M+E Connections

Cognizant continues to invest in artificial intelligence (AI) through new initiatives that include the creation of more innovation studios, according to Ravi Kumar, the  company’s CEO.

The company still expects to invest about $1 billion in its generative AI capabilities over the next three years, focusing on areas including platform modernization, infrastructure, recruiting and upskilling, he told analysts Nov. 1 on an earnings call for Cognizant’s third quarter (ended Sept. 30).

“To that end, we opened a dedicated AI innovation studio in London and, later this year, we expect to open AI studios in New York, Dallas and Bangalore,” he said.

Cognizant trained about 55,000 of its employees on generative AI this year and has an additional 40,000 employees “from all levels of our company registered and pursuing training” on generative AI, he said.

“We have also invested in AI partnerships and experimental infrastructure to support early client engagement,” he noted. “We believe clients will depend on partners like Cognizant to generate significant productivity gains through automated AI-powered platforms for design, engineering and operations. This shift in client behavior further validates a recently refined strategy which is aimed at strengthening Cognizant’s differentiation to help drive growth.”

Also, “to dive deeper into clients’ long-term objectives … Cognizant held a two- day discovery summit in October for about 130 of its North America clients,” Kumar told analysts. It was “our first large-scale client gathering in more than four years,” he pointed out.

“We discussed the transformative power of generative AI and how we believe it can reshape every industry,” he said. “We showed clients how to apply generative AI to create more connected, collaborative and responsive relationships with their customers. We also ran live use cases of Cognizant’s new AI platform. Showing generative AI working alongside legacy data and machine learning models to  rapidly create end-to-end AI use cases.”

Partnerships are playing a “major role” in the company’s growth strategy, he also said. Cognizant is “focused on expanding our partner ecosystem across a range of technology providers, among them, hyperscalers, cloud providers, enterprise software companies, business software enterprises and emerging startups. We believe this partner ecosystem will enable us to enhance our integrated offering by combining third party products with our service solutions, helping to deliver enterprise wide digital transformation.”

Overall, “we are pleased with the company’s continued progress in the third quarter, during which clients remained cautious, amid economic uncertainty, and discretionary spend was under pressure,” he told analysts.

Q3 revenue came in at $4.9 billion, within Cognizant’s guidance range, he noted. That was an increase of 0.8% over Q3 2022.

Cognizant reported another quarter of bookings growth, which was up about 9% from Q3 a year ago. “To sustain our large deal momentum through Q3, approximately 30 percent of our Q3 bookings were large deals, and three of these deals exceeded $100 million each,” Kumar said.

Meanwhile, total Cognizant headcount at the end of Q3 was 346,600, an increase of 1,000 from Q2 2023 but a decrease of 2,800 from Q3 2022.