Cognizant Technology Solutions (CTSH) investor relations material

AI transformation and operational efficiency

• Identified $4 trillion in administrative work in healthcare that can be transitioned to digital labor, enabling self-funded transformation and freeing resources for core care functions.

• AI capabilities are advancing rapidly, but there is a significant gap between technological capability and production value in enterprises, especially outside software engineering.

• Bridging this gap requires contextualizing AI to specific workflows, controls, and trust layers tailored to client needs.

• Significant infrastructure investments ($1T spent, $2–$3T expected in 2–3 years) will only yield value if applied to operational transformation.

• Production value will come from digitizing finance, legal, HR, customer service, and vertical operations, requiring interoperability between human and digital labor.

Business model evolution and growth strategy

• Industry is shifting from consolidation-driven growth to unlocking new value pools through mainframe modernization, SAP migrations, and AI-powered operations.

• Operations spend is increasingly self-funded by eliminating redundant work, not requiring large discretionary budgets.

• BPO and infrastructure services are experiencing double-digit growth, while software engineering is deflationary but expanding through new AI-driven opportunities.

• The focus is moving from being industry-leading to achieving breakaway growth by layering new operational models.

• M&A strategy targets platform and operations capabilities, with recent buybacks and acquisitions like Astreya supporting infrastructure and user-based service models.

Competitive landscape and talent transformation

• New entrants like OpenAI and Anthropic reinforce the need for a bridge between AI capability and enterprise production value, rather than changing the competitive landscape.

• The industry is moving from system integrators to AI builders, requiring interdisciplinary talent and a shift from project outcomes to operational outcomes.

• Frontier engineers and operators are emerging roles, with engineers focusing on agentifying processes and operators managing integrated digital-human operations.

• Platforms like TriZetto are central to delivering outcome-based services, with a shift to subscription and per-member-per-month models.

• Talent development is measured by certifications and the ability to scale frontier roles, supporting the bridge to production value.