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What changed in Cognizant's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cognizant's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+278 added−265 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-15)

Top changes in Cognizant's 2023 10-K

278 paragraphs added · 265 removed · 187 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

52 edited+16 added−27 removed38 unchanged
Biggest changeHighlights from our D&I efforts include: – Global D&I organization embedded within our HR function to drive accountability through our people processes and systems; – Global D&I training and programs, including allyship, psychological safety, and inclusive mindset training for leaders; – Progressive hiring policies and initiatives: • a diverse candidate pipeline initiative to ensure a more diverse interview slate at the Vice President level and above; • our Returnship Program, a 12-week paid, immersive experience for experienced professionals who have taken an extended career break; – Seven global affinity groups sponsored by Executive Committee members that welcome, nurture and provide safe spaces in which our employees can share their unique interests and aspirations; – For the first time in 2022, Executive Committee compensation included a metric focused on gender diversity globally, and developing and retaining talent.
Biggest changeHighlights from our D&I efforts include: – Global D&I organization embedded within our HR function to drive accountability through our people, processes and systems; – Global D&I training and programs for leaders; – Hiring policies and initiatives such as our Returnship Program, a 3-month paid, immersive experience for experienced professionals who have taken an extended career break; – Eight global affinity groups sponsored by Executive Committee members that welcome, nurture and provide safe spaces in which our employees can share their unique interests and aspirations; – Our sponsorships with the PGA, LPGA, where we doubled the Cognizant Founders Cup purse, and the Aston Martin Cognizant Formula One Team, where we partnered with Racing Pride to promote LGBTQ+ inclusivity in motor racing, demonstrate our commitment to equality around the world; and – In 2023, we were recognized as a "Best Place to Work for the LGBTQ+ Equality" by HRC Equidad MX in Mexico and HRC Equidade BR in Brazil; each of these is a foremost benchmarking survey related to LGBTQ+ workplace equality.
We believe our deep knowledge of our clients' infrastructure and systems provides us with a significant advantage as we work with them to build new digital capabilities to make their operations more modern and intuitive. We deliver all of our services and solutions across our four reportable business segments to best address our clients' individual needs.
We believe our deep knowledge of our clients' infrastructure and systems provides us with a significant advantage as we work with them to build new digital capabilities to make their operations more modern and intuitive. We deliver all our services and solutions across our four reportable business segments to best address our clients' individual needs.
This program is enhancing career velocity and bringing fresh thinking to our clients as employees identify new lateral and next-level opportunities across our organization; and – Continuously fostering a culture focused on recognition, Cognizant has created programs to reward all levels of employees through both monetary recognition as well as peer-driven non-monetary recognition. • Learning & Upskilling: From campus hire training for entry-level workforce to providing capability assurance programs for professional practitioners, our skilling ecosystem offers growth for associates at all levels.
This program is enhancing career velocity and bringing fresh thinking to our clients as employees identify new lateral and next-level opportunities across our organization; and – Continuously fostering a culture focused on recognition, Cognizant has created programs to reward all levels of employees through both monetary recognition as well as peer-driven non-monetary recognition. • Learning & Upskilling: From campus hire training for entry-level workforce to providing capability assurance programs for professional practitioners, our skilling ecosystem offers growth for employees at all levels.
Highlights include: – Targeted talent programs for key talent pools that include various training opportunities, digital leadership programs, custom leadership development initiatives and leadership transition programs to equip employees for taking on a leadership role; – Fast-tracking high-performing and high-potential leadership talent through personalized assessments, executive coaching and executive education programs; – More than 1,000 leaders have participated in our LEAD@Cognizant partnership with Harvard University, which is a 4.5-month leadership capability program designed exclusively for Cognizant leaders to learn, practice and internalize how to set the course, connect the dots, inspire followership and deliver results through strategic alignment, collaboration and building high performing teams; – Accelerating a diverse leadership pipeline through programs like Propel, an initiative focused on priming the next level of women leaders within Cognizant.
Highlights include: – Targeted talent programs for key talent pools that include various training opportunities, digital leadership programs, custom leadership development initiatives and leadership transition programs to equip employees for taking on a leadership role; – Fast-tracking high-performing and high-potential leadership talent through personalized assessments, executive coaching and executive education programs; – More than 1,300 leaders have participated in our LEAD@Cognizant partnership with Harvard University, which is a 4.5-month leadership capability program designed exclusively for Cognizant leaders to learn, practice and internalize how to set the course, connect the dots, inspire followership and deliver results through strategic alignment, collaboration and building high performing teams; – Accelerating a diverse leadership pipeline through programs like Propel, an initiative focused on priming the next level of women leaders within Cognizant.
Our services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, application maintenance, infrastructure and security as well as business process services and automation. Digital services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.
Our collaborative services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, application maintenance, infrastructure and security as well as business process services and automation. Digital services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.
Areas of focus within this practice are: • Cloud, infrastructure and security, which helps simplify, modernize and safeguard IT environments, creating new business opportunities; • AI and analytics, which helps clients formulate actionable insights from unstructured data to drive a greater understanding of their customers and operations; and • IoT, which unlocks greater productivity and new business models.
Areas of focus within this practice are: • Cloud, infrastructure and security, which helps simplify, modernize and safeguard IT environments, creating new business opportunities; • AI and analytics, which helps clients formulate actionable insights from unstructured data to drive a greater understanding of their customers and operations; and • IoT, which unlocks greater insights and new business models.
Cognizant 5 December 31, 2022 Form 10-K Table of Contents Reportable Business Segments We go to market across seven industry-based operating segments, which are aggregated into four reportable business segments: • Financial Services (FS) ◦ Banking ◦ Insurance • Health Sciences (HS) - This reportable business segment is comprised of a single operating segment of the same name. • Products and Resources (P&R) ◦ Retail and Consumer Goods ◦ Manufacturing, Logistics, Energy and Utilities ◦ Travel and Hospitality • Communications, Media and Technology (CMT) - This reportable business segment is comprised of a single operating segment of the same name.
Cognizant 5 December 31, 2023 Form 10-K Table of Contents Reportable Business Segments We go to market across seven industry-based operating segments, which are aggregated into four reportable business segments: • Financial Services (FS) ◦ Banking ◦ Insurance • Health Sciences (HS) - This reportable business segment is comprised of a single operating segment of the same name. • Products and Resources (P&R) ◦ Retail and Consumer Goods ◦ Manufacturing, Logistics, Energy and Utilities ◦ Travel and Hospitality • Communications, Media and Technology (CMT) - This reportable business segment is comprised of a single operating segment of the same name.
Software and Platform Engineering Our Software and Platform Engineering integrated practice helps clients develop modern enterprises through digital products, services and solutions that help them improve employee experiences and deliver new value for their customers.
Software and Platform Engineering Our Software and Platform Engineering practice helps clients develop modern enterprises through digital products, services and solutions that help them improve employee experiences and deliver new value for their customers.
Accordingly, we rely on the following to compete effectively: • investments to scale our digital services; • our recruiting, training and retention model; • our global delivery model; • an entrepreneurial culture and approach to our work; • a broad client referral base; • investment in process improvement and knowledge capture; • financial stability and good corporate governance; • continued focus on responsiveness to client needs, quality of services and competitive prices; and • project management capabilities and technical expertise.
Accordingly, we rely on the following to compete effectively: • investments to scale our AI capabilities; • our recruiting, training and retention model; • our global delivery model; • an entrepreneurial culture and approach to our work; • a broad client referral base; • investment in process improvement and knowledge capture; • financial stability and good corporate governance; • continued focus on responsiveness to client needs, quality of services and competitive prices; and • project management capabilities and technical expertise.
For additional information, see Part I, Item 1A. Risk Factors . Cognizant 9 December 31, 2022 Form 10-K Table of Contents Engaging Our People As a global professional services company, Cognizant competes on the basis of the knowledge, experience, insights, skills and talent of its employees and the value they can provide to clients.
For additional information, see Part I, Item 1A. Risk Factors . Cognizant 9 December 31, 2023 Form 10-K Table of Contents Engaging Our People As a global professional services company, Cognizant competes on the basis of the knowledge, experience, insights, skills and talent of its employees and the value they can provide to clients.
Our clients are able to leverage data, technologies and our digital engineering, design and product development capabilities to build world-class experiences, and a responsive, agile and intuitive framework for continuous innovation. Areas of focus are: • Digital engineering, which delivers modern business software; and • Application development and management, which improves or reimagines applications.
Our clients can leverage data, technologies and our digital engineering, design and product development capabilities to build world-class experiences, and a responsive, agile and intuitive framework for continuous innovation. Areas of focus are: • Digital engineering, which delivers modern business software; and • Application development and management, which improves or reimagines applications.
Responsible operations and transparency around environmental and social efforts are increasingly important to our stakeholders, which is why our ESG program is designed to align with our clients’ and employees’ increasing focus on ESG-related topics in our value chain, including but not limited to, our supply chain, delivery and solutions.
Responsible operations and transparency around environmental and social efforts are important to our stakeholders, which is why our ESG program is designed to align with our clients’ and employees’ focus on ESG-related topics in our value chain, including but not limited to, our supply chain, delivery and solutions.
Cognizant 6 December 31, 2022 Form 10-K Table of Contents For the year ended December 31, 2022, the distribution of our revenues across our four reportable business segments was as follows: The services we provide are distributed among a number of clients in each of our reportable business segments.
Cognizant 6 December 31, 2023 Form 10-K Table of Contents For the year ended December 31, 2023, the distribution of our revenues across our four reportable business segments was as follows: The services we provide are distributed among a number of clients in each of our reportable business segments.
W e utilize subcontractors to provide additional capacity and flexibility in meeting client demand, though the number of subcontractors has historically been immaterial relative to our employee headcount. We are not party to any significant collective bargaining agr eements.
We utilize subcontractors to provide additional capacity and flexibility in meeting client demand, though the number of subcontractors has historically been immaterial relative to our employee headcount. We are not party to any significant collective bargaining agr eements.
More than 1,200 women have progressed through this initiative; and – Periodic talent processes such as talent reviews aim to help individuals develop in role and prepare for the future, while strengthening our leadership pipeline overall.
More than 1,600 women have progressed through this initiative; and – Periodic talent processes such as talent reviews aim to help individuals develop in role and prepare for the future, while strengthening our leadership pipeline overall.
Cognizant 11 December 31, 2022 Form 10-K Table of Contents • Supporting Wellbeing at Work and Home: Our Be Well program offers a portfolio of benefits and rewards across all dimensions of wellbeing - physical, mental, financial and life & work.
Cognizant 11 December 31, 2023 Form 10-K Table of Contents • Supporting Wellbeing at Work and Home: Our Be Well program offers a portfolio of benefits and rewards across all dimensions of wellbeing - physical, mental, financial and life & work.
Our services decrease time to market, drive efficiencies and deliver impactful experiences. Our clients are able to better share information, simplify IT processes, automate workflow and improve flexibility. This practice focuses on application services, which help enterprises engage their partner ecosystems more productively, and run their operations and financial organizations more efficiently while enabling improved employee and customer experiences.
Our services decrease time to market, drive efficiencies and deliver impactful experiences. Our clients can better share information, simplify IT processes, automate workflow and improve flexibility. This practice focuses on application services, which help enterprises engage their partner ecosystems more productively, and run their operations and financial organizations more efficiently while enabling improved employee and customer experiences.
Our business process outsourcing services help clients transform and run functions and industry-specific processes such as finance and accounting, omni-channel customer care, loan origination, annotation services, location-based services and medical data management.
Our technology-driven business process outsourcing services help clients transform and run functions and industry-specific processes such as finance and accounting, omni-channel customer care, loan origination, annotation services, location-based services and medical data management.
Cognizant 7 December 31, 2022 Form 10-K Table of Contents Enterprise Platform Services Our Enterprise Platform Services integrated practice helps our clients digitally transform multiple front- and back-office business processes, implementing enterprise-wide platforms that enable customer experience, customer relationship management, human capital management, supply chain management, enterprise resource planning and finance.
Cognizant 7 December 31, 2023 Form 10-K Table of Contents Enterprise Platform Services Our Enterprise Platform Services practice helps our clients digitally transform multiple front- and back-office business processes, implementing enterprise-wide platforms that enable customer experience, customer relationship management, human capital management, supply chain management, enterprise resource planning and finance.
Areas of focus are: • Business process outsourcing services, which help deliver business outcomes including revenue growth, increased customer and employee satisfaction, and cost savings; and • Intelligent automation, which includes advisory and process and IT automation solutions designed to simplify and accelerate automation adoption.
Areas of focus are: • Business process outsourcing services, which help deliver business outcomes including revenue growth, increased customer and employee satisfaction, and cost savings; and • AI-led automation, which includes advisory and process and IT automation solutions designed to simplify and accelerate automation adoption.
