Cognizant Technology Solutions (CTSH) investor relations material

AI-driven transformation of IT services

• AI is fundamentally reshaping the IT services industry, shifting from a human capital model to a blend of human and digital labor for tech-led transformation.

• The market for tech services is expanding from $1 trillion to $6 trillion by embedding digital labor into business operations, not just systems.

• Outcome-based business models and platforms plus services are becoming central, moving away from traditional software and services silos.

• Companies that fail to adapt risk deflating their business models, while those expanding into business operations see a 6x opportunity.

Evolving client engagement and pricing models

• AI adoption is progressing through three swim lanes: productivity-led efficiency, doing old things in new ways, and enabling new discretionary spend cycles.

• Financial services are leading in activating all three swim lanes, resulting in sustained double-digit growth.

• The shift to fixed and outcome-based pricing now represents 58% of business, up from 48%, reflecting a move away from time and material contracts.

• Outcome-based pricing is most effective where cost observability is low and outcome observability is high, with models evolving from transaction-based to managing entire business outcomes.

• AI-infused rate cards (A0–A4) are being introduced, pricing based on the degree of automation rather than experience.

Strategic partnerships and competitive positioning

• Deep partnerships with AI leaders like Anthropic and OpenAI provide access to large-scale AI capacity and certified talent, but the value proposition is in delivering outcomes, not just access.

• The company manages risk and optimizes digital vs. human labor, embedding the right AI models for each task and outcome.

• Focus is on mastering business operations with agentic workflows, especially in healthcare, finance, and legal operations, where structured, high-transaction processes are ideal for AI.

• The evolving relationship with AI model providers is seen as symbiotic, with deployment capacity and process reinvention driving value.