Cognizant Technology Solutions Corp has doubled its share buyback programme to $2 billion in 2026, with the flexibility to buy shares worth as much as $3.45 billion as the Nasdaq-listed company looks to instill investors with confidence after its stock was battered this year.
The board of directors authorized the increase in the share repurchase target from $1 billion originally planned for 2026, the company said in a statement 18 May. The repurchase is expected to be completed during the second quarter of 2026.
“Our plan to increase the amount of share repurchases reflects our strong conviction in the long-term opportunity AI creates and our critical role in it as an AI builder,” S Ravi Kumar, chief executive officer of Cognizant, said in the statement. “We believe a fundamental shift in the IT services is underway, one that strengthens Cognizant’s position for future growth. We believe our current share price significantly undervalues those prospects.”
At least one analyst considered the move an effort to please shareholders at a time automation tools were eating into the business of IT services companies.
“Ravi Kumar cited his strong conviction in the long-term opportunity AI offers and Cognizant’s critical role as an AI builder. However, what many investors want to see are indicators for AI-led transformation, outcome-based models, and a pivot away from labour arbitrage,” said Thomas Reuner, principal analyst at Pierre Audoin Consultants. “The disconnect between these views goes beyond margin expectations. It is about the pace of business model reinvention.”
The board of directors also approved an increase of $2 billion to the amount authorized under its existing share repurchase programme. With this increase, as of 17 May, the company is authorized to repurchase shares worth $3.45 billion, according to the statement. For the current fiscal, the company will fund this additional $1 billion from its existing revolving credit facility.
Beaten down stock
Cognizant’s shares have fallen 38% since the start of the year, exceeding the decline in the stocks of India’s five largest . Investors were disappointed even after the company’s revenue jumped 7% to $21.1 billion last year, its fastest pace in four years.
For now, Cognizant’s total shareholder payout is expected to jump to $2.6 billion in 2026, which is its highest in at least six years. However, less than a month ago, the company had earmarked only $1.6 billion in shareholder returns for 2026 – $1 billion in buybacks and $600 million in dividends. This would have been less than the $1.99 billion paid to shareholders through dividends and buybacks in 2025.
The move to increase shareholder payouts comes as the rise of automation tools triggered panic among investors, executives and analysts, who have all faced questions on the relevance of IT services companies. Since the start of the year, an update from Anthropic or OpenAI has led investors to dump shares of IT stocks on four occasions, most recently when AI companies tied up with private equity firms to launch software services offerings.
One reason investors have been dumping IT shares is because GenAI tools have started to disrupt the employee-led billing model, which pays IT firms based on the hours humans spend on tasks. To assuage the concerns of analysts and shareholders, companies have been hosting AI investor days since the start of the year.
“My view is that there is no opportunity gap (because of AI). Opportunity is bigger than before,” Nandan Nilekani, chairman of Infosys, told analysts on 17 February. He said AI disruption is making companies re-examine the way they do business and that the modernizing of legacy systems cannot be deferred anymore.
Happiest Minds Technologies Ltd was among the first small IT companies to assert that automation tools present an opportunity for the company.
On the other hand, C Vijayakumar, CEO and managing director of HCL Technologies Ltd, said AI would result in revenue cannibalization.
“We called out 2% to 3% (deflation due to AI) and I think that holds true even now,” Vijayakumar said.
Project Leap
This decision to increase the share buyback came hours before Cognizant CEO Ravi Kumar sat down with a JPMorgan analyst at a conference in Boston and threw light on the company’s restructuring plan dubbed “Project Leap,” which envisages doubling down on AI investments and letting go at least 1% of its workforce, or 4,000 employees.
“What I’m really saying is the (employee) pyramid is broader and the pyramid is shorter,” said Kumar. “I’m de-layering the nodes where there is administrative work, and I’m only having player coaches in the middle, and I’m hiring significantly more number of people at the bottom (of the pyramid), higher than last year, and last year we hired higher than the year before, so that whole thing will give me margin per person higher,” added Kumar.
Workforce management is another fallout that tech services companies are dealing with as automation tools reduce the need for human roles. As part of Cognizant’s AI restructuring, it would let go of employees who can’t be reskilled and redeployed.
, which carried out its largest layoff exercise last year, has given the lowest ratings to about 3% of its workforce, stoking fears of another round of layoffs. Oracle did away with almost 19,000 employees at the start of the year.