assumption that new AI tools can be plugged into enterprise environments and immediately replace large parts of IT services work is misplaced.

While acknowledging rapid advances in AI capabilities, the company argued that the economic value from these technologies has not yet meaningfully shifted into enterprises.

“A tool or a technology would be plugged into an enterprise landscape, and magically, there will be output coming out of it. If that's the case, why hasn't that value drifted into enterprises over the last three years (since OpenAI launched ChatGPT). The reality is that the value is actually still sitting with infrastructure and not drifting to enterprises,” Kumar added.

He pushed back against the view that recent AI announcements fundamentally alter the near-term outlook for IT services.

Also, read: Indian IT selloff reflects AI-led repricing fears, not demand collapse, say analysts

“It is very complex, you have to integrate workflows, business flows, with AI-led action-oriented technology with human labour, you have to integrate into the physical and the operating layers of the company for getting digital enhancement,” he further said.

The comments come after global markets reacted sharply to Anthropic’s latest AI developments, sparking fears that faster automation could compress demand for traditional IT services. Indian IT stocks bore the brunt of the selloff, with investors reassessing long-term revenue visibility amid concerns over accelerated AI adoption.

Also, read: Explained: Anthropic’s new AI tool and why investors fear software businesses could be at risk

Meanwhile, the Teaneck-headquartered IT services firm, on February 4, beat its fourth-quarter revenue guidance, offering early evidence that its billion-dollar AI push is beginning to translate into growth, even as client spending remains measured and sequential visibility stays cautious.

The IT services giant reported fourth-quarter revenue of $5.3 billion, up 4.9 percent year-on-year, or 3.8 percent in constant currency, while full-year revenue rose 7 percent to $21.1 billion. Operating margin for the year expanded 140 basis points to 16.1 percent.

Also, read: No AI-led job apocalypse yet, but India must still stay cautious, says Economic Survey

AI adoption will be gradual, not a plug-and-play shift

Nevertheless, Cognizant said the transition would be evolutionary rather than abrupt. Enterprise adoption of AI, it said, involves redesigning processes, managing coexistence between deterministic legacy systems and probabilistic AI models, and embedding these tools into real-world operating environments.

The company argued that this complexity creates sustained demand for system integration, transformation, and managed services, rather than eliminating the need for them overnight.

“This drift of value will happen over the years. You need bridges to drift that value, and you need companies like Cognizant who will drift that value into enterprises,” Kumar further added.

The management also said that while AI will reshape delivery models and productivity, the shift in value from infrastructure providers to enterprise outcomes will take time.

This counters the fear that the latest AI breakthroughs signal an immediate structural disruption for the IT services industry.

In fact, many technology leaders who have seen through multiple technology shifts hold similar thoughts.

Former Infosys CEO Vishal Sikka, in a post on X, argued that generative AI creates a “jagged frontier,” where software development and routine knowledge work see disproportionate impact rather than a uniform collapse of services.

World’s largest GPU maker Nvidia’s CEO Jensen Huang has also pushed back on fears that AI will replace software itself, calling that assumption illogical and pointing to past platform shifts that expanded the stack.

Also, read: Anthropic-led AI volatility an opportunity for IT services, says Happiest Minds’ Ashok Soota