Additionally, we pursue select strategic acquisitions that can expand our talent, experience and capabilities in key digital areas or in particular geographies or industries. In 2022, we completed two such acquisitions to complement the 16 acquisitions we completed during 2020 and 2021. See Note 3 to our consolidated financial statements for additional information.
Additionally, we pursue select strategic acquisitions that can expand our talent, experience and capabilities in key digital areas or in particular geographies or industries. In 2023, we completed two such acquisitions to complement the nine acquisitions we completed during 2021 and 2022. See Note 3 to our consolidated financial statements for additional information.
Our CMT segment includes global communications, media and entertainment, education, information services and technology companies. Demand in this segment is driven by our clients’ need for services related to digital content, the creation of personalized user experiences, acceleration of digital engineering and access to new revenue streams to drive growth.
Our CMT segment includes global communications, media and entertainment, education, information services and technology companies. Demand in this segment is driven by our clients’ need for services related to digital content, business process improvement, technology modernization, the creation of unified and compelling user experiences and identifying new revenue streams to drive growth.
The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Table of Contents
The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Cognizant 13 December 31, 2023 Form 10-K Table of Contents
Item 1. Business Overview Cognizant is one of the world’s leading professional services companies, engineering modern businesses and delivering strategic outcomes for our clients. We help clients modernize technology, reimagine processes and transform experiences so they can stay ahead in a fast-changing world.
Item 1. Business Overview Cognizant is one of the world’s leading professional services companies, engineering modern businesses and delivering strategic outcomes for our clients. We help clients modernize technology, reimagine processes and transform experiences so they can stay ahead in a fast-changing world. We provide industry expertise and close client collaboration, combining critical perspective with a flexible engagement style.
Highlights include: – Robust technical programs that reskill and upskill our employees with a focus on building digital skills in areas such as IoT, digital engineering, data and cloud; – Innovative pre-employment training programs for graduates and early to mid-career professionals that focus on cultivating technology skills required for the next-generation workforce; – Our in-house, access-from-anywhere learning experience platform provides a marketplace recognizing both formal and informal learning, as well as recommended learning journeys; – A platform-driven mentorship program connects mentees with mentors across the global organization to learn and develop; – Development plans for all levels to encourage employees to own and prioritize their growth; and – Our approach to talent development has been recognized by leading learning and development organizations, such as the Association for Talent Development and the Brandon Hall group. • Leadership Development & Talent Management: Cognizant continuously fosters its pipeline of diverse, high-performing leaders who have the breadth and versatility to drive growth.
We trained 137,000 employees across a variety of digital skills; – Innovative pre-employment training programs for graduates and early to mid-career professionals that focus on cultivating technology skills required for the next-generation workforce; – Our in-house, access-from-anywhere learning experience platform provides a marketplace recognizing both formal and informal learning, as well as recommended learning journeys; – Development plans for all levels to encourage employees to own and prioritize their growth; and – Our approach to talent development has been recognized by leading learning and development organizations, such as the Association for Talent Development, NASSCOM and the Brandon Hall group. • Leadership Development & Talent Management: Cognizant continuously fosters its pipeline of high-performing leaders who have the breadth and versatility to drive growth.
Kumar has a bachelor’s degree in Engineering from Shivaji University and an M.B.A. from Xavier Institute of Management, India. Jan Siegmund has been our Chief Financial Officer since September 2020. Prior to joining Cognizant, Mr.
Kumar has a bachelor’s degree in Engineering from Shivaji University and an MBA from Xavier Institute of Management, India. Jatin Dalal has been our Chief Financial Officer since December 2023. Prior to joining Cognizant, Mr.
In response to this demand, we are focusing on services and solutions in the areas of monetization of networks, assets and platforms, as well as data modernization and customer experience design.
In response to this demand, we are focusing on services and solutions in the areas of monetization and evolution of networks, media supply chain transformation, product engineering and verticalization as well as data modernization and customer experience design.
Ayyar was the CEO of Mphasis, a global IT services company listed in India, from 2009 to 2017. Prior to Mphasis, Mr. Ayyar spent nearly two decades with Hewlett-Packard, holding a variety of leadership roles across multiple geographies. Surya Gummadi has been our Executive Vice President and President, Americas since January 2023.
Previously, he was Executive Vice President and President, Digital Operations from August 2019 to June 2022. Prior to joining Cognizant, Mr. Ayyar was the CEO of Mphasis, a global IT services company listed in India, from 2009 to 2017. Prior to Mphasis, Mr. Ayyar spent nearly two decades with Hewlett-Packard, holding a variety of leadership roles across multiple geographies.
Our direct competitors include, among others, Accenture, Atos, Capgemini, Deloitte Digital, DXC Technology, EPAM Systems, Genpact, HCL Technologies, IBM Consulting, Infosys Technologies, Tata Consultancy Services and Wipro. In addition, we compete with numerous smaller local companies in the various geographic markets in which we operate. For additional information, see Part I, Item 1A. Risk Factors .
Our direct competitors include, among others, Accenture, Atos, Capgemini, Deloitte Digital, DXC Technology, EPAM Systems, Genpact, HCL Technologies, IBM Consulting, Infosys Technologies, Tata Consultancy Services and Wipro. In addition, we compete Cognizant 8 December 31, 2023 Form 10-K Table of Contents with numerous smaller local companies in the various geographic markets in which we operate.
Kim held a variety of senior leadership roles at Capgemini from January 2012 to November 2019, including Global Head of Big Deals. Prior to Capgemini, Mr. Kim served as U.S.
Previously, he served as our Senior Vice President and Deputy General Counsel, Global Commercial Contracts. Prior to joining Cognizant in 2019, Mr. Kim held a variety of senior leadership roles at Capgemini from January 2012 to November 2019, including Global Head of Big Deals. Prior to Capgemini, Mr. Kim served as U.S.
Our services and solutions are organized into four integrated practices to simplify our operating model and better serve our clients through integrated solutioning and delivery. These integrated practices are Core Technologies and Insights, Enterprise Platform Services, Intuitive Operations and Automation, and Software and Platform Engineering.
Our services and solutions are organized into five integrated practices, which help us better serve our clients through integrated solutioning and delivery. These practices are Core Technologies and Insights, Enterprise Platform Services, Industry Solutions, Intuitive Operations and Automation and Software and Platform Engineer ing.
Training our talent in new digital skills supports career growth, internal talent movement, and brings seasoned Cognizant associates to projects. These trainings are provided in collaboration with the world’s leading educational and technology partners.
Training our talent in new digital skills supports career growth, internal talent movement, and helps build capabilities in new and emerging technologies and subject areas. These trainings are provided in collaboration with the world’s leading educational and technology partners.
None of our executive officers is related to any other executive officer or to any of our Directors. Our executive officers are appointed annually by the Board of Directors and generally serve until their successors are duly appointed and qualified.
Telesmanic has a Bachelor of Science degree from New York University and an MBA from Columbia University. None of our executive officers are related to any other executive officer or to any of our Directors. Our executive officers are appointed annually by the Board of Directors and generally serve until their successors are duly appointed and qualified.
Cognizant 8 December 31, 2022 Form 10-K Table of Contents The principal competitive factors affecting the markets for our services include the provider’s reputation and experience, strategic advisory capabilities, digital services capabilities, performance and reliability, responsiveness to customer needs, financial stability, corporate governance and competitive pricing of services.
For additional information, see Part I, Item 1A. Risk Factors . The principal competitive factors affecting the markets for our services include the provider’s reputation and experience, strategic advisory capabilities, digital services capabilities, performance and reliability, responsiveness to customer needs, financial stability, corporate governance and competitive pricing of services.
We believe that our deep knowledge of the industries we serve and our clients’ businesses has been central to our growth and high client satisfaction, and we continue to invest in those digital capabilities that help to enable our clients to become modern businesses. Our FS segment includes banking, capital markets, payments and insurance companies.
We believe that our deep knowledge of the industries we serve and our clients’ businesses has been central to our growth and high client satisfaction, and we continue to develop and deploy our client-centric culture, innovating together to produce transformative outcomes. Our FS segment includes banking, capital markets, payments and insurance companies.
Workforce We had approximately 355,300 employees at the end of 2022, with 258,500 in India, 41,100 in North America, 18,200 in Continental Europe, 9,200 in the United Kingdom and 28,300 in various other locations throughout the rest of the world. This represents an increase of 24,700 employees as compared to December 31, 2021.
Workforce We had approximately 347,700 employees at the end of 2023, with 254,000 in India, 40,500 in North America, 16,300 in Continental Europe, 8,500 in the United Kingdom and 28,400 in various other locations throughout the rest of the world. This represents a decrease of 7,600 employees as compared to December 31, 2022.
Central to our strategy to align with our clients’ need to modernize is our continued investment in digital, with a focus on four key areas: IoT, digital engineering, data and cloud.
Central to our strategy to align with our clients’ need to modernize is our continued investment in new technologies, including AI, cloud, data modernization, automation, digital engineering and IoT.
Core Technologies and Insights Our Core Technologies and Insights integrated practice helps clients build agile and relevant organizations that apply the power of cloud, data, software, and IoT to help them perform better and innovate faster.
Core Technologies and Insights Our Core Technologies and Insights practice helps clients build agile and relevant organizations that apply the power of cloud, data and IoT to help them perform better and innovate faster. Our clients can harness data securely in cloud-first architectures, enabling them to become highly resilient enterprises that are capable of quickly adapting to market dynamics.
Cognizant 12 December 31, 2022 Form 10-K Table of Contents Information About Our Executive Officers The following table identifies our current executive officers: Name Age Capacities in Which Served In Current Position Since Ravi Kumar S 51 Chief Executive Officer 2023 Jan Siegmund 58 Chief Financial Officer 2020 Robert Telesmanic 56 Senior Vice President, Controller and Chief Accounting Officer 2017 John Kim 55 Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary 2021 Rebecca Schmitt 49 Executive Vice President, Chief People Officer 2020 Balu Ganesh Ayyar 61 Executive Vice President and President, Intuitive Operations and Automation 2019 Surya Gummadi 46 Executive Vice President and President, Americas 2023 Robert Walker 49 Executive Vice President and President, Global Growth Markets 2022 Ravi Kumar Singisetti (also referred to as Ravi Kumar S or Ravi Kumar) has been our Chief Executive Officer since January 2023.
Information About Our Executive Officers The following table identifies our current executive officers: Name Age Capacities in Which Served Ravi Kumar S 52 Chief Executive Officer Jatin Dalal 49 Chief Financial Officer Balu Ganesh Ayyar 62 EVP and President, Intuitive Operations and Automation and Industry Solutions Kathryn Diaz 54 EVP, Chief People Officer Surya Gummadi 47 EVP and President, Americas John Kim 56 EVP, General Counsel, Chief Corporate Affairs Officer and Secretary Robert Telesmanic 57 SVP, Controller and Chief Accounting Officer Ravi Kumar Singisetti (also referred to as Ravi Kumar S or Ravi Kumar) has been our Chief Executive Officer since January 2023.
Cognizant 10 December 31, 2022 Form 10-K Table of Contents • High Performance Culture: We aim to create a work environment where every person is inspired to achieve, driven to perform and rewarded for their contributions. Our culture of meritocracy fosters individual and team high performance to fuel our growth.
In our 2023 engagement survey, D&I continued to score higher than external benchmarks, showing as a consistent strength for Cognizant. • High Performance Culture: We aim to create a work environment where every person is inspired to achieve, driven to perform and rewarded for their contributions. Our culture of meritocracy fosters individual and team high performance to fuel our growth.
Our attrition rate for the years ended December 31, 2022 and 2021, including both voluntary and involuntary, was 31.7% and 30.8%, respectively. • Advancing Diversity & Inclusion: We strive to continually improve upon D&I over the long term. A diverse and inclusive workfor ce strengthens our ability to innovate and to understand our clients’ needs and aspirations.
For the years ended December 31, 2023 and 2022, our Voluntary Attrition - Tech Services was 13.8% and 25.6%, respectively. • Diversity & Inclusion: We believe a diverse and inclusive workfor ce strengthens our ability to innovate and to understand our clients’ needs and aspirations.
Prior to that, he served in a variety of roles in his 24-year tenure with Cognizant. He holds a degree in mechanical engineering from Indian Institute of Technology, Bombay. Robert Walker has been our Executive Vice President and President, Global Growth Markets, which covers all of Cognizant’s markets outside of North America, since June 2022.
Prior to that, he served in a variety of roles during his more than 20-year tenure with Cognizant. He holds a degree in mechanical engineering from Indian Institute of Technology, Bombay. John Kim has been our Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary since March 2021.
