Cognizant CEO Kumar: AI Is ‘A Double Engine Of Transformation’

‘We are rapidly applying AI across the organization to strengthen our operating agility while at the same time quickly sharing our learnings with clients,’ says Cognizant CEO Ravi Kumar.

Cognizant is moving quickly to become a leading AI provider and in the past year has made several major moves to ensure that happens, said CEO Ravi Kumar.

Kumar, in his prepared remarks for Teaneck, N.J.-based Cognizant’s fiscal 2024 financial conference call, told analysts the company made significant moves toward that goal, including internal development and two major acquisitions.

“You have heard me call AI a double engine of transformation because it offers Cognizant the opportunity to accelerate our own progress as much as it does for clients,” he said. “We are rapidly applying AI across the organization to strengthen our operating agility while at the same time quickly sharing our learnings with clients. We've identified more than 200 internal AI use cases, applying AI across three major dimensions: associate experience and productivity, enabling business operations, and to improve our technology and security landscape. These will remain important priorities in 2025.”

Cognizant’s AI labs made significant advancements in the company’s AI capabilities and offerings in 2024, Kumar said.

“We introduced Flowsource for full-stack engineering, Neuro Edge for real-time AI, Neuro Cyber Security for AI-enabled proactive defense and Neuro AI Multi-Agent Accelerator for AI agent development,” he said. “We also added multi-agent orchestration capabilities to our Neuro AI platform, and we debuted our AI-powered Cognizant Moment to help clients reimagine client experiences.”

2024 also saw Cognizant, ranked No. 8 on CRN’s 2024 Solution Provider 500, make two strategic acquisitions that will boost its AI capabilities, Kumar said. Cognizant in early 2024 closed its acquisition of Thirdera, a ServiceNow-focused solution provider, elevating Cognizant to global Elite status with that vendor, he said. Cognizant also acquired Belcan, strengthening the company’s ERP capabilities, he said.

Cognizant has also been busy expanding its GenAI capabilities, Kumar said.

“For example, we now have over 1,200 early GenAI engagements, compared to 1,000 at the end of third quarter,” he said. “We see demand for AI services expanding across industries as use cases proliferate. This includes predictive analytics for patient outcomes, drug discovery and virtual health assistance in health care, credit scoring and analysis, customer service and automation, fraud detection, financial services, predictive maintenance, quality control, supply chain optimization and manufacturing, content personalization, and targeted advertising and media, just to name a few.”

Another application of its AI capabilities is Stores 360, a set of IP and applications focused on modernizing retail and store operations using ServiceNow as the core platform, Kumar said.

“Stores 360 aims to help retailers streamline store operations, enhance employee productivity and improve their customer experience with integrated, automated and predictive GenAI capabilities,” he said.

Kumar cited Toyota, McDonald’s and Gilead Sciences as businesses already working with Cognizant’s AI capabilities.

“As we think about AI-enabled enterprise landscapes, I’m very excited about the role Cognizant can play in reimagining businesses, reshaping operating models, co-creating new products and services, and redefining the workforces and the workplaces of our clients,” he said.

Recent advances in democratizing AI foundation models are bringing new value to the front end of the AI value chain, Kumar said.

“We can play a big role for our clients in unlocking newer efficiency and innovation value levers, and we think it will be a force multiplier,” he said. “We believe our industry domain strength at the intersection of design, deep engineering and operations will allow us to stay differentiated and be a front-runner as we see a proliferation of AI-led services.”

Kumar said Cognizant sees AI-enabled opportunities playing out in three distinct areas.

The first, which he said is already here, is the mainstream use case of AI as “tech for tech,” or its application in software development cycles with the help of code assist platforms.

“We have our own developer workbench on the Flowsource platform,” he said. “In the fourth quarter, we estimated that 20 percent of our code accepted by our developers was generated by AI, allowing us to do more for less and unleash a wave of hyper productivity. Our belief is, with this level of hyper productivity, there will be an opportunity for partners like ours to help clients unlock the estimated trillions of dollars of technical debt, find viable ways to modernize legacy systems and applications, automate infrastructure and operations, and eliminate the backlog of workloads.”

The second opportunity will be about modernizing the data and cloud foundation for integrating AI into enterprise landscapes, Kumar said.

“We believe this opportunity will require building last-mile infrastructure related to domain-specific cognitive and reasoning frameworks, explainability, traceability, agentification, and multi-agent orchestration and platforms,” he said. “It also involves ensuring that AI is used as ethically as possible, and the output is optimized for accuracy and costs. Our belief is that this process of identification will drive significant innovation cycles, leading to new AI-enabled products and services, work that is being advanced by our AI labs.”

The third opportunity is around untapped and newer service pools that will be unlocked by identification, Kumar said.

“Our view is that software may no longer be a tool for organizing work but can become the worker itself, capable of understanding, executing and improving services traditionally delivered by humans,” he said. “We expect the most transformative applications of AI will be those that collaborate with human teams with the potential to unlock new and previously unimaginable categories of work. We see a future where a system of agents can inject autonomous intelligence into workflows by grasping context, applying reasoning and building a team of experts that each contribute unique knowledge and abilities. This evolution of ‘services as a software,’ as we call it, is expected to dramatically expand our addressable spend through new access to our clients’ extensive business operations budgets rather than the technology budgets alone.”

Cognizant By The Numbers

For its fourth fiscal quarter 2024, which ended Dec. 31, Cognizant reported revenue of $5.08 billion, up 6.7 percent over the $4.76 billion the company reported for its fourth fiscal quarter 2023.

That included health sciences revenue of $1.54 billion, up 10.4 percent; financial services revenue of $1.44 billion, up 2.9 percent; products and resources revenue of $1.30 billion, up 11.3 percent; and communications, media and technology revenue of $811 million, up 0.9 percent.

By geography, North America revenue was $3.82 billion, up 8.3 percent; Europe revenue was $939 million, up 2.3 percent; and rest of the world revenue was $321 million, up 3.5 percent.

Cognizant also reported GAAP net income for the quarter of $546 million, or $1.10 per share, down slightly from last year’s $558 million, or $1.11 per share. On a non-GAAP basis, the company reported income of $1.21 per share, up from last year’s $1.18 per share.

For its full fiscal year 2024, Cognizant reported revenue of $19.74 billion, up 2.0 percent from the $19.35 billion the company reported for fiscal 2023.

By geography, North America revenue was $14.70 billion, up 3.0 percent; Europe revenue was $3.76 billion, down 0.9 percent; and rest of the world revenue was $1.30 billion, down 1.3 percent.

Cognizant also reported GAAP net income for the year of $2.24 billion, or $4.51 per share, up from last year’s $2.13 billion, or $4.21 per share. On a non-GAAP basis, the company reported income of $4.75 per share, up from last year’s $4.55 per share.

Looking ahead, Cognizant expects non-GAAP earnings of $4.90 to $5.06 per share.