Cognizant has kicked off a major overhaul inside the company. The IT services giant says it will spend between $230 million and $320 million as part of a restructuring plan called “Project Leap,” with a large chunk of that money going towards employee-related costs.
The announcement came along with the company’s first-quarter results on April 29. The company has not termed this as layoffs, but a severance-heavy budget clearly signals workforce changes as part of the reset.
Cognizant readies $320M restructuring under Project Leap
A large part of this money will go towards employees. Cognizant said it expects to spend $200 million to $270 million on severance between April and December this year. On top of that, another $30 million to $50 million will go into other personnel-related costs.
The company did not say how many employees may be affected. However, it did make it clear that the changes will not be limited to one region or one team. CFO Jatin Dalal called it a “global programme,” adding that it would touch “various parts of the organisation” and “various geographies.”
Cognizant says Project Leap is meant to speed up its transition to the “operating model of the future.” In simple terms, the company wants to change how it delivers services, making them more efficient and more aligned with what clients now expect.
This includes putting more money into AI capabilities, building stronger and more integrated offerings, and forming the right partnerships. At the same time, the company plans to train its employees in new skills and make sure its teams are structured in a way that fits future demand.
Savings expected, but changes come first
The company believes this exercise will start paying off fairly quickly. It expects to save between $200 million and $300 million in 2026 itself, with even more benefits likely in 2027.
These savings are already helping the company improve its outlook. It has raised its adjusted operating margin guidance to 16.0%–16.2%, slightly higher than before.
Some of these savings will be reinvested into AI and growth areas, while the rest will help improve margins. Cognizant now expects its adjusted operating margin for the year to be in the range of 16.0% to 16.2%, a slight improvement. But before those gains show up, the company will have to absorb the one-time costs of restructuring this year.
Workforce structure set for a shift
One of the biggest changes will be in how the workforce is shaped. Cognizant plans to bring in more than 20,000 freshers in 2026, signalling a clear shift towards younger, AI-trained talent. This also suggests that mid-level and experienced roles could see more pressure, especially where automation can replace or reduce manual work.
Cognizant has a strong presence in India, where a majority of its workforce is based. That means any broad restructuring is likely to be felt here in a meaningful way, even though the company has said the changes will be global.
Interestingly, while restructuring is underway, Cognizant’s total headcount actually rose to 357,600 by the end of March. That’s up by 6,000 employees from December and over 21,000 from a year ago. Attrition remains steady at 12.3%, showing no major spike in exits yet.
Cognizant Q1 results: steady growth, strong deals, big AI push
The company reported revenue of $5.4 billion, up 5.8% year-on-year. Growth was a bit lower in constant currency at 3.9%, which gives a more accurate picture of business performance without currency impact. For the second quarter, Cognizant expects revenue between $5.45 billion and $5.52 billion, pointing to moderate growth.