These trends result in increased demand for services that drive operational improvements in areas such as clinical development, pharmacovigilance and manufacturing, as well as claims processing, enrollment, membership and billing.
Demand in this segment is driven by emerging industry trends, including the shift towards consumerism, outcome-based contracting, digital health and delivering integrated seamless, omni-channel, patient-centered experiences. These trends result in increased demand for services that drive operational improvements in areas such as clinical development, pharmacovigilance and manufacturing, as well as claims processing, enrollment, membership and billing.
On an annual basis, after each engagement survey, we develop and communicate clear action plans to continue to build on our strengths and address shortfalls. In 2022, we saw meaningful increases in our employee engagement results, including scores above benchmark across multiple categories.
In 2023, we saw meaningful increases in our employee engagement scores; – On an annual basis, after each engagement survey, we develop action plans designed to continue to build on our strengths and address shortfalls. People managers are also asked to assess their scores and build actions plans for their teams; and – We regularly assess retention levels.
Highlights include: – Annual performance-based promotions and merit increases for eligible associates at all levels; – Encouraging regular role movement and career growth through our internal job moves initiative.
Highlights include: – Structured performance evaluation processes to ensure that expectations are clear and employees are rewarded for achieving and exceeding established goals; Cognizant 10 December 31, 2023 Form 10-K Table of Contents – Annual performance-based promotions and merit increases for eligible employees at all levels; – Encouraging regular role movement and career growth through our internal job moves initiative.
He is a member of the Board of Directors of Digimarc Corporation, where he is a member of the Compensation & Talent Management Committee and the Market Development Committee, and Transunion, where he is a member of the Compensation Committee and the Mergers, Acquisitions and Integration Committee. Mr.
Kumar served in positions of increasing authority at PricewaterhouseCoopers, Cambridge Technology Partners, Oracle Corporation, Sapient and Infosys. He is a member of the Board of Directors of Transunion, where he is a member of the Compensation Committee and the Mergers, Acquisitions and Integration Committee. Mr.
We continually review and enhance our offerings to best meet the needs of today's modern workforce. Highlights include: – Our WorkFlex program, which provides employees greater flexibility to complete their required hours outside their standard schedule or to transition to a part-time schedule to accommodate personal priorities.
Highlights include: – Our WorkFlex program, which provides employees greater flexibility to complete their required hours outside their standard schedule or to transition to a part-time schedule to accommodate personal priorities; – We provide access and support for mental health for our employees globally through a robust Employee Assistance Program; – We provide various resources and access to third party mental health platforms, webinars, and events throughout the year.
Our purpose, vision and values comprise the Cognizant agenda. In order to achieve this vision and support our clients, we are continuing to focus our business on four strategic priorities to increase our commercial momentum and accelerate growth.
Our purpose, vision and values are central to Cognizant's strategic approach. In order to achieve this vision and support our clients, we are focusing our business on six strategic initiatives to simplify our operations, become an employer of choice and accelerate growth.
These digital technologies enable customer experience enhancement, robotic process automation, analytics and AI in areas such as digital lending, fraud detection and next generation payments. In addition to platforms that drive outcomes at speed, demand is also created by our clients’ desire to reduce complexity through packaged solutions and suppliers with embedded product partners.
Demand in this segment is driven by our clients’ need to adopt and integrate digital technologies to serve their customers while complying with significant regulatory requirements and adapting to regulatory change. These digital technologies enable enhanced customer experience, robotic process automation, analytics and AI in areas such as digital lending, fraud detection and next generation payments.
We aim for our employees to feel motivated, engaged, and empowered to do their best work through careers they find meaningful.
We aim to be the employer of choice in our industry and for our employees to feel motivated, engaged, and empowered to do their best work through careers they find meaningful. • Engagement & Retention: In a market where competition for skilled IT professionals is intense, we routinely focus on listening to, engaging with and investing in our people through a comprehensive talent approach.
We work closely with partners including Adobe, Amazon Web Services, Cisco, Google, Microsoft, Oracle, Pegasystems, Salesforce, SAP, ServiceNow, Workday and many others. Intuitive Operations and Automation Our Intuitive Operations and Automation integrated practice helps clients build and run modern operations through two main vehicles: intelligent automation and business process outsourcing services.
We work closely with partners including Adobe, Amazon Web Services, Cisco, Google, Microsoft, Oracle, Pegasystems, Salesforce, SAP, ServiceNow, Workday and many others. Industry Solutions Our Industry Solutions was established in 2023 as part of Cognizant’s strategy to build differentiation at the industry level. The practice integrates industry technologists and thought leaders specialized in vertical micro-segments.
This includes guides and training on topics such as engaging hybrid teams, preventing fatigue and burnout, and more. Environmental, Social and Corporate Governance We believe integrating ESG considerations into our strategy will help us meet client and other stakeholder expectations.
These tools include guides and training on topics such as engaging hybrid teams, preventing fatigue and burnout, and more.
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These strategic priorities include: • Accelerating digital - growing our digital business organically and inorganically; • Globalizing Cognizant - accelerating the growth of our business in key international markets and diversifying our leadership, capabilities and delivery footprint; • Increasing our relevance to our clients - leading with thought leadership and capabilities to address clients' business needs; and • Repositioning our brand - improving global brand recognition and becoming better known as a global digital partner to the entire C-suite.
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These strategic initiatives include: • Growing in select industries - investing in prioritized industries to drive differentiation across our value chain; • Expanding internationally - growing by prioritizing strategic growth accounts; • Building large deal capabilities - enhancing creative deal generation with the right solutions, deal modeling and governance; • Capturing the AI opportunity - protecting and expanding in target areas while improving efficiency; • Delivering our talent strategy - embedding our cultural values and building a future-relevant talent model; and • Continuing to implement our IT roadmap – continuing to modernize and execute critical projects necessary to lead with AI.
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Demand in this segment is driven by our clients’ need to serve their customers while being compliant with significant regulatory requirements and adaptable to regulatory change, adopting and integrating digital technologies in order to do so.
Added
In addition to having platforms that drive outcomes at speed, demand is also created by our clients’ desire to reduce complexity through packaged solutions and suppliers with embedded product partners. Our HS segment consists of healthcare providers and payers, and life sciences companies, including pharmaceutical, biotech and medical device companies.
Removed
Our HS segment consists of healthcare providers and payers as well as life sciences companies, including pharmaceutical, biotech and medical device companies. Demand in this segment is driven by emerging industry trends, including the shift towards consumerism, outcome-based contracting, digital health and delivering integrated seamless, omni-channel, patient-centered experiences.
Added
These teams work with specialized partners to develop industry-specific products and services that enable clients to improve productivity, increase operational excellence and accelerate innovation. Intuitive Operations and Automation Our Intuitive Operations and Automation practice helps clients build and run modern operations through two main vehicles: AI-led automation and business process outsourcing services.
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Our clients are able to harness data securely in cloud-first architectures, enabling them to become highly resilient enterprises that are capable of quickly adapting to market dynamics.
Added
Highlights include: – We maintain and regularly enhance our employee value proposition (the benefits and experiences we offer our associates) as the strategic guide for our people programs, including our recruitment, talent management and employee engagement efforts; – We monitor engagement levels and assess employee sentiment through a third-party engagement survey.
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In a market where competition for skilled IT professionals is intense, we focus on the following: • Engagement & Retention: We regularly monitor employee engagement and retention levels, and assess employee sentiment through third-party engagement surveys, leader listening sessions and interactions on our internal channels.
Added
Despite continued competition for skilled employees in the technology industry, Cognizant experienced meaningfully lower attrition in 2023 compared to the prior year. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business.
Removed
Competition for skilled employees in the current labor market is intense, and we experienced significantly elevated attrition during 2022. We continue to enhance our employee value proposition and our pay-for-performance approach as well as increase our efforts with respect to recruitment, talent management and employee engagement.
Added
This metric, which we refer to as Voluntary Attrition - Tech Services, includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice.
Removed
For the three months ended December 31, 2022 and 2021, our annualized attrition rate, including both voluntary and involuntary, was 25.3% and 34.6%, respectively.
Added
As of each of December 31, 2023 and 2022, women represented approximately 38% of our workforce.
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In addition, every leader at the level of director and above has a goal for hiring and retaining women at the senior manager level and above in their business area; – Our sponsorships with the PGA, LPGA, where we doubled the Cognizant Founders Cup purse, and the Aston Martin Cognizant Formula One Team, where we partnered with Racing Pride to promote LGBTQ+ inclusivity in motor racing, demonstrate our commitment to equality and furthering diversity and inclusion around the world; and – In 2022, Cognizant earned a perfect score on the Human Rights Campaign Foundation’s 2022 Corporate Equality Index, a foremost benchmarking survey related to LGBTQ+ workplace equality.
Added
Highlights include: – In 2023, more than 265,000 of our employees acquired one or more skills utilizing our learning ecosystem; – Robust technical programs that reskill and upskill our employees with a focus on building digital skills in areas such as AI, GenAI, IoT, digital engineering, data and cloud.
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As of December 31, 2022, we employed approximately 134,000 women, or 38% of our workforce, as compared to approximately 123,000 women, or 38% of our workforce, as of December 31, 2021. In our 2022 engagement survey, D&I continued to score higher than external benchmarks, showing as a consistent strength for Cognizant.
Added
We continually review and enhance our offerings to best meet the needs of today's modern workforce.
Removed
In 2022, we expanded this program, making it available to more geographies; – We ensure access and support for all employees globally for mental health through a robust Employee Assistance Program.
Added
Dalal served as Chief Financial Officer of Wipro Limited, a publicly traded multinational technology and services consulting company, from April 2015 to November 2023 and assumed additional responsibilities as President from December 2019 to November 2023 . Previously, he held various leadership positions at Wipro, including CFO, IT Business from 2011 to 2015.
Removed
In 2022, we expanded mental health insurance coverage in many countries; – We provide various resources and access to third party mental health platforms, webinars, and events throughout the year.
Added
He joined Wipro in Cognizant 12 December 31, 2023 Form 10-K Table of Contents 2002 from the General Electric Company, where he began his career in 1999. Mr. Dalal holds a bachelor’s degree in engineering from the National Institute of Technology in Surat, India.
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In 2022, we took the following steps to advance our ESG agenda: • In 2022, we focused on engaging our associates on sustainability and community efforts, such as skills-based volunteering, on team and culture building through social impact and voluntary training on sustainability fundamentals.
Added
He also has a postgraduate diploma in business administration with a specialization in finance and international business from Narsee Monjee Institute of Management Studies in Mumbai, India. In addition, Mr. Dalal is a Chartered Accountant (India), a Chartered Management Accountant (UK) and a Chartered Financial Analyst (USA). Mr.
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Employees who participated in our affinity groups or Outreach programs had a lower attrition rate than Company average in 2022; • In June 2022, we issued our ESG report with limited assurance on greenhouse gas emissions data.
Added
Dalal is also an alumnus of the Advanced Management Program of The Wharton School of the University of Pennsylvania. Balu Ganesh Ayyar has been our Executive Vice President and President, Intuitive Operations and Automation since July 2022 and assumed additional responsibilities for Industry Solutions in April 2023.
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We continue to report against criteria aligned to GRI (Global Reporting Index), SASB (Sustainability Accounting Standards Board) and TCFD (Taskforce on Climate-related Financial Disclosures); and • In April 2022, we set a near-term target of sourcing 100% renewable energy for all our global offices and facilities by the end of 2026.
Added
Kathryn (Kathy) Diaz has been our Executive Vice President, Chief People Officer since September 2023. She held the role on an interim basis from May 2023 to September 2023. Prior to being appointed Chief People Officer, Ms. Diaz served as the Head of Global Total Rewards at Cognizant from July 2020 until September 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+45 added−8 removed117 unchanged
Biggest changeSuch outbreaks could reduce demand for our services, particularly in regions or industries that are significantly impacted by such events. • Delivery challenges – Due to the closures of many of our clients' facilities, including as a result of various orders from national, state or local governments, we faced challenges in delivering services to our clients and satisfying contractually agreed upon service levels during the COVID-19 pandemic and could face such closures in future pandemics, epidemics or other outbreaks of disease.
Biggest changeThe vast majority of our business is with clients in the United States, the United Kingdom and other countries in Europe, all regions that were significantly impacted by the COVID-19 pandemic and could be impacted by other future outbreaks of disease. • Delivery challenges – We could face closures of our clients' facilities that materially impair our ability to deliver services to our clients and satisfy contractually agreed upon service levels during pandemics, epidemics, or other outbreaks of disease.
Our risk management, business continuity and disaster recovery plans may not be effective at predicting or mitigating the effects of such disruptions, particularly in the case of catastrophic events or longer term, increasingly severe developments that occur as a result of climate change.
