Cognizant aims for the sky: Under CEO Ravi Kumar software giant looks to break into IT’s top league by 2027

Teaneck-headquartered Cognizant, which has guided a $20.3 billion to $20.8 billion or 2.6% to 5.1% USD revenue growth for the calendar year (CY) 2025, has set a goal to join the league of top-tier global IT service providers like Accenture, TCS, Infosys, and Capgemini in the next three years. At the company’s investor day held on March 25 in New York, MD and CEO Ravi Kumar said, “We want to be in the top tier, which is the top three or four players by 2027,” while sharing his strategy to reach this goal.

Coming off two years of revenue decline and registering a 0.5% growth in CY 2024, Cognizant aims not just to level up its revenue growth but also to gain market share and secure large deals.

For CY 2025, the company has already guided an adjusted operating margin in the range of 15.5% to 15.7% (a 20 to 40 basis point expansion over 2024). From 2026 onwards, it aims for a minimum expansion of 10 to 30 basis points each year. "We want to pursue gradual margin expansion. We've created the flywheel of gross margin and operating margin leverage, which means our EPS growth is going to be higher than our revenue growth,” Ravi added.

The company’s board has also tweaked its capital allocation policy, increasing the stock repurchase program by $2 billion. From the earlier $500 million, an additional $600 million has been allocated for 2025, bringing the total share buyback to $1.1 billion.

On the company’s margin expansion plan, CFO Jatin Dalal pointed out that in the last four quarters, Cognizant had increased its aggregate revenue growth by 900 basis points, out of which 500 basis points were organic. He added that over the past two years, the ‘NextGen’ program—focused on improving structure, processes, and cost optimization—had reduced overall selling and other costs by 140 basis points. Regarding operational cost control, he said, “We shrunk our bench costs by 30% between Q4 2024 and Q4 2023.”

Analysts seem convinced by the company’s strategy. In a note, BMO Capital acknowledged that several potential drivers exist for Cognizant to achieve improved growth. Nomura, in its note on the investor day presentation, mentioned that Cognizant remains one of its top picks in the IT sector.

“We expect CTSH to deliver 5.2–8.7% year-on-year growth in revenues (in $ terms), with an EBIT margin of 15.7–15.8% in FY25–26F. We value CTSH at an unchanged 17x CY26F EPS (based on a three-stage growth model) and maintain our Buy rating with an unchanged target price of $ 97. CTSH is a classic turnaround story, in our view, and is one of our top picks in the India IT services space. The stock currently trades at ~14x FY26F EPS. Downside risks include an inability to gain wallet share and slow expansion in EBIT margins,” the report stated.