Cognizant Technology Solutions NASDAQ: CTSH CEO Ravi Kumar S said the company sees artificial intelligence as an expanding opportunity for IT services providers, arguing that enterprises need help turning rapidly advancing AI capabilities into operational value.
Speaking at a company news event, Kumar said the “bridge to production value” remains a major gap for clients adopting AI. He said the gap includes workflows, controls, guardrails, trust layers, evaluations, context and institutional knowledge that must be built around AI systems before they can be used effectively in enterprise operations.
“The more the technology is evolving, the more the technology is advancing, the more is the gap to enterprise value,” Kumar said. “That gap needs a bridge, and that bridge will come from companies like us.”
AI Seen as a Tailwind for Services Demand
Kumar said Cognizant is already seeing client conversations accelerate around AI-enabled modernization and operational change. He cited a large mainframe deal involving cloud migration to Amazon Web Services, five to six SAP migrations and 10 to 12 discovery efforts involving Mistral and other technologies.
He said the IT services industry has recently relied on consolidation-related spending as a growth driver, but Cognizant is layering in “new value pools” tied to modernizing legacy systems, migrating SAP workloads, addressing vulnerabilities and applying AI to business operations.
Kumar described software engineering as already “mainstream” for AI, but said the bigger opportunity is in operations such as finance, legal, human resources, customer service and vertical-specific processes including healthcare and mortgage operations.
In healthcare, Kumar said the opportunity is significant because of the industry’s large administrative workforce. He said healthcare employs about 20 million people, with only 5 million to 6 million providing care and 14 million to 15 million doing administrative work. He argued that some of that work can be transitioned from human labor to “digital labor” in ways that are self-funded rather than dependent on large discretionary spending.
CEO Says New AI Deployment Companies Validate the Market
Asked whether deployment efforts from AI model companies such as OpenAI and Anthropic change the competitive landscape, Kumar said they do not. Instead, he said those efforts reinforce the need for a bridge between model capability and enterprise production value.
“I see this as an endorsement of what we do,” Kumar said. He compared the trend to earlier technology cycles in which enterprise software, SaaS and cloud providers had professional services arms, but said those efforts did not scale to meet the needs of the Global 2000.
Kumar said Cognizant is shifting its own model from being a traditional systems integrator to what he called an “AI builder.” He said that includes moving from a pyramid of talent to interdisciplinary teams combining human and digital labor, from services to platform-led services, and from managing project outcomes to managing enterprise operational outcomes.
He highlighted two new types of roles: “frontier engineers,” who help build AI-powered products and agentic systems for clients, and “frontier operators,” who help run operations that combine human and digital labor.
Tokenization and Pricing Models Emerge as Key Focus Areas
Kumar said tokenization has become a major focus for Cognizant as clients ask the company to take on more responsibility for AI-related usage and inference costs. He referred to an AI-enabled rate card ranging from human effort to autonomous machine effort, with intermediate stages involving human work validated by machines and machine work validated by humans.
As work shifts toward more machine-driven delivery, Kumar said rates may rise while the number of units declines. He said clients are increasingly asking Cognizant to manage the machine effort because they do not know how to do so themselves.
He acknowledged that token costs carry more risk in operations than in software development. “The cost of tokenization is a higher risk in inference and lower risk in developing,” he said. Kumar added that Cognizant plans to proceed in a controlled way, focusing on areas where work can be precisely scoped and repeated across clients.
Healthcare, Mortgage and Customer Service Named as Early Targets
Kumar said adoption will likely move faster in functions that have historically been outsourced, including healthcare operations, mortgage operations, customer service and finance and accounting. Areas such as legal operations and HR operations, which have not traditionally been outsourced to companies like Cognizant, may be harder to scale.
He identified healthcare as a priority, pointing to Cognizant’s TriZetto platform. Kumar said the company wants TriZetto’s rules engine to serve as a moat for AI agents accessing rules, guardrails and related processes. He also cited billing systems, life insurance record-keeping and mortgage operations as areas where traditional software may have been less effective and where AI could create value.
Kumar also said Cognizant is building new offerings such as a “digital nurse” for people receiving dialysis treatments at home and new capabilities in wealth management, though he said some new products and services have not fully taken off outside financial services because of discretionary spending constraints.
Metrics, Buybacks and M&A Strategy
Kumar said investors should watch revenue per person and margin per person as indicators of progress. He said margin per person is likely to see a larger bump because Cognizant is broadening and shortening its talent pyramid through its Leap program, reducing administrative layers while hiring more people at the bottom.
He also pointed to fixed-price and outcome-based work as important metrics. Kumar said Cognizant has roughly 50% fixed-price work and 10% outcome-based pricing, and said the company has added nearly 10 percentage points to fixed-price work since 2023.
On capital allocation, Kumar said Cognizant increased its buyback by $1 billion, after authorizing $1 billion in January. He said the move was intended to show confidence and support the company’s story.
Regarding acquisitions, Kumar said M&A should fit Cognizant’s thesis around platforms and operations. He said the planned acquisition of Astreya has not closed, but that it aligns with Cognizant’s view of growing infrastructure demand. He said Astreya brings workplace services, data services, data center services and network services delivered on a per-user basis rather than through a human-effort model.
Kumar said Cognizant may also act opportunistically in regions where it has less presence, including Asia-Pacific and Europe, but said the broader strategic intent is to add platforms and operational capabilities that help bridge AI capability to enterprise value.
About Cognizant Technology Solutions NASDAQ: CTSH
Cognizant Technology Solutions NASDAQ: CTSH is a global professional services company that provides information technology, consulting and business process services to large enterprises. Its core offerings include digital engineering, application development and maintenance, cloud migration and managed services, data analytics and artificial intelligence, cybersecurity, and industry-specific solutions. Cognizant works with clients to design and implement technology-enabled transformations that address customer experience, operational efficiency and new product and service delivery.
Founded in the 1990s and headquartered in Teaneck, New Jersey, Cognizant has grown into a multinational organization with delivery centers and operations across the Americas, Europe, and Asia.
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