Our risk management, business continuity and disaster recovery plans may not be effective at predicting or mitigating the effects of such disruptions, particularly in the case of catastrophic events or longer term, increasingly severe developments that may occur as a result of climate change.
We provide services to clients and have operations in many parts of the world and in a wide variety of different industries, subjecting us to numerous, and sometimes conflicting, laws and regulations on matters as diverse as trade controls and sanctions, immigration (including temporary work authorizations or work permits), content requirements, trade restrictions, tariffs, taxation, antitrust laws, anti-money laundering and anti-corruption laws (including the FCPA and the U.K.
We provide services to clients and have operations in many parts of the world and in a wide variety of different industries, subjecting us to numerous, evolving, and sometimes conflicting, laws and regulations on matters as diverse as trade controls and sanctions, immigration (including temporary work authorizations or work permits), content requirements, trade restrictions, tariffs, taxation, antitrust laws, anti-money laundering and anti-corruption laws (including the FCPA and the U.K.
Bribery Act), the environment, including climate change regulation and reporting requirements, government affairs, internal and disclosure control obligations, data privacy, intellectual property, employment and labor relations and human rights. We face significant regulatory compliance costs and risks as a result of the size and breadth of our business.
Bribery Act), the environment, including climate change regulation and reporting requirements, government affairs, internal and disclosure control obligations, data privacy, intellectual property, employment and labor relations, human rights and AI. We face significant regulatory compliance costs and risks as a result of the size and breadth of our business.
We may not be successful in identifying suitable opportunities, completing targeted transactions or achieving the desired results in the timeframe we expect or at all, such opportunities may divert our management's time and focus away from our core business and realizing the desired results of a particular transaction may depend upon competition, market trends, additional costs or investments and the actions of suppliers or other third parties.
We may not be successful in identifying suitable opportunities, completing targeted transactions or achieving the desired results in the timeframe we expect or at all, such opportunities may divert our management's time and focus away from our core business and realizing the desired results of a particular transaction may depend upon competition, market trends, regulatory developments, additional costs or investments and the actions of suppliers or other third parties.
Our profitability depends on the efficiency with which we run our operations (including changes in our internal organizational structure) and the cost of our operations, especially the compensation and benefits costs of our employees.
Our profitability also depends on the efficiency with which we run our operations (including changes in our internal organizational structure) and the cost of our operations, especially the compensation and benefits costs of our employees.
Cognizant 21 December 31, 2022 Form 10-K Table of Contents In addition, from time to time there has been publicity about purported negative experiences associated with offshore outsourcing, such as alleged domestic job loss and theft and misappropriation of sensitive client data, particularly involving service providers in India.
Cognizant 21 December 31, 2023 Form 10-K Table of Contents In addition, from time to time there has been publicity about purported negative experiences associated with offshore outsourcing, such as alleged domestic job loss and theft and misappropriation of sensitive client data, particularly involving service providers in India.
Further, any future pandemic, epidemic or other outbreak of disease, and the volatile regional and global economic conditions stemming from such an event, could precipitate or aggravate the other risk factors that we identify in this report, any of which could have a material adverse impact to our business.
Further, any future pandemic, epidemic or other outbreak of disease, and the volatile regional and global economic conditions stemming from such an event, could precipitate or amplify the other risk factors that we identify in this report, any of which could have a material adverse impact to our business.
Cognizant 20 December 31, 2022 Form 10-K Table of Contents If our risk management, business continuity and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation.
Cognizant 20 December 31, 2023 Form 10-K Table of Contents If our risk management, business continuity and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation.
For example, we may experience increased costs in 2023 and future years for employment and post-employment benefits in India as a result of the issuance of the Code on Social Security, 2020, which enhanced social security coverage (a portion of which is paid by the employer) and extended such benefits to all workers .
For example, we may experience increased costs in 2024 and future years for employment and post-employment benefits in India as a result of the issuance of the Code on Social Security, 2020, which enhanced social security coverage (a portion of which is paid by the employer) and extended such benefits to all workers.
The use of new technologies in our offerings can expose us to additional risks if those technologies fail to work as predicted, which could lead to cost overruns, project delays, financial penalties, or damage to our reputation.
The use of new technologies in our offerings (including GenAI) can expose us to additional risks if those technologies fail to work as predicted, which could lead to cost overruns, project delays, financial penalties, or damage to our reputation.
As these new laws, regulations, treaties and similar initiatives and programs are adopted and implemented, we will be required to comply or potentially face market access limitations, enforcement actions, civil suits or sanctions, including fines.
As these new laws, regulations, treaties and similar initiatives and programs continue to be adopted and implemented, we will be required to comply or potentially face market access limitations, enforcement actions, civil suits or sanctions, including fines.
Our clients, regulators, or other third parties may attempt to hold us liable, through contractual indemnification clauses or directly, for any such losses or damages resulting from such an attack.
Our clients, regulators, or other third parties may attempt to hold us liable for any such losses or damages resulting from such an attack, including through contractual indemnification clauses.
System failures, outages and operational disruptions may be caused by factors outside of our control, such as hostilities (including the ongoing conflict between Russia and Ukraine), political unrest, terrorist attacks, cybersecurity incidents, power or water shortages or telecommunications failures, natural or man-made disasters or other catastrophic events (including extreme weather conditions and other events that may be caused or exacerbated by climate change), and public health emergencies, epidemics and pandemics, affecting the geographies where our people, equipment and clients are located.
System failures, outages and operational disruptions may be caused by factors outside of our control, such as hostilities (including the ongoing conflicts between Russia and Ukraine and in the Middle East), political unrest, terrorist attacks, cybersecurity incidents, power or water shortages or telecommunications failures, natural or man-made disasters or other catastrophic events (including extreme weather conditions and other events that may be caused or exacerbated by climate change), and public health emergencies, epidemics and pandemics, affecting the geographies where our people, equipment and clients are located.
Further, we are expected to become increasingly subject to laws, regulations and international treaties relating to climate change, such as carbon pricing or product energy efficiency requirements.
Further, we are subject to, and expect to become increasingly subject to, laws, regulations and international treaties relating to climate change, such as carbon pricing or product energy efficiency requirements.
The COVID-19 pandemic had, and any future pandemic, epidemic or other outbreak of disease may have, widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets and business practices by, among other things, causing significant loss of life, curtailing congregation of people and disrupting communications and travel.
Any pandemic, epidemic or other outbreak of disease may have, widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets and business practices by, among other things, causing significant loss of life, curtailing congregation of people and disrupting communications and travel.
Volatile, negative or uncertain economic conditions could cause our clients to reduce, postpone or cancel spending on projects with us and could make it more difficult for us to accurately forecast client demand and have available the right resources to profitably address such client demand.
Volatile, negative or uncertain economic conditions have in the past and could in the future cause our clients to reduce, postpone or cancel spending on projects with us, making it more difficult for us to accurately forecast client demand and have available the right resources to profitably address such client demand.
Our business has experienced and may continue to experi ence s ignificant employee attrition, which has caused us to incur increased costs to hire new employees with the desired skills.
Our business has experienced in the past and may experi ence in the future s ignificant employee attrition, which has caused us to incur increased costs to hire new employees with the desired skills.
In 2021 and most of 2022, we, and we believe the IT industry as a whole, experienced unprecedented attrition. As a result, we hired over a hundred thousand new employees in each of 2021 and 2022.
In 2021 and most of 2022, we, and we believe the IT industry as a whole, experienced unprecedented attrition. As a result, we hired over a hundred thousand new employees in each of 2021 and 2022, an d over sixty thousand in 2023.
If we do not sufficiently invest in new technologies, successfully adapt to industry developments and changing demand, and evolve and expand our business at sufficient speed and scale to keep pace with the demands of the Cognizant 18 December 31, 2022 Form 10-K Table of Contents markets we serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy, which would materially adversely affect our business, results of operations and financial condition.
If we do not sufficiently invest in new technologies, successfully adapt to industry developments and changing demand, and evolve and expand our business at sufficient speed and scale to keep pace with the demands of the markets we serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy, which would materially adversely affect our business, results of operations and financial condition.
In addition, Russia’s invasion of Ukraine and associated international tensions have heightened the overall risk of cyber-threats and, while we have taken steps to mitigate such risks, those steps may not be successful.
In addition, recent international tensions (including Russia’s invasion of Ukraine and conflicts in the Middle East) have heightened the overall risk of cyber-threats and, while we have taken steps to mitigate such risks, those steps may not be successful.
Our worldwide effective income tax rate may increase or our financial condition may be materially impacted as a result of developments, changes in interpretations and assumptions made, additional guidance that may be issued and ongoing and future actions the Company has or may take with respect to our corporate structure and intercompany arrangements.
Cognizant 22 December 31, 2023 Form 10-K Table of Contents Our worldwide effective income tax rate may increase or our financial condition may be materially impacted as a result of developments, changes in interpretations and assumptions made, additional guidance that may be issued and ongoing and future actions the Company has or may take with respect to our corporate structure and intercompany arrangements.
The new 2022 Bill is designed to encourage growth in the technology sector; however, much detail (including on requirements for cross border transfers) has been left to subordinate legislation which will be prescribed by the executive arm of the government. As currently drafted, the bill limits penalties that can be imposed to 5 billion rupees or approximately $60 million.
The DPDP is designed to encourage growth in the technology sector; however, much detail (including on requirements for cross border transfers) has been left to subordinate legislation which will be prescribed by the executive arm of the government. The DPDP limits penalties that can be imposed to 2.5 billion Indian rupees or approximately $30 million.
Additionally, our cash flows could be materially affected by the issuance of additional interpretive guidance by the U.S. Treasury regarding the capitalization and amortization of research and experimental expenses for tax purposes, as more fully described in Note 11 to the consolidated financial statements.
For example, our cash flows could be materially affected by the issuance of additional interpretive guidance by the U.S. Treasury regarding the capitalization and amortization of research and experimental expenses for tax purposes, as more fully described in Note 11 to the consolidated financial statements. Additionally, we are subject to routine tax audits, investigations and proceedings in various jurisdictions.
While we strive to adjust pricing to reduce the impact of compensation increases on our operating margin, we may not be successful in recovering these increases, which could adversely affect our profitability and operating margin. Costs associated with recruiting and training employees are significant.
While we strive to adjust pricing to reduce the impact of compensation increases on our operating margin, we may not be successful in recovering these increases, which could adversely affect our profitability and operating margin. Costs associated with recruiting and training employees are Cognizant 14 December 31, 2023 Form 10-K Table of Contents significant.
We are Cognizant 17 December 31, 2022 Form 10-K Table of Contents particularly susceptible to wage and cost pressures in India and the exchange rate of the Indian rupee relative to the currencies of our client contracts due to the fact that the substantial majority of our employees are in India while our contracts with clients are typically in the local currency of the country where our clients are located.
We are particularly susceptible to wage and cost pressures in India and the exchange rate of the Indian rupee relative to the currencies of our client contracts due to the fact that the substantial majority of our employees are in India while our contracts with clients are typically in the local currency of the country where our clients are located.
We may not be able to achieve our profitability goals and maintain our capital return strategy. Our goals for profitability and capital return rely upon a number of assumptions, including our ability to improve the efficiency of our operations and make successful investments to grow and further develop our business.
Our goals for profitability and capital return rely upon a number of assumptions, including our ability to improve the efficiency of our operations and make successful investments to grow and further develop our business.
The rate of attrition began to decrease in the second half of 2022, but if such attrition levels do not continue to decrease or if they increase again in the future, it could materially adversely affect our business.
The rate of attrition began to decrease in the second half of 2022, but if such attrition levels increase again in the future, it could materially adversely affect our business and results of operations.
Our clients, suppliers, subcontractors, and other third parties with whom we do business, including in particular cloud service providers and software vendors, generally face similar cybersecurity threats, and we must rely on the safeguards adopted by these parties.
Our clients, suppliers, subcontractors, and other third parties with whom we do business, including in particular cloud service providers and software vendors, generally face similar cybersecurity threats, and we must rely on the safeguards Cognizant 18 December 31, 2023 Form 10-K Table of Contents adopted by these parties.
Cognizant 15 December 31, 2022 Form 10-K Table of Contents Additionally, if we are unable to offer our employees a value proposition that is competitive and appealing, it could have an adverse effect on engagement and retention, which may materially adversely affect our business.
Additionally, if we are unable to offer our employees a value proposition that is competitive and appealing, it could have an adverse effect on engagement and retention, which may materially adversely affect our business.
Failure to successfully adapt our corporate structure and intercompany arrangements to align with our Cognizant 22 December 31, 2022 Form 10-K Table of Contents evolving business operations may increase our worldwide effective tax rate and have a material adverse effect on our earnings, cash flows and financial condition.
