BENGALURU: Cognizant Technology Solutions Corp. is cutting jobs as it pivots towards artificial intelligence (AI), marking one of the first instances of a large IT services firm explicitly linking AI-led disruption to headcount.
In an internal memo to more than 350,000 employees, Surya Gummadi, head of Cognizant’s US business, said the layoffs reflect a “real” and “accelerated” shift in how the industry operates, with the company moving to redeploy resources towards AI capabilities and partnerships. Mint has seen a copy of the memo.
“We’re making these changes because our industry is shifting in ways that are real and accelerating. The work that’s contracting is contracting for a reason. We’re choosing to get ahead of that, reinvesting in AI capabilities, in stronger partnerships, and in equipping our people for the work that’s going to matter most,” Gummadi said.
The job cuts are part of Project Leap, an internal initiative to fund AI-led projects, partnerships and service offerings, Mint reported on 29 April citing two people with knowledge of the matter. The programme will involve at least 4,000 layoffs, or roughly 1% of Cognizant’s workforce.
Cognizant expects the initiative to cost up to $320 million, including as much as $270 million in severance, and generate about $300 million in savings this year. The company said those savings will be reinvested in improving its AI offerings.
“This involves real change and I know that’s not easy. This effort will free up resources to make those investments real. That’s the commitment I’m making to the people in this organization,” Gummadi added.
The restructuring comes alongside Cognizant’s push to deepen its AI infrastructure capabilities, including the $600 million acquisition of Astreya, a California-based IT services firm that manages data centre and AI lab infrastructure for the world's largest technology companies, including Microsoft, Amazon, Alphabet, Apple, and Nvidia.
“This strengthens our ability to design, build, and operate the environments where enterprise AI runs. Not the pitch, but the plumbing. That’s where client value gets made or lost, and it’s a capability gap we’re closing. It also deepens our relationships with the hyperscalers building the infrastructure that enterprise AI runs on. AI capability is widely available. Enterprise value isn’t,” Gummadi said.
Together, the layoffs and investments signal a shift in how Cognizant is reshaping its workforce, even as overall headcount has continued to grow. The company ended the January-March 2026 period with 357,600 employees, up by 6,000 from the previous quarter, and is expected to hire more freshers than it did in 2025, suggesting a broader, flatter employee pyramid.
This is the second round of layoffs under chief executive S. Ravi Kumar, who took over in January 2023. In May that year, the company cut about 3,500 employees in non-billable roles.
Cognizant’s move follows workforce reductions at peers, though rivals have not directly attributed such actions to AI. Oracle Corp. laid off 19% of its workforce earlier this year, while Tata Consultancy Services cut 2% in July last year.
Demand outlook
The restructuring comes as the company navigates a mixed demand environment. Cognizant reported revenue of $5.41 billion for the January-March quarter, up 1.5% sequentially and 5.8% from a year earlier. Operating margin fell 40 basis points from the previous quarter to 15.6%. Net profit rose 2.16% sequentially but declined 0.15% year-on-year to $662 million.
“We achieve these results against the softening demand environment. Market conditions have become more complex since the start of the year, and we expect the impact from heightened macroeconomic uncertainty to persist in the near term,” said CEO Kumar during the company’s post-earnings analyst call on Wednesday.
Against this backdrop, management marginally lowered its full-year guidance from the preceding quarter. It now expects to end the year with revenue between $22.11 billion and $22.64 billion, translating to 4.8% to 7.3% increase in dollar terms and 4.0% to 6.5% growth in constant currency terms, which is unchanged. About 1.5% of this would come from acquisitions.
“I won’t pretend the market isn’t mixed. We have sectors with real momentum and others facing real pressure. Our path forward means navigating both honestly and at the same time,” Gummadi said.
Despite the near-term uncertainty, Cognizant has outpaced some peers. It ended last year with $21.1 billion in revenue, up 7% year-on-year, compared with 4.6% growth at Infosys and 6% at HCLTech.
At least one brokerage flagged risks ahead.
“These results suggest that ongoing geopolitical and trade uncertainties could impact June-quarter revenue and bookings across the sector—a factor we believe is largely baked into the guidance of Indian IT Services companies,” said ICICI Securities analysts Ruchi Mukhija, Aditi Patil, and Seema Nayak in a note dated 30 April.