Cognizant flags up to $270 mn in severance, job cuts likely

Bengaluru: It’s not encouraging news for Cognizant employees. The company rolled out a global programme, Project Leap, and expects to incur costs of $230 million to $320 million, recognizing most of these expenses in 2026. This includes $200 million to $270 million in employee severance costs. Sources said the initiative could affect thousands of roles over the next eight months, including in India, which accounts for a large share of the company's workforce.

While Cognizant’s management declined to disclose the number of employees likely to be impacted, industry estimates suggest that every $100 million in restructuring costs could translate into roughly 10,000 jobs. When TOI asked whether the impact could be in the range of 20,000 to 30,000 employees, CFO Jatin Dalal said, “It is a global programme that will impact various parts of the organisation. We have not disclosed the specific number of employees who may be affected. However, this programme aims to prepare us for the future operating model, and we will execute it with the same focus and energy as any other strategic priority. It's equally important,” he said during the earnings call on Wednesday.

The move comes amid a broader reset across the IT industry. Last year, TCS cut about 2% of its workforce — over 12,000 employees — with reductions largely impacting mid-level and senior roles, as companies shift investments towards AI, data and cybersecurity while redeploying or exiting legacy talent.

For the March quarter, Cognizant reported revenue of $5.4 billion, up 5.8% year-on-year in dollar terms and 3.9% in constant currency. It expects full-year 2026 revenue in the range of $22 billion to $22.6 billion, reflecting growth of 4.8% to 7.3% (or 4% to 6.5% in constant currency). The company also raised its full-year operating margin guidance to 16%-16.2%. Cognizant said Project Leap will help improve margins. It now expects adjusted operating margin expansion of 20 to 40 basis points in 2026, up from its earlier estimate of 10 to 30 basis points. Following the results, Cognizant shares fell nearly 2% in early trade on the Nasdaq on Wednesday. Attrition remained low at 12.3% and largely unchanged despite a recalibration in how the company defines the metric. Cognizant said its definition of voluntary attrition in tech services now excludes certain categories of negotiated separations, with prior periods recast for comparability.

At the same time, the company continues to hire. Cognizant added about 6,000 employees sequentially and 21,300 year-on-year, taking its total workforce to around 3.5 lakh. It plans to recruit more than 20,000 graduates in 2026 after hiring a similar number last year. The changes reflect a deeper shift in the business model as AI reshapes the services industry. “How do you transfer this from a people business to a platforms business and how do you create commercial models which will enable you to own the outcomes? The industry will be back into a hyper growth era. You cannot approach it just with a people endeavour. You have to approach it with the courage to actually own operational outcomes for enterprises. And if you’re able to own, it’s going to be non-linear both on the input and the output,” said Cognizant CEO Ravi Kumar.

The company is also strengthening its AI infrastructure capabilities through acquisitions. It is acquiring Astreya, a tech firm specialising in AI infrastructure and data centre services, in a deal valued at about $600 million — its third-largest acquisition after Trizetto and Belcan. Astreya manages over 500,000 end users and supports nearly 30% of the world’s data centres for large enterprises. “Between 2025 and 2030 there is a projected $6.7 trillion AI data centre infrastructure buildout currently reshaping the global technology landscape, with global capacity expected to double in five years. The five largest hyperscalers are expected to spend nearly $700 billion on infrastructure in 2026 alone. By acquiring Astreya ..., we will be even better-positioned to help clients architect their platform-led AI systems and operationalise them at scale,” Kumar said.


Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.