Failure to successfully adapt our corporate structure and intercompany arrangements to align with our evolving business operations may increase our worldwide effective tax rate and have a material adverse effect on our earnings, cash flows and financial condition.
Addressing these employee morale and productivity concerns as well as other significant challenges presented by such events, including various business continuity measures demands significant management time and attention.
Addressing Cognizant 19 December 31, 2023 Form 10-K Table of Contents these employee morale and productivity concerns as well as other significant challenges presented by such events, including various business continuity measures demands significant management time and attention.
If new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet such obligations.
If new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased compliance burdens and costs to meet such obligations. If we fail to comply with new laws, regulations, treaties, or reporting requirements, our reputation and business could be adversely impacted.
Complying with changing regulatory requirements requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes to our business practices in certain jurisdictions, any of which could materially adversely affect our business operations and operating results. Climate change and risks arising from the transition to a lower-carbon economy may impact our business.
Complying with these changing regulatory requirements that apply to us directly or indirectly from our impacted customers requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes to our business practices in certain jurisdictions, any of which could materially adversely affect our business operations and operating results.
This or other similar events may have a material adverse impact upon, our business, liquidity, results of operations and financial condition, including as a result of the following: • Reduced client demand for services – The vast majority of our business is with clients in the United States, the United Kingdom and other countries in Europe, all regions that were significantly impacted by the COVID-19 pandemic and could be impacted by other future pandemics, epidemics or other outbreaks of disease.
Such events may have a material adverse impact upon, our business, liquidity, results of operations and financial condition, including as a result of the following: • Reduced client demand for services – Pandemics, epidemics, or other outbreaks of disease could reduce demand for our services, particularly in regions or industries that are significantly impacted by such events.
Further, as we expand into these areas, we may be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such new areas, which may negatively affect our reputation and demand for our services and solutions. We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from security breaches and/or cyberattacks.
Further, as we expand into these areas, we may be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such new areas, which may negatively affect our reputation and demand for our services and solutions. Our use of AI technologies may not be successful and may present business, financial, legal, and reputational risks.
Fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations, can adversely impact our profitability, results of operations and financial condition.
Failure to carry out our capital return strategy may adversely impact our reputation with shareholders and shareholders’ perception of our business and the trading price of our common stock. Fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations, can adversely impact our profitability, results of operations and financial condition.
Failure to carry out our capital return strategy may adversely impact our reputation with shareholders and shareholders’ perception of our business and the trading price of our common stock. Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse impact upon our business, liquidity, results of operations and financial condition.
Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse impact upon our business, liquidity, results of operations and financial condition.
A similar future pandemic, epidemic or other outbreak of disease, or a future security incident during such circumstances, could materially impair our ability to deliver services to clients. • Increased strain on employees and management – The significant challenges presented by a pandemic, such as the potentially life-threatening health risks to employees and their loved ones and the unavailability of various services our employees may rely upon, such as childcare, were and may in future pandemics, epidemics or other outbreaks of disease be a cause of employee morale concerns and may adversely impact employee productivity.
For example, the COVID-19 pandemic, particularly in India, but also in the Philippines and other countries where we have near-shore or offshore delivery operations for clients, as well as our in-country offices and offices of clients where our employees may normally work, impacted our ability to deliver services to clients. • Increased strain on employees and management – The significant challenges presented by a pandemic or other outbreak of disease, such as the potentially life-threatening health risks to employees and their loved ones and the unavailability of various services our employees may rely upon, such as childcare, may be a cause of employee morale concerns and may adversely impact employee productivity, as they did during the COVID-19 pandemic.
Clients may reduce demand for services quickly and with little warning, which may cause us to incur extra costs where we have employed more personnel than client demand supports. Our business is particularly susceptible to economic and political conditions in the markets where our clients or operations are concentrated.
For example, in 2023 some of our clients reduced their discretionary spending in response to economic uncertainty, which negatively impacted our revenues. Clients may reduce demand for services quickly and with little warning, which may cause us to incur extra costs where we have employed more personnel than client demand supports.
This uncertainty results in increased compliance costs, as well as the risk of regulatory enforcement actions, which can result in such significant financial penalties, private lawsuits, reputational damage, blockage of international data transfers, disruption to business and loss of customers.
New rules and restrictions on the movement of data across national borders could increase compliance costs, as well as the risk of regulatory enforcement action (including potential financial penalties), private lawsuits, reputational damage, blockage of international data transfers, disruption to business and loss of customers.
Increases in wages and other costs, including as a result of attrition, may also put pressure on our Cognizant 16 December 31, 2022 Form 10-K Table of Contents profitability. Our profitability is also impacted by our ability to accurately estimate, attain and sustain revenues from client engagements, margins and cash flows over contract periods and general economic and political conditions.
Our profitability is impacted by our ability to accurately estimate, attain, and sustain revenues from client engagements, margins and cash flows over contract periods and general economic and political conditions.
Recent developments, including the new EU-U.S. Trans-Atlantic Data Privacy Framework, are expected to help secure the transfer of data from the EU to the United States. However, there remains significant regulatory uncertainty for businesses transferring data globally.
Data Privacy Framework, which provides a mechanism for the transfer of personal data from the EU to the United States, there remains regulatory uncertainty for businesses transferring data globally.
Item 1B . Unresolved Staff Comments None. Cognizant 23 December 31, 2022 Form 10-K Table of Contents
Item 1B . Unresolved Staff Comments None. Cognizant 23 December 31, 2023 Form 10-K Table of Contents Item 1C . Cybersecurity Risk Management and Strategy Cybersecurity risk management is an integral part of our overall enterprise risk management program.
In the United States, federal sectoral laws, such as the Health Insurance Portability and Accountability Act, and comprehensive state legislation, such as the California Consumer Privacy Act of 2018, together with its successor, the California Privacy Rights Act (the “CPRA”) that went into effect on January 1, 2023, and similar legislation in several other states that is expected to take effect throughout 2023, impose or will impose extensive privacy requirements on organizations that handle personal data.
In the United States, federal sectoral laws, such as the Health Insurance Portability and Accountability Act, alongside growing state level legislation impose or will impose extensive privacy requirements on organizations that handle personal data. Proposals for federal comprehensive privacy legislation continue and other new state laws are under consideration.
Clients also often have the right to terminate a contract and pursue damages claims for serious or repeated failure to meet these service commitments. Some of our contracts provide that a portion of our compensation depends on performance measures such as cost-savings, revenue enhancement, benefits produced, business goals attained and adherence to schedule.
Some of our contracts provide that a portion of our compensation depends on performance measures such as cost-savings, revenue enhancement, benefits produced, business goals Cognizant 16 December 31, 2023 Form 10-K Table of Contents attained and adherence to schedule.
There are inherent climate-related risks everywhere that we conduct our business.
Climate change and risks arising from the transition to a lower-carbon economy may impact our business. There are inherent climate-related risks everywhere that we conduct our business.
Other countries have enacted or are considering enacting data localization laws that require certain data to stay within their borders. We may also face audits or investigations by one or more domestic or foreign government agencies or our clients pursuant to our contractual obligations relating to our compliance with these regulations.
Other countries have enacted or are considering enacting privacy or data localization laws that require certain data to stay within their borders.
We are required to comply with increasingly complex and changing data security and privacy regulations in the United States, the EU, India and in other jurisdictions in which we operate. These laws regulate the collection, use and transfer of Cognizant 19 December 31, 2022 Form 10-K Table of Contents personal data and can include significant financial penalties for noncompliance.
Failure to comply with data security and privacy regulations could have a material adverse effect on our business operations and operating results. We are required to comply with increasingly complex and changing data security and privacy regulations in the United States, the EU, India and in other jurisdictions in which we operate.
Removed
The COVID-19 pandemic, particularly in India, but also in the Philippines and other countries where we have near-shore or offshore delivery operations for clients, as well as our in-country offices and offices of clients where our employees may normally work, impacted our ability to deliver services to clients.
Added
Our business is particularly susceptible to economic and political conditions in the markets where our clients or operations are concentrated.
Removed
Further, the regulations to implement the CPRA are expected to be finalized in 2023, and there is uncertainty regarding how the California Privacy Protection Agency will enforce the new law and regulations. Proposals for federal comprehensive privacy legislation continue and other new state comprehensive privacy laws are under consideration.
Added
Our NextGen program and the associated reductions in headcount and consolidation of office space could disrupt our business, may not result in anticipated savings, and could result in total costs and expenses that are greater than expected.
Removed
The Indian Ministry of Information Technology released a new draft Digital Personal Data Protection Bill in November 2022 ("the 2022 Bill"), replacing the previously proposed Personal Data Protection Bill of 2019.
Added
Guided by our strategic priorities, in the second quarter of 2023 we initiated the NextGen program aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. Our drive for simplification will include operating with fewer layers in an effort to enhance agility and enable faster decision making.
Removed
Failure or perception of failure to achieve our stated goal to lower or negate our greenhouse gas emissions or to mitigate climate risk to our business, or perception of a failure to act responsibly with respect to the environment, could lead to adverse publicity, adverse effects on our business or damage to our reputation.
Added
In connection with the NextGen program, in 2023 we incurred $115 million of employee separation costs and $114 million of facility exit and other costs totaling $229 million. See Note 4 to our audited consolidated financial statements.
Removed
If we fail to comply with new laws, regulations, treaties, or reporting requirements or keep pace with ESG trends and developments or fail to meet the expectations of our clients and investors, our reputation and business could be adversely impacted.
Added
We Cognizant 15 December 31, 2023 Form 10-K Table of Contents currently expect to incur total costs of approximately $300 million with approximately $70 million of such costs anticipated in 2024.
Removed
For example, we had to spend significant resources on conducting an internal investigation and cooperating with investigations by the DOJ and the SEC, both concluded in 2019, focused on whether certain payments relating to Company-owned facilities in India were made in violation of the FCPA and other applicable laws.
Added
The NextGen program may result in the loss of institutional knowledge and expertise, as well as the reallocation of certain roles and responsibilities across the Company, all of which could adversely affect our operations. Such effects from our NextGen program could have a material adverse effect on our ability to execute on our business plan.
Removed
For example, our effective income tax rate and financial condition could be materially affected by the adoption and implementation of the Base Erosion and Profit Shifting project of the Organisation for Economic Cooperation and Development (OECD), composed of governments of various countries, many of which we do business in.
Added
There can be no assurance that we will be successful in implementing our NextGen program, which may be disruptive to our operations, or may cause difficulties in the retention of our remaining employees or reduced productivity among remaining employees.
Removed
While we currently do not believe that the Inflation Reduction Act of 2022 will have a material impact on us, any additional regulatory guidance which may be issued under this act may have a material impact on our tax rate and financial results. Additionally, we are subject to routine tax audits, investigations and proceedings in various jurisdictions.
Added
In addition, we may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from the NextGen program due to unforeseen difficulties, delays or unexpected costs.
Added
If the actual amount and timing of costs differ from our current expectations and estimates or we are unable to realize the expected operational efficiencies and cost savings from the NextGen program, our operating results and financial condition would be adversely affected.
Added
Furthermore, we may incur unanticipated charges or be required to make cash payments as a result of our NextGen program that were not previously contemplated, which could result in an adverse effect on our business or results of operations. We may not be able to achieve our profitability goals and maintain our capital return strategy.
Added
Increases in wages and other costs, including as a result of attrition, may also put pressure on our profitability.
Added
Clients also often have the right to terminate a contract and pursue damages claims for serious or repeated failure to meet these service commitments.
Added
We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. As with many innovations, AI presents risks and challenges that could adversely impact our business.
Added
The development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices by us, our clients, or third parties with whom we do business could result in unintended Cognizant 17 December 31, 2023 Form 10-K Table of Contents consequences.
Added
Such consequences may include, for example, employees making decisions based on biased or inaccurate information; disclosure of sensitive information; deliberate misuse; or infringement of third-party intellectual property rights. In turn, these consequences may cause decreased demand for our services or harm to our business, results of operations, or reputation.
Added
AI technology and services are part of a highly competitive and rapidly evolving market. We plan to incur significant development and operational costs to build and support our AI capabilities to meet the needs of our clients.
Added
We face significant competition from our traditional competitors as well as other third parties, including those that are new to the market, and our clients may develop their own AI-related capabilities. In addition, as these technologies evolve, we expect that some services that we currently perform for our clients will be replaced by AI or forms of automation.
Added
Each of the foregoing may lead to reduced demand for our services or harm our ability to obtain favorable pricing or other terms for our services, which could have a material adverse effect on our business, results of operations and financial condition.
Added
Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain including in the areas of intellectual property, cybersecurity, and privacy and data protection.
Added
Compliance with new or changing laws, regulations, industry standards or ethical requirements and expectations relating to AI may impose significant operational costs requiring us to change our service offerings or business practices, or may limit or prevent our ability to develop, deploy, or use AI technologies.
