Cognizant has said it aims to be back among India’s top four IT services companies by 2027 by improving revenue, market share, bagging large deals, and gradual margin expansion.
The Nasdaq-listed company does a major part of its business in India, but has trailed peers such as Tata Consultancy Services and Accenture over the last few years as growth tapered, margins squeezed, and attrition soared.
It’s a far cry from its heydays a decade ago when its steady growth was a hallmark in the industry.
TCS, Infosys, HCL Technologies, and Wipro are India’s top four IT (information technology) companies by market capitalisation.
“We want to be in the winner's circle by 2027,” Ravi Kumar, chief executive officer of Cognizant, said during the company’s annual investor meeting.
“Our definition of the winner's circle is to be a top-tier player,” referring to the club of the largest and fastest-growing IT services firms.
Cognizant, which has its largest employee base in India, reported revenue growth of 2 per cent in 2024 from the year before.
In constant currency, which negates the effect of currency volatility, it was 1.9 per cent.
The company, which follows a calendar year, said in February growth included about 200 basis point, or 2 per cent, benefits of acquiring Belcan and Thirdera last year.
Excluding those companies, organic growth numbers are flat or negative for the second consecutive year, posing a challenge for Kumar.
Kumar, who joined Cognizant in 2023 after working at Infosys, said the company was positioned 10th in 2022 with revenue growth trailing peers by an average 8 per cent. It narrowed to 3 per cent during his first year and came at par with the industry in 2024.
Cognizant is working on three plans to regain industry leadership: Improve talent by skilling employees, focus on platform-led growth in an AI-era, and gaining a lead over competitors in generative artificial intelligence.
The company is banking on higher productivity as more codes are written by machines, industrialising AI and banking on AI agents.
About 230,000 Cognizant employees have been trained in AI and 12,000 “released” due to the technology and automation, according to a presentation made by the company.
Chief financial officer Jatin Dalal said the company is hopeful of improving margins.
“For outer years (apart from FY25), we believe we can deliver another 10 to 30 basis points of margin expansions,” he said.
Cognizant’s adjusted operating margin, which has been subdued for some years, is a concern for investors.
It was 15.3 per cent in 2024 and is expected to inch up to 15.5-15.7 per cent for 2025.
While investors will cheer that improvement because it is the best guidance in the last five years, the numbers are still below the pre-pandemic levels of 18 per cent.
The company’s 2024 operating margins across businesses, barring financial services, “were negatively impacted by increased compensation costs, partially offset by savings generated from our NextGen program and the beneficial impact of foreign currency,” according the annual report.
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