Ravi Kumar S
Chief Executive Officer at Cognizant Technology Solutions
Thank you, Tyler, and good afternoon, everyone. Today, I would like to cover three topics, Cognizant's fourth quarter and full year results, an assessment of our progress in 2023, and a look ahead to our focus and outlook for 2024. I have been in the CEO role now for a full year and have used these 12 months to dig into the company's client relationships, operations, services portfolio, market environment, finances and culture.
I've met with about 400 clients and established a regular cadence of listening to and speaking with our employees across the world. My full year immersion into everything Cognizant has confirmed my belief in the high level of initiative and motivation of our nearly 350,000 employees, as well as my belief in the company's distinctive core strengths. I have confidence in our potential to increase our revenue growth, and I'll have more to say about this in a few minutes.
Let's start with the fourth quarter where we delivered on our commitments while continuing to implement our cost management program. To call out three highlights: First, we executed well, delivering revenue within our guidance range despite ongoing macroeconomic pressures and meaningfully exceeded our adjusted operating margin expectations; Second, we made further progress on our goal to increase the percentage of large deals, new clients and business in the overall mix; And third, we saw continued improvement in our voluntary attrition.
Q4 revenue of $4.8 billion was in line with the guidance range we provided last quarter. Year over year, Q4 revenue was down 1.7% as reported or down 2.4% in constant currency. The quarter developed much as we expected as clients remained cautious and limited their discretionary spending. Our Q4 adjusted operating margin of 16.1% was meaningfully stronger than we anticipated, driven by savings from our NextGen cost management program and better execution on our operational efficiencies.
We sustained our large deal momentum in the quarter, winning seven deals exceeding $100 million each. Of these seven deals, two were new business and five were a mix of renewals and expansions. I am especially pleased to see our continued decline in employee attrition. Trailing 12-month voluntary attrition for our Tech Services business declined to 13.8%, that is down 2.4 percentage points sequentially and down 12 points year over year.
Turning to the full year, revenue of $19.4 billion was down slightly from the prior year and in line with the guidance we set on our Q3 call. A strong Q4 margin performance enabled us to achieve a full year adjusted operating margin of 15.1% compared with a guidance of approximately 14.7%. We ended Q4 with a trailing 12 months' booking growth of $26.3 billion, up 9% year over year, resulting in a book to bill of 1.4 times. For 2023, about 30% of our TCV exceeded 50 billion-plus deals compared with approximately 20% of the previous year. We signed 17 deals that exceeded $100 million TCV, $100 million TCV. Total TCV for deals above $100 million increased 42% year over year.
Several factors contributed to this progress. We have reoriented our teams to large deal demand generation and execution across all service lines. We have strengthened 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.
Turning to our business segments, while Jatin will cover our financial performance, I want to comment on our two largest segments. In Financial Services, while responding to a demand environment that remains challenging, we are increasing our efforts to stimulate growth. We've installed new leaders in a number of key positions across the segment. We have invested in consulting and commercial resources in target subindustries and in partner relationships. We are also focused on expanding our service offerings and on enhancing our industry solutions powered by new technologies like generative AI.
In Health Sciences, as the healthcare industry continues to undergo major transformation, we believe Cognizant is well positioned to become the nucleus of an emerging healthcare ecosystem through a platform's data and solutions. With these dynamics in mind, we are investing in the expansion of a TriZetto platform and our Healthcare BPaaS solution capabilities. We are also capitalizing on the opportunity GenAI presents to the healthcare market. For instance, LLMs can be used to streamline payer administrative processes, automate clinical documentation, and enhance clinical decision support systems.
I remain confident in the value of our Health Sciences portfolio provides to clients. For example, Fortrea recently chose Cognizant as its technology transformation partner to deploy a modern, secure digital ecosystem to help bring treatments to patients faster, while strengthening its position in the life sciences industry. And Takeda, a global biopharma company with whom we have had a long relationship, has selected us to help modernize their infrastructure and application management in support of their digital transformation.
