Cognizant Technology plans to cut about 4,000 jobs, or roughly 1% of its workforce, according to two people with knowledge of the matter, as slowing demand and a push toward automation weigh on growth and prompt the company to lower its full-year outlook.
“In the second quarter of 2026, we introduced Project Leap, a program designed to accelerate our transformation to the operating model of the future by funding investments in our integrated offerings, AI (artificial intelligence) capabilities and partnerships, reshaping productivity through competitive offerings and upskilling our workforce,” Cognizant said in a press release on Wednesday.
During the company’s post-earnings analyst call on Wednesday, management said more than 20,000 freshers would join this year, suggesting reductions in mid-level roles. Headcount rose by 6,000 to 357,600 at the end of March 2026.
Cognizant’s move follows similar actions across the industry. Corp. laid off 19% of its workforce at the start of the year, while Tata Consultancy Services cut 2% of its workforce last summer.
“They, like many peers, are trying to lift revenue per head and pivot away from people-intensive delivery toward more automated, platform-based services. Initiatives such as Project LEAP are fundamentally about stripping out complexity in the middle of the organization and reweighting investment toward higher-value skills in AI, advisory work, and deep industry solutions,” said Phil Fersht, chief executive of HFS Research.
The move marks the second round of layoffs under chief executive S. Ravi Kumar, who took over in January 2023. Four months after taking over, the company laid off about 3,500 employees in May 2023 in non-billable roles.
An expert said the layoffs would be of a similar magnitude to those carried out in 2023.
“There are a number of factors at play in this headcount reduction. This comes at a time where Cognizant is focusing on cost reduction, for example it is also reducing travel expense and looking to trim back other discretionary expenses. The broader context is that the industry is going through a significant disruption driven by ,” said Peter Bendor-Samuel, founder of Everest Group.
“By fostering a workforce that is properly sized, AI-enabled and possesses the skills required for success as well as optimizing our technology footprint, we aim to streamline operations and enhance productivity through AI-led efficiencies, creating a more agile and cost-effective operating model,” the company said in the press release.
It did not disclose the extent of reductions.
Cognizant on Wednesday reported revenue of $5.41 billion for the quarter, up 1.5% sequentially and 5.8% year-on-year, in line with analyst expectations. A Bloomberg poll of 26 analysts had estimated revenue at $5.41 billion.
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.
“This program is expected to generate in-year savings of approximately $200 million to $300 million in 2026. These expected savings, net of the investments described above, are enabling us to raise our 2026 adjusted operating margin guidance from expansion of 10 to 30 basis points to expansion of 20 to 40 basis points, in-line with our long-term aspiration to expand margins,” the company said in the press statement.
“In connection with Project Leap, we expect to record costs of $230 million to $320 million, with substantially all of the costs expected to be incurred in 2026. This consists of $200 million to $270 million of employee severance and other personnel related costs and $30 million to $50 million of other charges,” it added.
Shares fell 1.8% to $54.1 as of 7:13pm, India time.
An email sent to Cognizant went unanswered until press time.
Cautious outlook
The company flagged a softer demand environment.
“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 chief executive officer Kumar during the company’s post-earnings analyst call.
Management caution is reflected in its full-year guidance, which management lowered 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% in dollar terms and 4.0% to 6.5% in constant currency terms.
About 1.5% of this would come from acquisitions. The company announced its intent to acquire California-based firm, Astreya, reportedly for $600 million.
Cognizant’s revenue growth was similar to that of the country’s largest IT outsourcer. TCS grew 1.5% sequentially to $7.62 billion in the January-March 2026 period.
On the other hand, Infosys Ltd and HCL Technologies Ltd reported a decline of 1.2% and 2.93% to $5.04 billion and $3.68 billion in revenue, respectively. While Cognizant follows a January-December financial calendar, Indian IT firms follow an April-March financial calendar.