Cognizant Enhancing AI Investments Through Strategic Acquisitions: CEO Ravi Kumar S
Cognizant's focus is not solely on external growth through acquisitions but also on internal talent development, says the CEO
Cognizant Technology Solutions, a US-based IT firm, is aggressively pursuing a strategy of acquisitions to bolster its investments in artificial intelligence (AI), CEO Ravi Kumar S. announced in his letter to shareholders.
The announcement was part of the annual report for 2023, which was released on Tuesday as Kumar begins his second year at the helm of the IT giant.
Kumar stressed the competitive landscape in which the company operates, stating, “We face intense and evolving competition and our service offerings must keep pace with significant technological advances in the rapidly changing markets we compete in.” This need to stay ahead in technology innovation is driving Cognizant's strategic decisions, particularly in enhancing its AI capabilities.
In a significant move to bolster its service offerings, Cognizant recently acquired Thirdera, an Elite ServiceNow partner that specialises in solutions for the ServiceNow platform. This acquisition is expected to expand Cognizant’s global presence and is a strategic fit for its ServiceNow Business Group, aiming to scale this partnership significantly in the upcoming years. Kumar noted that this move supports the company's strategy to stay at the forefront of technological advancements in the competitive markets it serves.
Cognizant's focus is not solely on external growth through acquisitions but also on internal talent development. In 2023, 90 per cent of Cognizant's global workforce engaged in learning initiatives, with 270,000 employees acquiring at least one new skill or proficiency. About 88,000 of these employees completed courses in AI and generative AI, reflecting the firm's push to integrate AI into its business practices and empower its workforce for a future dominated by this transformative technology.
Further outlining the company's operational shifts, the 2023 annual report also highlighted the implementation of the NextGen program, which led to substantial restructuring costs including USD 115 million in employee separation and USD 114 million in facility exits. These changes are part of a broader strategy expected to incur around USD 300 million in total, aimed at making the firm more agile and efficient.
The strategic initiatives seem to be yielding significant results, as evidenced by a 42 per cent year-over-year growth in total contract value deals over USD 100 million. As Kumar steps into his second year as CEO, he remains optimistic about the company's trajectory, planning to reinvest the majority of the firm's savings back into growth opportunities while aiming for modest margin expansion in 2024.
