Cognizant CEO: Growth Will Be Fueled By Large Deals, AI
‘The results we have seen from initial GenAI proofs of concept are very interesting. We believe system integrators like Cognizant will play a major role in managing, governing, and optimizing generative AI initiatives at scale,’ says Cognizant CEO Ravi Kumar.
Global IT solution provider Cognizant is making significant progress in the large enterprise market, and using that success to quickly expand its AI and generative AI business, CEO Ravi Kumar told investors.
Kumar, who last month celebrated the first anniversary of his becoming CEO of Teaneck, N.J.-based Cognizant, said during his prepared remarks during the company’s fourth fiscal quarter 2023 quarterly financial conference call that Cognizant has sustained its large deal momentum in the quarter.
“[We won] seven deals exceeding $100 million each,” he said. “Of these seven deals, two were new business, and five were a mix of renewals and expansions.”
During 2023, about 30 percent of Cognizant’s TCV (total contract value) came from $50 million-plus deals, compared with approximately 20 percent in 2022, said Kumar (pictured above). The company also signed 17 deals that exceeded $100 million in TCV, which Kumar said was up 42 percent year-over-year.
“Several factors contributed to this progress,” he said. “We reoriented our teams to large-deal demand generation execution across all service lines. We have centered our ability to seed, shape, and sell large deals. And we have made progress industrializing delivery with automation and productivity tools to create repeatable solutions and enable a consistent and efficient delivery operating model for large deals.”
Cognizant, ranked No. 6 on CRN’s Solution Provider 500, in 2023 further deepened its expertise at the intersection of technology and industry use cases to deliver industry-specific solutions in service of business outcomes, and enhanced its collaboration and co-creation with clients and technology partners to develop industry-leading capabilities, Kumar said.
“A good example is a strategic partnership with ServiceNow to advance the adoption of AI-driven automation across industries,” he said. “We are also collaborating with ServiceNow to enhance Cognizant’s WorkNext modern workplace services solution with generative AI capabilities. WorkNext aims to provide more intuitive and personalized experiences for employees while helping to better quantify and improve the return on experience for enterprise customers.”
Cognizant last April launched its Bluebolt GenAI-powered innovation assistant aimed at helping its employees help solve client problems, look for unmet or latent client needs, and challenge the status quo, Kumar said.
“In just nine months, our employees generated more than 100,000 ideas, 21,000 of which we have already implemented,” he said. “We expect to operate our Bluebolt program through a new collaboration with Microsoft to launch the Innovation Assistant, a generative AI-powered tool built on Azure Open AI service.”
Cognizant remains committed to providing its teams with continuous learning, upskilling, and professional development, Kumar said. In 2023, 270,000 of its employees acquired at least one new skill or proficiency, and 88,000 employees completed AI and generative AI courses, he said.
To help accelerate revenue growth, Cognizant has invested heavily in platform-centric approaches to further differentiate the company in such industries as healthcare, life sciences, and smart manufacturing, Kumar said. The company also began industrializing solutions for the next wave of technologies with its AI portfolio, including:
- The launch of Cognizant Neuro IT operations, an AI-led platform built to reduce the complexity and costs of enterprise infrastructure.
- The launch of Cognizant Skygrade, a cloud orchestration platform designed to help clients rapidly transition to modern cloud-native architectures.
- The introduction last week of Cognizant Flowsource, developed to help engineering teams deliver high-quality code faster with increased control and transparency.
Cognizant already has over 250 early engagements that incorporate the use of generative AI, and has another 350-plus opportunities in its pipeline the company is planning to scale, Kumar said.
“We have to infuse AI not only into our core offerings, but into everything we do, including using generative AI to create industry and functional services,” he said.
To help expand its enterprise business, Cognizant recently acquired Thirdera, an elite ServiceNow partner that specializes in solutions for the ServiceNow platform, Kumar said.
“Adding Thirdera brings an on- and near-shore global presence to our own ServiceNow business group, and Thirdera will continue to advance the efforts of our strategic partnership with ServiceNow to build a $1-billion combined business focused on AI-driven automation,” he said.
While consumer use of generative AI is starting to explode, enterprise use cases have been ramping slowly, Kumar said. However, he said, Cognizant expects the pace of enterprise adoption to pick up soon.
“The results we have seen from initial GenAI proofs of concept are very interesting,” he said. “We believe system integrators like Cognizant will play a major role in managing, governing, and optimizing generative AI initiatives at scale.”
Cognizant previously said it expects to invest approximately $1 billion in GenAI capabilities over the next three years spanning people, platforms, partnerships, and M&A, Kumar said.
“We believe generative AI is becoming a driving force for the economy and society,” he said. “In partnership with Oxford Economics, Cognizant developed and published [a new report] at last month's World Economic Forum that predicts generative AI will inject up to $1 trillion into the US economy over 10 years of research. Our research also predicts that 90 percent of jobs will be disrupted in some way by this technology. From 2023 to 2032, the percent of jobs with high exposure scores, meaning the degree to which an occupation will be affected by generative AI could increase from 8 percent to 52 percent, setting the stage for a profound shift in how we approach work, productivity, and economic growth.”
Cognizant By The Numbers
For its fourth fiscal quarter 2023, which ended December 31, Cognizant reported revenue of $4.76 billion, down less than 2 percent from the $4.84 billion the company reported for its fourth fiscal quarter 2022.
This included financial services revenue of $1.40 billion, down 5.8 percent; health science revenue of $1.40 billion, down 2.7 percent; products and resources revenue of $1.16 billion, up 1.3 percent; and communications, media, and technology revenue of $804 million, up 2.6 percent.
Cognizant also reported GAAP net income of $558 million or $1.11 per share, up from last year’s $521 million or $1.02 per share. On a non-GAAP basis, the company reported $1.18 per share, up from $1.01 per share.
For its full fiscal 2023, Cognizant reported revenue of $19.35 billion, down ever so slightly from its fiscal 2022 revenue of $19.42 billion.
Cognizant also reported full year GAAP net income of $2.13 billion or $4.21 per share, down from last year’s $2.29 billion or $4.41 per share. On a non-GAAP basis, the company reported $4.55 per share, up from last year’s $4.40 per share.