Added
Failure to appropriately conform to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm. We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from security breaches and/or cyberattacks.
Added
These laws regulate the collection, use and transfer of personal data and can include significant financial penalties for noncompliance. We may also face audits or investigations by one or more domestic or foreign government agencies or our customers pursuant to our contractual obligations relating to our compliance with these regulations. Despite positive developments, such as the new EU-U.S.
Added
In India, the DPDP was approved on August 11, 2023 and is expected to come into effect in phases over the next 6-12 months.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have a significant number of delivery centers in other countries, including the United States, Philippines, Germany, Canada, Mexico and countries throughout Europe.
Biggest changeWe also have a significant number of delivery centers in other countries, including the United States, Philippines, Germany, Canada, Mexico and countries throughout Europe. In addition, we have sales and marketing offices, innovation labs, and digital design and consulting centers in major business markets, including New York, London, Paris, Melbourne, and Singapore, among others.
We have over 28 million square feet of owned and leased facilities for our delivery centers.
We have over 24 million square feet of owned and leased facilities for our delivery centers.
Our largest delivery center presence is in India, representing 87% of our total delivery centers on a square-foot basis, with the largest presence in Chennai (10 million square feet), Hyderabad (4 million square feet), Pune (3 million square feet), Kolkata (3 million square feet) and Bangalore (2 million square feet).
Our largest delivery center presence is in India, representing 90% of our total delivery centers on a square-foot basis, with the largest presence in Chennai (9 million square feet), Hyderabad (3 million square feet), Pune (3 million square feet), Kolkata (3 million square feet) and Bangalore (2 million square feet).
We believe our current facilities are adequate to support our operations in the immediate future, and that we will be able to obtain suitable additional facilities on commercially reasonable terms as needed.
Our facilities are used to support clients across all four reportable business segments. We believe our current facilities are adequate to support our operations in the immediate future, and that we will be able to obtain suitable additional facilities on commercially reasonable terms as needed.
Removed
In addition, we have sales and marketing offices, innovation labs, and digital design and consulting centers in major business markets, including New York, London, Paris, Melbourne, and Singapore, among others, which are used to support our clients across all four of our reportable business segments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMonth Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions) October 1, 2022 - October 31, 2022 — $ — — $ 1,075 November 1, 2022 - November 30, 2022 2,759,018 58.24 2,759,018 2,914 December 1, 2022 - December 31, 2022 2,397,159 58.12 2,397,159 2,775 Total 5,156,177 $ 58.18 5,156,177 We regularly purchase shares in connection with our stock-based compensation plans as shares of our Class A common stock are tendered by employees for payment of applicable statutory tax withholdings.
Biggest changeDuring the three months ended December 31, 2023, we repurchased $298 million of our Class A common stock under our stock repurchase program as follows: Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions) October 1, 2023 - October 31, 2023 — $ — — $ 2,075 November 1, 2023 - November 30, 2023 2,287,032 68.38 2,287,032 1,919 December 1, 2023 - December 31, 2023 1,930,988 73.15 1,930,988 1,777 Total 4,218,020 $ 70.56 4,218,020 We regularly purchase shares in connection with our stock-based compensation plans as shares of our Class A common stock are tendered by employees for payment of applicable statutory tax withholdings.
For the three months ended December 31, 2022, we purchased 0.2 million shares at an aggregate cost of $15 million in connection with employee tax withholding obligations. Recent Sales of Unregistered Securities None.
For the three months ended December 31, 2023, we purchased 0.2 million shares at an aggregate cost of $15 million in connection with employee tax withholding obligations. Recent Sales of Unregistered Securities None.
Cognizant 25 December 31, 2022 Form 10-K Table of Contents Performance Graph The following graph compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the S&P 500 Index and the S&P 500 Information Technology Index for the period beginning December 31, 2017 and ending on the last day of our last completed fiscal year.
Cognizant 26 December 31, 2023 Form 10-K Table of Contents Performance Graph The following graph compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the S&P 500 Index and the S&P 500 Information Technology Index for the period beginning December 31, 2018 and ending on the last day of our last completed fiscal year.
Issuer Purchases of Equity Securities Our stock repurchase program, as amended in November 2022, allows for the repurchase of up to $11.5 billion, excluding fees and expenses, of our Class A common stock through open market purchases, including under a 10b5-1 Plan or in private transactions, including through ASR agreements entered into with financial institutions, in accordance with applicable federal securities laws.
Issuer Purchases of Equity Securities Our stock repurchase program, as amended in November 2022, allows for the repurchase of up to $11.5 billion, excluding fees and expenses, of our Class A common stock through open market purchases, including under a 10b5-1 Plan in accordance with applicable federal securities laws.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Class A common stock trades on the Nasdaq Stock Market under the symbol “CTSH.” As of December 31, 2022, the number of holders of r ecord of our Class A common stock was 106 and the approximate number of beneficial holders of our Class A common stock was 501,800 .
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Class A common stock trades on the Nasdaq Stock Market under the symbol “CTSH.” As of December 31, 2023, the number of holders of r ecord of our Class A common stock was 102 and the approximate number of beneficial holders of our Class A common stock was 575,000 .
Cash Dividends During 2022, we paid quarterly cash dividends of $0.27 per share, or $1.08 per share in total for the year. In February 2023, our Board of Directors approved a cash dividend of $0.29 per share with a record date of February 17, 2023 and a payment date of February 28, 2023.
Cash Dividends During 2023, we paid quarterly cash dividends of $0.29 per share, or $1.16 per share in total for the year. In February 2024, our Board of Directors approved a cash dividend of $0.30 per share with a record date of February 20, 2024 and a payment date of February 28, 2024.
The repurchase program does not have an expiration date. The timing of repurchases and the exact number of shares to be purchased are determined by management, in its discretion, or pursuant to a 10b5-1 Plan, and will depend upon market conditions and other factors.
The repurchase program does not have an expiration date and had a remaining balance of $1,777 million as of December 31, 2023. The timing of repurchases and the exact number of shares to be purchased are determined by management, in its discretion, or pursuant to a 10b5-1 Plan, and depend upon market conditions and other factors.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)(2) Among Cognizant, the S&P 500 Index and the S&P 500 Information Technology Index Company / Index Base Period 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Cognizant Technology Solutions Corp $ 100 $ 90.34 $ 89.37 $ 119.69 $ 131.22 $ 85.90 S&P 500 Index 100 95.62 125.72 148.85 191.58 156.88 S&P 500 Information Technology Index 100 99.71 149.86 215.63 290.08 208.30 (1) Graph assumes $100 invested on December 31, 2017 in our Class A common stock, the S&P 500 Index and the S&P 500 Information Technology Index.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)(2) Among Cognizant, the S&P 500 Index and the S&P 500 Information Technology Index Company / Index Base Period 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Cognizant Technology Solutions Corp $ 100 $ 98.93 $ 132.49 $ 145.26 $ 95.09 $ 127.78 S&P 500 Index 100 131.49 155.68 200.37 164.08 207.21 S&P 500 Information Technology Index 100 150.29 216.25 290.92 208.90 329.73 (1) Graph assumes $100 invested on December 31, 2018 in our Class A common stock, the S&P 500 Index and the S&P 500 Information Technology Index.
Removed
During the three months ended December 31, 2022, we repurchased $300 million of our Class A common stock under our stock repurchase program.
Removed
The following table sets out the stock repurchase activity under our stock repurchase program during the fourth quarter of 2022 and the approximate dollar value of shares that may yet be purchased under the program as of December 31, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

60 edited+30 added−40 removed36 unchanged
Biggest changeThe Year Ended December 31, 2022 Compared to The Year Ended December 31, 2021 The following table sets forth certain financial data for the years ended December 31: % of % of Increase / Decrease (Dollars in millions, except per share data) 2022 Revenues 2021 Revenues $ % Revenues $ 19,428 100.0 $ 18,507 100.0 $ 921 5.0 Cost of revenues (a) 12,448 64.1 11,604 62.7 844 7.3 Selling, general and administrative expenses (a) 3,443 17.7 3,503 18.9 (60) (1.7) Depreciation and amortization expense 569 2.9 574 3.1 (5) (0.9) Income from operations 2,968 15.3 2,826 15.3 142 5.0 Other income (expense), net 48 1 47 * Income before provision for income taxes 3,016 15.5 2,827 15.3 189 6.7 Provision for income taxes (730) (693) (37) 5.3 Income (loss) from equity method investments 4 3 1 33.3 Net income $ 2,290 11.8 $ 2,137 11.5 $ 153 7.2 Diluted EPS $ 4.41 $ 4.05 $ 0.36 8.9 Other Financial Information 3 Adjusted Income From Operations and Adjusted Operating Margin $ 2,968 15.3 $ 2,846 15.4 $ 122 4.3 Adjusted Diluted EPS $ 4.40 $ 4.12 $ 0.28 6.8 (a) Exclusive of depreciation and amortization expense * Not meaningful Revenues - Overall During 2022, revenues increased by $921 million as compared to 2021, representing growth of 5.0%, or 7.5% on a constant currency basis 3 .
Biggest changeThe Year Ended December 31, 2023 Compared to The Year Ended December 31, 2022 The following table sets forth certain financial data for the years ended December 31: % of % of Increase / Decrease (Dollars in millions, except per share data) 2023 Revenues 2022 Revenues $ % Revenues $ 19,353 100.0 $ 19,428 100.0 $ (75) (0.4) Cost of revenues (a) 12,664 65.4 12,448 64.1 216 1.7 Selling, general and administrative expenses (a) 3,252 16.8 3,443 17.7 (191) (5.5) Restructuring charges 229 1.2 — — 229 N/A Depreciation and amortization expense 519 2.7 569 2.9 (50) (8.8) Income from operations and operating margin 2,689 13.9 2,968 15.3 (279) (9.4) Other income (expense), net 98 48 50 104.2 Income before provision for income taxes 2,787 14.4 3,016 15.5 (229) (7.6) Provision for income taxes (668) (730) 62 (8.5) Income (loss) from equity method investments 7 4 3 75.0 Net income $ 2,126 11.0 $ 2,290 11.8 $ (164) (7.2) Diluted EPS $ 4.21 $ 4.41 $ (0.20) (4.5) Other Financial Information 3 Adjusted Income From Operations and Adjusted Operating Margin $ 2,918 15.1 $ 2,968 15.3 $ (50) (1.7) Adjusted Diluted EPS $ 4.55 $ 4.40 $ 0.15 3.4 (a) Exclusive of depreciation and amortization expense N/A Not applicable 3 Revenues During the year ended December 31, 2023, revenues declined by $75 million as compared to the twelve months ended December 31, 2022, representing a decline of 0.4%, or a decline of 0.3% on a constant currency basis. 3 Our recently completed acquisitions contri but ed 110 b asis points of growth to the change in revenu es. 3 Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth are not measures of financial performance prepared in accordance with GAAP.
We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in conjunction with out reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.
Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by approximately 18 basis points (excluding the impact of our cash flow hedges).
Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by approximately 19 basis points (excluding the impact of our cash flow hedges).
We believe that we currently meet all conditions set forth in the New Credit Agreement to borrow thereunder, and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility as of December 31, 2022 and through the date of this filing.
We believe that we currently meet all conditions set forth in the Credit Agreement to borrow thereunder, and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility as of December 31, 2023 and through the date of this filing.
Cognizant 28 December 31, 2022 Form 10-K Table of Contents Results of Operations For a discussion of our results of operations for the year ended December 31, 2020, including a year-to-year comparison between 2021 and 2020, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report Form 10-K for the year ended December 31, 2021.
Cognizant 29 December 31, 2023 Form 10-K Table of Contents Results of Operations For a discussion of our results of operations for the year ended December 31, 2021, including a year-to-year comparison between 2022 and 2021, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report Form 10-K for the year ended December 31, 2022.
See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable. Cognizant 32 December 31, 2022 Form 10-K Table of Contents A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 23.5% of our global operating costs during the year ended December 31, 2022 .
See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable. Cognizant 32 December 31, 2023 Form 10-K Table of Contents A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 24% of our global operating costs during the year ended December 31, 2023 .
The gains on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. As of December 31, 2022, the notional value of our undesignated hedges was $1,433 million.
The gains on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. As of December 31, 2023, the notional value of our undesignated hedges was $1,317 million.
Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as the Class Action Litigation Settlement in 2021 and the effect of recognition in the third quarter of 2022 of an income tax benefit related to a specific uncertain tax position that was previously unrecognized in our prior-year consolidated financial statements, net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments.
Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as NextGen charges and the effect of recognition in the third quarter of 2022 of an income tax benefit related to a specific uncertain tax position that was previously unrecognized in our prior-year consolidated financial statements, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments.
