Cognizant has set an ambitious target of being among the world’s top four IT services firms by 2027, focusing on revenue and margin growth, market share expansion, and large deal wins. Analysts, however, say this may be difficult, given the IT major’s past struggles and industry challenges.
“We want to be in the winner’s circle by 2027,” said S Ravi Kumar, Cognizant’s chief executive, referring to the group of the largest and fastest-growing IT services firms. “Our definition of the winner’s circle is to be a top-tier player,” he said.
Cognizant’s financial performance continues to lag behind key competitors, which include Accenture, Tata Consultancy Services (TCS), Capgemini, and Infosys. While it reported a 2% revenue growth in 2024, Accenture grew by 4% to $64.1 billion, TCS by 4.1% to $29.1 billion, and Infosys by 1.9% to $18.6 billion. The company has projected revenue of around $5-5.1 billion for the ongoing January-March quarter and expects to earn $20.3-20.8 billion for the full year.
Cognizant’s four-point strategy will include improving profitability, gaining market share, focusing on large deals, and ensuring revenue growth in line with the world’s top IT services companies.
“The winner’s circle is not about top-tier revenue growth. We want to gain market share. We want to keep our large deal momentum. We want to skill for the future. We want to do gradual margin expansion,” Kumar said.
To achieve these targets, the Nasdaq-listed company plans to improve margins by 30 basis points annually until FY27 through improved workforce utilisation, convincing customers to focus on outcomes, increasing the share of managed services, and enhancing productivity via AI integration.
Cognizant has also placed a significant emphasis on artificial intelligence (AI), adopting a three-pronged approach: enabling hyper productivity through platform capabilities, industrialising AI by strengthening capabilities across the AI stack, and “agentifying” enterprises by augmenting human services with digital agents.
The company aims to expand its market by targeting underpenetrated regions in the Americas and selective expansion in Europe, Middle East, and Africa (EMEA). Additionally, the company is focused on expanding in key industry verticals such as healthcare, banking, and life sciences, as well as underpenetrated markets. Through AI adoption, automation, and cloud modernisation, it aims to drive cost efficiencies and increase competitiveness.
Analysts at Kotak Institutional Equities remain doubtful about its ability to achieve top-tier growth in the current business climate.
They noted that while Cognizant has been successful in winning large deals and pushing AI-driven productivity, maintaining this momentum will be crucial. “CTSH’s (Cognizant) renewed focus on large and mega deals, coupled with a focus on driving productivity in technology through AI and sharing it with clients and consolidating out vendors where possible, can increase the competitive intensity for Indian IT in the near to medium term, in our view.”
Since taking over as the CEO in January 2023, Kumar has been working to turn the company around. However, his first year saw a revenue decline. Although Cognizant recorded a 4% revenue growth in 2024, reaching $19.7 billion, this included acquisitions such as Belcan and Thirdera, without which the firm has struggled to achieve organic growth.
The company’s operating margins also saw fluctuations, dropping from 15.3% in 2022 to 13.9% in 2023, before recovering to 14.7% in 2024. This improvement was largely due to cost-cutting measures, including reducing its workforce by nearly 11,000 employees.