Now let's turn to an assessment of how we moved the company forward in 2023. To begin, we made considerable progress enhancing three core strengths that, taken together, I believe Cognizant set apart in the market. First, industry expertise. In 2023, we further deepened our expertise at the intersection of technology and industry use cases to deliver industry-specific solutions in service of business outcomes. We also enhanced our collaboration and cocreation with clients and the broader partner ecosystem to stitch together industry-leading capabilities.
A good example is our strategic partnership with ServiceNow to advance the adoption of AI-driven automation across industries. 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.
A second core strength, we are collaborative partners to our clients. As mentioned on our Q3 call, our annual client net promoter score survey hit a historic high for Cognizant last year. Our empathy for clients is a part of our DNA, and we believe we have become even better at listening carefully to, learning from, and working with clients to earn their trust, solve their problems, and help them succeed.
Third, we are passionate innovators. Last April, we launched Cognizant's Bluebolt grassroots innovation program, calling on all our employees to help us solve client problems, look for unmet or latent client needs, and challenge the status quo. In just nine months, our employees generated more than 100,000 ideas, 21,000 of which we have already implemented. We expect to augment our Bluebolt program through a new collaboration with Microsoft to launch the Innovation Assistant, a generative AI-powered tool built on Azure OpenAI service.
Shortly after my arrival, we consolidated our performance objectives, the way we measure success, to just three long strategic priorities -- long-term priorities: become the employer of choice in our industry; accelerate revenue growth; and simplify our operations. I'll touch on our progress beginning with employer of choice.
Our voluntary attrition improved throughout 2023 to multi-year lows, while our employee engagement scores improved. To catalyze Cognizant's entrepreneurial spirit, we have given greater autonomy and accountability to business unit leaders. This is helping increase our responsiveness to client needs and market conditions. We remain committed to providing our teams with continuous learning, upskilling and professional development.
In 2023, 90% of our global workforce spent time in learning, with 270,000 of our employees acquiring at least one new skill or proficiency and 88,000 completing AI and generative AI courses. We've also established programs to provide more opportunities for employees to advance their careers. I'm pleased to say we promoted nearly 30,000 people across the company last year. Later this month, we'll bring together our entire employee population in gatherings, physical and virtual, to recognize excellence across the business with Cognizant's company-wide awards program, The IMPACT Awards.
Late last year, we introduced an initiative called Shakti that will unify our women-centric programs to further advance careers and boost women leadership in technology. Shakti will encompass Cognizant's leadership development programs for a senior-level women globally and for a mid-level women in India, along with our paid upskilling program for women returning to work after a career break.
Our second performance objective is to accelerate revenue growth. We've invested heavily in platform-centric approaches to further differentiate Cognizant and select industries. I've talked about our core platforms such as TriZetto in healthcare, Shared Investigator in life sciences, and Asset Performance in smart manufacturing, to name a few.
Last year, we also began industrializing solutions for the next wave of technologies with our AI portfolio. We introduced Cognizant Neuro IT operations, our AI-led platform built to reduce the complexity and costs of enterprise infrastructure. We launched Cognizant's Skygrade cloud orchestration platform designed to help clients rapidly transition to modern cloud-native architectures. In addition, we introduced Cognizant Neuro AI developed to speed clients' adoption of generative AI. With Neuro AI, we are able to quickly build AI enablement use cases for clients that are specific to their businesses. And just last week, we expanded our GenAI portfolio with the introduction of Cognizant flow source, developed to help engineering teams deliver high-quality code faster with increased control and transparency.
Today, we have over 250 early engagements that incorporate the use of generative AI. Some examples are creating a virtual coach for a diabetic patient, for a pharma company, predicting the size of target audiences for a TV network, conducting sentiment analysis and summarization of user comments for a large bank, developing a field services expert advisor for a manufacturer, enabling conversational intelligence for an insurance call center and auto generating a sales pitch for a tech company. We have another 350-plus opportunities in our pipeline that we are planning to scale. We aim to infuse AI not only into our core offerings, but into everything we do, including using generative AI to create industry and functional services.
