Cognizant Technology Solutions (CTSH) Morgan Stanley Technology, Media & Telecom Conference 2026 summary

Growth outlook and guidance for 2026

• Projected total growth for 2026 is 4%-6.5%, with 1.5% from inorganic sources and the rest organic, assuming a stable or improving environment.

• Organic growth at the midpoint (3.75%) is driven by both market share gains and increased discretionary spending, especially in BFSI.

• Large deal wins and strong execution are central to capturing market share during industry consolidation.

• BFSI and healthcare are leading verticals in growth, while products, resources, communication, and media show slower or volatile spending.

• Retail and manufacturing are shifting focus from supply chain stabilization to IT and AI investments as stability returns.

AI adoption and deal economics

• GenAI-driven productivity is now embedded in new deal economics, with close monitoring of deal performance against expectations.

• Customers are increasingly open to deploying new technologies, seeking greater productivity and lower total cost of ownership.

• AI-related projects are smaller in size ($8M–$12M TCV) compared to traditional contracts but are expected to grow as adoption matures.

• Enterprises are taking varied approaches to AI adoption, often integrating custom, SaaS, and open-source solutions based on specific needs.

• Practical B2B AI applications are just beginning to scale, with more clients moving from pilots to production deployments.

Contract structures and profitability

• Fixed price contracts have grown 6%-7% over three years and are expected to increase by 2%-3% annually.

• Fixed price models offer certainty of outcome and flexibility, but are not inherently more profitable than time and material contracts.

• BPO has adopted GenAI rapidly, leading to higher throughput and access to previously untapped markets, driving 9%-10% growth.

• BPO is a faster-growing and more profitable segment, contributing positively to the overall portfolio.