As of December 31, 2022, our goodwill balance was $5,710 million. We review our finite-lived assets, including our finite-lived intangible assets, for impairment whenev er eve nts or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
As of December 31, 2023, our goodwill balance was $6,085 million. We review our finite-lived assets, including our finite-lived intangible assets, for impairment whenev er eve nts or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
Net of the impact of the hedges, the depreciation of the Indian rupee contributed 73 basis points to the improvement in our operating margin for the year ended December 31, 2022 as compared to December 31, 2021.
Net of the impact of the hedges, the depreciation of the Indian rupee contributed 90 basis points to the improvement in our operating margin for the year ended December 31, 2023 as compared to December 31, 2022.
We expect clients to continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policie s and other macroeconomic factors, including the increasing uncertainty related to the global economy, which could affect their demand for our services.
We believe clients will continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policie s and other macroeconomic and geopolitical factors, including the increasing uncertainty related to the global economy, which has affected and may continue to affect their demand for our services.
We also have purchase commitments of approximately $350 million that will be paid over the next three years, of which approximately $150 million will be paid during the next twelve months. See Note 7 to our consolidated financial statements for a description of our operating lease obligations.
In addition, we also have purchase commitments of approximately $615 million that will be paid over the next four years, of which approximately $180 million will be paid during the next twelve months. In addition, see Note 7 to our consolidated financial statements for a description of our operating lease obligations.
(2) Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our consolidated statements of operations.
See Note 4 to our audited consolidated financial statements for additional information. (2) Non-operating foreign currency exchange gains and losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our consolidated statements of operations.
In 2022, the settlement of our cash flow hedges negatively impacted our operating margin by approximately 7 basis points, compared to a positive impact of 35 basis points in 2021. We finished the year ended December 31, 2022 with approximate ly 355,300 employees as compared to 330,600 employees for the year ended December 31, 2021.
In 2023, the settlement of our cash flow hedges negatively impacted our operating margin by approximately 13 basis points, compared to a negative impact of 7 basis points in 2022. We finished the year ended December 31, 2023 with approximate ly 347,700 employees as compared to 355,300 employees for the year ended December 31, 2022.
Constant currency revenue growth is Cognizant 34 December 31, 2022 Form 10-K Table of Contents defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues. Free cash flow is defined as cash flows from operating activities net of purchases of property and equipment.
Constant currency revenue growth is defined as revenues for a given period restated at the comparative period’s foreign currency exchange rates measured against the comparative period's reported revenues. Free cash flow is defined as cash flows from operating activities net of purchases of property and equipment.
Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. Based on our most recent evaluation of goodwill performed during the fourth quarter of 2022, we concluded that the goodwill in each of our reporting units was not at risk of impairment.
Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. Cognizant 39 December 31, 2023 Form 10-K Table of Contents Based on our most recent evaluation of goodwill performed during the fourth quarter of 2023, we concluded that the goodwill in each of our reporting units was not at risk of impairment.
Cognizant 31 December 31, 2022 Form 10-K Table of Contents Cost of Revenues (Exclusive of Depreciation and Amortization Expense) é $844M é 1.4% as a % of revenue ¡ % of Revenues Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and equipment costs relating to revenues.
Cognizant 31 December 31, 2023 Form 10-K Table of Contents Cost of Revenues (Exclusive of Depreciation and Amortization Expense) é $216M é 1.3% as a % of revenues ¡ % of Revenues Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues.
Our future results may be affected by potential tax law changes and other potential regulatory changes, including possible U.S. corporate income tax reform and pote ntially increased costs for employment and post-employment benefits in India as a result of the Code on Social Security, 2020. For additional information, see Part I, Item 1A.
In addition to the NextGen program, potential tax law and other regulatory changes, including possible U.S. corporate income tax reform and potentially increased costs for employment and post-employment benefits in India as a result of the Code on Social Security, 2020, among other items, may impact our future results. For additional information, see Part I, Item 1A.
We monitor turnover, aging and the collection of trade accounts receivable by client. Our DSO calculation includes trade accounts receivable, net of allowance for credit losses, and contract assets, reduced by the uncollected portion of our deferred revenue. DSO was 74 days as of December 31, 2022 and 69 days as of December 31, 2021.
We monitor turnover, aging and the collection of trade accounts receivable by client. Our DSO calculation includes trade accounts receivable, net of allowance for credit losses, and contract assets, reduced by the uncollected portion of our deferred revenue.
(4) During the three months ended September 30, 2022, we recognized an income tax benefit of $36 million related to a specific uncertain tax position that was previously unrecognized in our prior-year consolidated financial statements.
(4) As previously reported in our 2022 Annual Report on Form 10-K, d uring the three months ended September 30, 2022, we recognized an income tax benefit of $36 million related to a specific uncertain tax position that was previously unrecognized in our prior-year consolidated financial statements.
(3) Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income for the years ended December 31: (in millions) 2022 2021 Non-GAAP income tax benefit (expense) related to: Class Action Settlement Loss $ — $ 6 Foreign currency exchange gains and losses (39) (5) Cognizant 35 December 31, 2022 Form 10-K Table of Contents The effective tax rate related to non-operating foreign currency exchange gains and losses varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions.
(3) Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income for the years ended December 31: (in millions) 2023 2022 Non-GAAP income tax benefit (expense) related to: NextGen charges $ 59 $ — Foreign currency exchange gains and losses (6) (39) The effective tax rate related to non-operating foreign currency exchange gains and losses varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions.
Liquidity and Capital Resources Cash generated from operations has historically been our primary source of liquidity to fund operations and investments t o grow our business. As of December 31, 2022, we had cash, cash equivalents and short-term investments of $2,501 million.
Cognizant 36 December 31, 2023 Form 10-K Table of Contents Liquidity and Capital Resources Cash generated from operations has historically been our primary source of liquidity to fund operations and investments t o grow our business. As of December 31, 2023, we had cash, cash equivalents and short-term investments of $2,635 million.
Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by approximately 115 basis points in 2022, while in 2021 the appreciation of the Indian rupee against the U.S. dollar negatively impacted our operating margin by approximately 5 basis points.
Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by approximately 96 basis points in 2023.
Investing activities The decrease in cash used in investing activities in 2022 compared to 2021 was primarily driven by net maturities of investments in 2022 as compared to net purchases of investments in 2021 as well as lower payments for business combinations in 2022.
Investing activities The increase in cash used in investing activities in 2023 compared to 2022 was primarily driven by lower net maturities of investments in 2023 as compared to 2022 and higher payments for business combinations in 2023.
Challenges attracting and retaining highly qualified personnel have resulted in higher compensation costs. SG&A Expenses (Exclusive of Depreciation and Amortization Expense) SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs.
SG&A Expenses (Exclusive of Depreciation and Amortization Expense) SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs.
Risk Factors. 2 Adjusted Operating Margin is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliation to the most directly comparable GAAP financial measures.
Risk Factors. 2 Adjusted Operating Margin and constant currency revenue growth are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures.
Additionally, as of December 31, 2022, we had available capacity under our credit facilities of approximately $2,000 million .
Additionally, as of December 31, 2023, we had available capacity under our credit facilities of approximately $2.0 billion.
The following table sets forth total other income (expense), net for the years ended December 31: (in millions) 2022 2021 Increase / Decrease Foreign currency exchange (losses) $ (16) $ (33) $ 17 Gains on foreign exchange forward contracts not designated as hedging instruments 23 13 10 Foreign currency exchange gains (losses), net 7 (20) 27 Interest income 59 30 29 Interest expense (19) (9) (10) Other, net 1 — 1 Total other income (expense), net $ 48 $ 1 $ 47 The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries.
The following table sets forth total other income (expense), net for the years ended December 31: (in millions) 2023 2022 Increase / Decrease Foreign currency exchange gains (losses) $ 42 $ (16) $ 58 (Losses) gains on foreign exchange forward contracts not designated as hedging instruments (40) 23 (63) Foreign currency exchange gains (losses), net 2 7 (5) Interest income 126 59 67 Interest expense (41) (19) (22) Other, net 11 1 10 Total other income (expense), net $ 98 $ 48 $ 50 The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries.
Cognizant 39 December 31, 2022 Form 10-K Table of Contents
Cognizant 40 December 31, 2023 Form 10-K Table of Contents
We tailor our services and solutions to specific industries with an integrated global delivery model that employs client service and delivery teams based at client locations and dedicated global and regional delivery centers.
We provide industry expertise and close client collaboration, combining critical perspective with a flexible engagement style. We tailor our services and solutions to specific industries with an integrated global delivery model that employs client service and delivery teams based at client locations and dedicated global and regional delivery centers.
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients.
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business.
In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to the corresponding GAAP measures set forth below should be carefully evaluated.
In addition, these non-GAAP financial measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to the corresponding GAAP measures set forth below should be carefully evaluated. Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual items, such as NextGen charges.
The following table provides a summary of our cash flows for the years ended December 31: (in millions) 2022 2021 Increase / Decrease Net cash provided by (used in): Operating activities $ 2,568 $ 2,495 $ 73 Investing activities (106) (2,164) 2,058 Financing activities (1,939) (1,203) (736) Other Cash Flow Information 7 Free cash flow 2,236 2,216 20 Operating activities 7 The increase i n cash provided by operating activities in 2022 compared to 2021 was primarily driven by higher income from operations.
The following table provides a summary of our cash flows for the years ended December 31: (in millions) 2023 2022 Increase / Decrease Net cash provided by (used in): Operating activities $ 2,330 $ 2,568 $ (238) Investing activities (331) (106) (225) Financing activities (1,609) (1,939) 330 Other Cash Flow Information 6 Free cash flow 2,013 2,236 (223) Operating activities 6 The decrease i n cash provided by operating activities in 2023 compared to 2022 was primarily driven by an increase in income tax payments.
Capital Allocation Framework Acquisitions Share repurchases Dividend payments Our capital allocation framework anticipates the deployment of approximately 50% of our free cash flow 8 for acquisitions, 25% for share repurchases and 25% for dividend payments.
Cognizant 37 December 31, 2023 Form 10-K Table of Contents Capital Allocation Framework Acquisitions Share repurchases Dividend payments Our capital allocation framework anticipates the deployment of approximately 50% of our free cash flow 7 for acquisitions, 25% for share repurchases and 25% for dividend payments.
The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred.
For further detail on the NextGen charges, see Note 4 to our audited consolidated financial statements. The income tax impact of each item excluded from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred.
There is a 1.0% prepayment penalty applicable to payments made within 30 days of disbursement. This working capital facility contains affirmative and negative covenants and is renewable annually. As of December 31, 2022, there was no balance outstanding under the working capital facility.
There is a 1.0% prepayment penalty applicable to payments made within 30 days after disbursement. This working capital facility contains affirmative and negative covenants and may be renewed annually.
Attrition, including both voluntary and involuntary, was approximately 31.7% for th e year ended December 31, 2022. * Annualized attrition Segment Operating Profit In 2022, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating segment performance and resource allocation.
For the year ended December 31, 2023 our Voluntary Attrition - Tech Services was 13.8% as compared to 25.6% for the year ended December 31, 2022. Segment Operating Profit In 2023, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating segment performance and resource allocation.
The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, as applicable, for the years ended December 31: (Dollars in millions, except per share data) 2022 % of Revenues 2021 % of Revenues GAAP income from operations and operating margin $ 2,968 15.3 % $ 2,826 15.3 % Class Action Settlement Loss (1) — — 20 0.1 Adjusted Income From Operations and Adjusted Operating Margin $ 2,968 15.3 % $ 2,846 15.4 % GAAP diluted EPS $ 4.41 $ 4.05 Effect of above adjustments, pre-tax — 0.04 Effect of non-operating foreign currency exchange losses (gains), pre-tax (2) (0.01) 0.03 Tax effect of above adjustments (3) 0.07 — Effect of recognition of income tax benefit related to an uncertain tax position (4) (0.07) — Adjusted Diluted EPS $ 4.40 $ 4.12 Net cash provided by operating activities $ 2,568 $ 2,495 Purchases of property and equipment (332) (279) Free cash flow $ 2,236 $ 2,216 (1) During 2021, we recorded a Class Action Settlement Loss in "Selling, general and administrative expenses" in our consolidated financial stateme nts.