It's worth mentioning that one of our integrated practices, intuitive operations and automation, which helps clients build and run modern operations, cross $2.5 billion of revenue in 2023. Our tech-driven modern BPO and automation services helps clients achieve higher levels of productivity and reap benefits of generative AI in their core processes. We strive to stay tuned to market shifts, which is why last month we acquired Thirdera, an Elite ServiceNow Partner that specializes in solutions for the ServiceNow platform. Adding Thirdera brings an on- and near-shore global presence to our own ServiceNow business group. With Thirdera, we'll continue to advance the efforts of our strategic partnership with ServiceNow to build $1 billion combined business focused on AI-driven automation.
Our third performance objective is to simplify our business. We executed well on our NextGen program, which is aimed at simplifying our operating model, optimizing corporate functions, and consolidating and realigning workspace to reflect the post-pandemic work environment. Our cost management enabled us to achieve a 2023 adjusted operating margin performance that exceeded our expectations from earlier in the year. Simplifying a business goes beyond structurally reducing costs. It also helps us become more agile and productive and innovative.
Last year, we further streamlined our operating model in what we -- what was a complex matrix structure to focus primarily on our markets and integrated service lines. We are moving towards fewer layers in the organization, which we believe will bring us closer to our clients and associates, help drive strong coordination across the company, and further empower account teams to make decisions. In summary, 2023 was a year of strengthening our company's fundamentals.
Now let's look at -- look to our focus in 2024. We have selected six strategic imperatives that will help further sharpen our differentiation across clients' primary needs, while strengthening our ability to achieve our performance objectives. These imperatives are to grow in select industries, expand internationally, build large deal capabilities, capture the AI opportunity, deliver our talent strategy, and implement our IT roadmap. In the interest of time, I'll focus on only one of those initiatives, which is capturing the substantial AI opportunity.
Although consumer use of generative AI is starting to explode, enterprise use cases have been ramping slowly. That said, we expect the pace of enterprise adoption to pick up soon and believe that after a slow take-off, movement up the S curve will accelerate sharply. The results we have seen from initial GenAI proof of concepts are very encouraging.
We believe system integrators like Cognizant will play a major role in managing, governing and optimizing generative AI initiatives at scale. This includes building accuracy in output, reducing hallucinations, continued reinforced learning and testing, incorporating transparency and accountability and, iteratively, driving performance optimization. Therefore, as mentioned on our prior calls, we expect to invest approximately $1 billion in our generative AI capabilities over the next three years, spanning people, platforms, partnerships and M&A.
We believe generative AI is becoming a driving force for the economy and society. In partnership with Oxford Economics, Cognizant developed and published a new economic impact study ahead of last month's World Economic Forum that predicts generative AI could inject up to $1 trillion into the U.S. economy over 10 years. Our research also predicts that 90% of the 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% to 52%, setting the stage for a profound shift in how we approach work, productivity and economic growth.
One last topic to cover, and that's the demand environment. We see little change from the assessment we have provided in recent quarters about uncertain and weak discretionary spending in the early part of 2024. Given that clients are experiencing a period that has bought both change and uncertainty, together, we expect them to continue to focus on reducing costs, consolidating vendors, modernizing the data and processes, and increasing the productivity so that they can apply savings to AI-led transformation.
On a closing note, we celebrated our 30th anniversary just last month. We have stood the test of time and we are determined to sustain and extend the momentum we have created last year. As optimistic as I was about our company's future when I joined last January, I am doubly so now. Whatever the future may hold, I believe we are in a significantly strong position today than we were one year ago to seize the market opportunity ahead.
Now it's my pleasure to turn the call over to Jatin, who joined us on December 4, for his initial observations about Cognizant and additional details on the quarter.
