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Cognizant Cuts 2026 Revenue Guidance Amid Slower Discretionary Spending
Cognizant Technology Solutions just trimmed its 2026 revenue forecast, a move that echoes a broader pullback in discretionary IT spending. The U.S.‑based IT services firm lowered its constant‑currency (CC) revenue growth range to 4‑5.5 % from the previously issued 4‑6.5 % band, while keeping a 150‑basis‑point contribution from inorganic growth.
The adjustment follows a solid April‑June quarter in which Cognizant posted a 4.1 % CC revenue increase. That growth outpaced tier‑1 peers: Infosys (2.4 %), Wipro (0.9 %), HCL Technologies (2.6 %) and Tata Consultancy Services (3.2 %). CFO Jatin Dalal said the guidance was revised because discretionary spending had not accelerated in the second quarter as initially expected. “At the beginning of Q2, we had mentioned we expect the discretionary spend to return in the second half. The reality is that the macro conditions continue to remain what they were, and there has not been an uptick or superior momentum that can be seen from the discretionary side,” Dalal explained.
CEO Ravi Kumar acknowledged the lower outlook but stressed that Cognizant still leads its peer group. “The average midpoint of our peer group in the tier‑1 is almost 150 to 200 basis points lower than us,” he said. He added that the company’s new‑business share of total bookings rose 10 % year‑on‑year, driven by AI‑led efficiency projects and growing demand in cybersecurity and data analytics.
Bookings for the quarter climbed 5 % year‑on‑year to $29.1 billion, including seven deals larger than $100 million. Revenue growth was led by the financial services vertical, which expanded 11.7 % year‑on‑year – the second consecutive quarter of double‑digit growth in that segment.
Cognizant’s workforce reached 356,700 employees by June 30, 2026, up 12,900 from the previous year, outpacing tier‑1 competitors. The company incurred $84 million in charges during the quarter related to its Project Leap initiative, comprising $56 million in employee separation costs and $28 million in other expenses. Operating margins rose 30 basis points year‑on‑year.
Analysts have noted that sustaining above‑market growth will hinge on demonstrating measurable client outcomes from the firm’s AI investments. Phil Fersht, founder and CEO of HFS Research, said that Cognizant has closed much of the gap with its peers over the past two years, but continued success will depend on proving that AI projects deliver tangible results.
In a broader industry context, Kumar discussed the evolving demand for open‑weight models. “Companies will need both closed frontier models and open‑weight models. Closed frontier models power the advances and they remain cutting edge, and they will be ahead on the curve. Open‑weight models can be industrialised in a much cheaper way,” he said.
Cognizant’s CFO, Jatin Dalal, previously served as CFO at Wipro. In July 2026, the company settled a non‑compete lawsuit filed by Wipro, paying $505,087 to Dalal, according to reports.
The revised guidance reflects a cautious stance amid a broader slowdown in discretionary IT spend, but Cognizant’s stronger‑than‑peer performance, growing AI‑driven bookings and a larger workforce suggest it remains well positioned to navigate the current market environment. The company will continue to monitor client demand and adjust its strategy accordingly, while investors and analysts watch for further updates on revenue growth, margin expansion and the impact of its Project Leap initiative in the coming quarters.
The adjustment follows a solid April‑June quarter in which Cognizant posted a 4.1 % CC revenue increase. That growth outpaced tier‑1 peers: Infosys (2.4 %), Wipro (0.9 %), HCL Technologies (2.6 %) and Tata Consultancy Services (3.2 %). CFO Jatin Dalal said the guidance was revised because discretionary spending had not accelerated in the second quarter as initially expected. “At the beginning of Q2, we had mentioned we expect the discretionary spend to return in the second half. The reality is that the macro conditions continue to remain what they were, and there has not been an uptick or superior momentum that can be seen from the discretionary side,” Dalal explained.
CEO Ravi Kumar acknowledged the lower outlook but stressed that Cognizant still leads its peer group. “The average midpoint of our peer group in the tier‑1 is almost 150 to 200 basis points lower than us,” he said. He added that the company’s new‑business share of total bookings rose 10 % year‑on‑year, driven by AI‑led efficiency projects and growing demand in cybersecurity and data analytics.
Bookings for the quarter climbed 5 % year‑on‑year to $29.1 billion, including seven deals larger than $100 million. Revenue growth was led by the financial services vertical, which expanded 11.7 % year‑on‑year – the second consecutive quarter of double‑digit growth in that segment.
Cognizant’s workforce reached 356,700 employees by June 30, 2026, up 12,900 from the previous year, outpacing tier‑1 competitors. The company incurred $84 million in charges during the quarter related to its Project Leap initiative, comprising $56 million in employee separation costs and $28 million in other expenses. Operating margins rose 30 basis points year‑on‑year.
Analysts have noted that sustaining above‑market growth will hinge on demonstrating measurable client outcomes from the firm’s AI investments. Phil Fersht, founder and CEO of HFS Research, said that Cognizant has closed much of the gap with its peers over the past two years, but continued success will depend on proving that AI projects deliver tangible results.
In a broader industry context, Kumar discussed the evolving demand for open‑weight models. “Companies will need both closed frontier models and open‑weight models. Closed frontier models power the advances and they remain cutting edge, and they will be ahead on the curve. Open‑weight models can be industrialised in a much cheaper way,” he said.
Cognizant’s CFO, Jatin Dalal, previously served as CFO at Wipro. In July 2026, the company settled a non‑compete lawsuit filed by Wipro, paying $505,087 to Dalal, according to reports.
The revised guidance reflects a cautious stance amid a broader slowdown in discretionary IT spend, but Cognizant’s stronger‑than‑peer performance, growing AI‑driven bookings and a larger workforce suggest it remains well positioned to navigate the current market environment. The company will continue to monitor client demand and adjust its strategy accordingly, while investors and analysts watch for further updates on revenue growth, margin expansion and the impact of its Project Leap initiative in the coming quarters.