Cognizant 35 December 31, 2023 Form 10-K Table of Contents The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, as applicable, for the years ended December 31: (Dollars in millions, except per share data) 2023 % of Revenues 2022 % of Revenues GAAP income from operations and operating margin $ 2,689 13.9 % $ 2,968 15.3 % NextGen charges (1) 229 1.2 — — Adjusted Income From Operations and Adjusted Operating Margin $ 2,918 15.1 % $ 2,968 15.3 % GAAP diluted EPS $ 4.21 $ 4.41 Effect of NextGen charges, pre-tax 0.45 — Effect of non-operating foreign currency exchange losses (gains), pre-tax (2) — (0.01) Tax effect of above adjustments (3) (0.11) 0.07 Effect of recognition of income tax benefit related to an uncertain tax position (4) — (0.07) Adjusted Diluted EPS $ 4.55 $ 4.40 Net cash provided by operating activities $ 2,330 $ 2,568 Purchases of property and equipment (317) (332) Free cash flow $ 2,013 $ 2,236 (1) As part of the NextGen program, during the year ended December 31, 2023, we incurred employee separation, facility exit and other costs.
Our Tax Reform Act transition tax payments are due in annual installments of $94 million, $126 million and $157 million for the years 2023, 2024 and 2025, respectively. In 2022, our Tax Reform Act transition tax payment was $50 million.
Our remaining Tax Reform Act transition tax payments are $123 million and $157 million in the yea rs 2024 and 2025, respectively. In 2023, our Tax Reform Act transition tax payment was $94 million.
Changes to these estimates could have a material effect on our results of operations and financial condition. Our significant accounting policies are described in Note 1 to our consolidated financial statements. Revenue Recognition .
Changes to these estimates could have a material effect on our results of operations and financial condition. Our significant accounting policies are described in Note 1 to our consolidated financial statements. 7 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information.
Cognizant 36 December 31, 2022 Form 10-K Table of Contents In March 2022, our India subsidiary renewed its one-year 13 billion Indian rupee ($157 million at the December 31, 2022 exchange rate) working capital facility, which requires us to repay any balances drawn down within 90 days from the date of disbursement.
As of December 31, 2023, we had no outstanding balance on our revolving credit facility. In March 2023, our India subsidiary renewed its working capital facility at 15 billion Indian rupee ($180 million at the December 31, 2023 exchange rate). This facility requires us to repay any balances drawn down within 90 days from the date of disbursement.
As of December 31, 2022, we had no outstanding balance on our revolving credit facility. 7 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information.
As of December 31, 2023, we have not borrowed funds under this facility or any of its predecessor facilities. 6 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information.
Specifically, segment operating profit now includes costs related to non-delivery personnel that support consulting services, which were previously included in "unallocated costs." We have reported 2022 segment operating profits using the new allocation methodology and have recast the 2021 results to conform to the new methodology.
Specifically, segment operating profit now includes an allocation of both SG&A costs related to our integrated practices and the excess or shortfall of incentive-based compensation for commercial and delivery employees as compared to target, which were previously included in "unallocated costs." We have reported 2023 segment operating profits using the new allocation methodology and have recast the 2022 and 2021 results to conform to the new methodology.
The increase, as a percentage of revenues, was due to higher compensation costs for delivery personnel (including employees and subcontractors) as well as a 30 basis point negative impact due to the impairment of certain capitalized costs related to a large volume-based contract with a Health Sciences client, partially offset by delivery efficiencies and the depreciation of the Indian rupee against the U.S. dollar.
The increase, as a percentage of revenues, was due to higher compensation costs for delivery personnel, primarily as a result of two merit increase cycles for the majority of our employees since October 2022, partially offset by the benefit of the depreciation of the Indian rupee against the U.S. dollar and improvement in profitability of a large contract with a Health Sciences client in 2023.
Our services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, application maintenance, infrastructure and security as well as business process services and automation.
Our collaborative services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, application maintenance, infrastructure and security as well as business process services and automation. Digital services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.
Ou r 2021 GAAP operating margin was negatively impacted by the Class Action Settlement Loss, which was e xcluded from our Adjusted Operating Margin 6 in 2021. 6 Adjusted Income From Operations and Adjusted Operating Margin are not measurements of financial performance prepared in accordance with GAAP.
In addition, as discussed in Note 4 to our audited consolidated financial statements, our 2023 GAAP operating margin was negatively impacted by the NextGen charges, which were excluded from our Adjusted Operating Margin 5 . 5 Adjusted Income From Operations and Adjusted Operating Margin are not measurements of financial performance prepared in accordance with GAAP.
Segment operating profit and operating margin percentage were as follows: Segment operating profit % Segment operating margin In 2022, segment operating margins benefited from delivery efficiencies and the depreciation of the Indian rupee against the U.S. dollar offset by increased compensation costs for delivery personnel (including employees and subcontractors).
Segment operating profit and operating margin percentage were as follows: Segment operating profit % Segment operating margin In 2023, segment operating margins across all our segments were negatively impacted by increased compensation costs, primarily as a result of two merit increase cycles for the majority of our employees since October 2022, partially offset by the benefit of the depreciation of the Indian rupee against the U.S. dollar and savings generated from our NextGen program.
In October 2022, we completed a debt refinancing and entered into the New Credit Agreement with a commercial bank syndicate providing for a $650 million New Term Loan and a $1,850 million unsecured revolving credit facility, which are each due to mature in October 2027.
Financing activities The decrease in cash used in financing activities in 2023 compared to 2022 was primarily driven by lower repurchases of common stock. We have a Credit Agreement providing for a $650 million Term Loan and a $1,850 million unsecured revolving credit facility, which are each due to mature in October 2027.
The Credit Agreement was terminated upon the closing of the New Credit Agreement and the proceeds from the New Term Loan were used primarily to repay our outstanding Term Loan balance. We are required under the New Credit Agreement to make scheduled quarterly principal payments on the New Term Loan beginning in December 2023.
We are required under the Credit Agreement to make scheduled quarterly principal payments on the Term Loan beginning in December 2023. See Note 10 to our consolidated financial statements.
Cognizant 37 December 31, 2022 Form 10-K Table of Contents Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our accompanying consolidated financial statements that have been prepared in accordance with GAAP.
We cannot be certain that additional financing, if required, will be available on terms and conditions acceptable to us, if at all. Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our accompanying consolidated financial statements that have been prepared in accordance with GAAP.
These events or circumstances could include a significant change in the business climate, regulatory environment, established business plans, operating performance indicators or competition.
These events or circumstances could include a significant change in the business climate, regulatory environment, established business plans, operating performance indicators or competition. Evaluation of goodwill for impairment requires judgment, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units and determination of the fair value of each reporting unit.
Cognizant 27 December 31, 2022 Form 10-K Table of Contents Our operating margin and Adjusted Operating Margin 2 were each 15.3% for the year ended December 31, 2022.
Our operating margin and Adjusted Operating Margin 2 was 13.9% and 15.1%, respectively, for the year ended December 31, 2023. This compares to operating margin and Adjusted Operating Margin of 15.3% for the year ended December 31, 2022.
The increase in interest income and interest expense was each primarily attributable to higher interest rates in the current period.
The increase in interest income and interest expense was each primarily attributable to higher interest rates in the current period. Provision for Income Taxes ê $62M ¡ Effective Income Tax Rate ê 0.2% The effective income tax rate decreased primarily driven by the geographical mix of earnings in 2023 as compared to 2022.
Our recently completed acquisitions contributed 100 basis points to revenue growth while the previously disclosed sale of the Samlink subsidiary, which was completed on February 1, 2022, negatively impacted revenue growth b y 60 basis points. Revenue growth was strongest in our Communications, Media and Technology and Products and Resources segments.
Revenue decline was driven by our Financial Services segment, which was negatively impacted by weakness in the banking sector, partially offset by growth in our Communications, Media and Technology, Products and Resources and Health Sciences segments. Our recently completed acquisitions contributed 110 basis points to revenue growth, primarily benefiting our Products and Resources and Communications, Media and Technology segments.
See Note 11 to our consolidated financial statements for additional information. Net Income Th e increase in net income was primarily driven by higher income from operations. é $153M ¡ % of Revenues Non-GAAP Financial Measures Portions of our disclosure include non-GAAP financial measures.
Net Income Th e decrease in net income was primarily driven by lower income from operations, partially offset by higher interest income and lower provision for income taxes in 2023. ê $164M ê 0.8% as a % of revenues ¡ % of Revenues Cognizant 34 December 31, 2023 Form 10-K Table of Contents Non-GAAP Financial Measures Portions of our disclosure include non-GAAP financial measures.
Revenues from clients added since December 31, 2021 were $69 million. é $316M Revenues - Geographic Markets Revenues of $19,428 million by geographic market were as follows for the year ended December 31, 2022: 2022 as compared to 2021 Increase / (Decrease) (Dollars in millions) $ % CC % 5 North America 799 5.9 6.0 United Kingdom 168 10.2 21.1 Continental Europe (124) (6.5) 3.1 Europe - Total 44 1.2 11.4 Rest of World 78 6.0 12.1 Total revenues 921 5.0 7.5 North America continues to be our largest market, representing 74.3% of total revenues for the year ended December 31, 2022.
Cognizant 30 December 31, 2023 Form 10-K Table of Contents Revenues - Reportable Business Segments and Geographic Markets Revenues of $19,353 million across our business segments and geographies were as follows for the year ended December 31, 2023: 2023 as compared to 2022 Increase / (Decrease) (Dollars in millions) $ % CC % 4 Financial Services $ (263) (4.3) (4.2) Health Sciences 43 0.8 0.5 Products and Resources 62 1.4 1.5 CMT 83 2.6 3.1 Total revenues $ (75) (0.4) (0.3) 2023 as compared to 2022 Increase / (Decrease) (Dollars in millions) $ % CC % 4 North America $ (172) (1.2) (1.1) United Kingdom 75 4.1 3.5 Continental Europe 114 6.4 4.3 Europe - Total 189 5.2 3.9 Rest of World (92) (6.6) (2.6) Total revenues $ (75) (0.4) (0.3) Change in revenues was driven by the following factors: • Reduced demand for discretionary work negatively impacted revenues across all segments, and primarily in North America.
Total segment operating profit was as follows for the year ended December 31: (Dollars in millions) 2022 % of Revenues 2021 % of Revenues Increase Total segment operating profit $ 5,746 29.6 $ 5,460 29.5 $ 286 Less: unallocated costs 2,778 14.3 2,634 14.2 144 Income from operations $ 2,968 15.3 $ 2,826 15.3 $ 142 Cognizant 33 December 31, 2022 Form 10-K Table of Contents Other Income (Expense), Net Total other income (expense), net consists primarily of foreign currency exchange gains and losses, interest income and interest expense.
Cognizant 33 December 31, 2023 Form 10-K Table of Contents Total segment operating profit was as follows for the year ended December 31: (Dollars in millions) 2023 % of Revenues 2022 % of Revenues Increase / (Decrease) Total segment operating profit $ 4,117 21.3 $ 4,353 22.4 $ (236) Less: unallocated costs 1,428 7.4 1,385 7.1 43 Income from operations $ 2,689 13.9 $ 2,968 15.3 $ (279) The increase in unallocated costs for 2023 as compared to 2022 was primarily driven by the NextGen charges in 2023, see Note 4 to our audited consolidated financial statements, partially offset by lower corporate expenses.
Revenues from clients added during 2022 were $172 million. 3 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
Operating Margin and Adjusted Operating Margin 6 - Overall Our 2022 operating margin was positively impacted by economies of scale that allowed us to leverage our cost structure over a larger organization, delivery efficiencies and the depreciation of the Indian rupee against the U.S. dollar, partially offset by increased compensation costs for our delivery personnel (including employees and subcontractors) as well as a 30 basis point negative impact due to the impairment of certain capitalized costs related to a large volume-based contract with a Health Sciences client.
Operating Margin and Adjusted Operating Margin 5 - Overall Our 2023 operating margin and Adjusted Operating Margin 5 were negatively impacted by increased compensation costs, primarily as a result of two merit increase cycles for the majority of our employees since October 2022, partially offset by the benefit of the depreciation of the Indian rupee against the U.S. dollar, savings generated from our NextGen program and improvement in profitability of a large contract with a Health Sciences client in 2023.
For the year ended December 31, 2022, our attrition, including both voluntary and involuntary, was 31.7% as compared to 30.8% for the year ended December 31, 2021. For the three months ended December 31, 2022, our annualized attrition rate, including both voluntary and involuntary, was 25.3% as compared to 34.6% for the three months ended December 31, 2021.
This metric, which we refer to as Voluntary Attrition - Tech Services, includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice. For the year ended December 31, 2023 our Voluntary Attrition - Tech Services was 13.8% as compared to 25.6% for the year ended December 31, 2022.
Removed
Digital services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses. 2022 Financial Results Revenues Income from Operations Operating Margin Diluted EPS GAAP Adjusted 1 GAAP Adjusted 1 GAAP Adjusted 1 Revenue up $921 million or 5.0% from 2021; 7.5% in constant currency 1 Income from Operations up $142 million or 5.0% from 2021 Adjusted Income from Operations 1 up $122 million or 4.3% from 2021 Operating margin flat compared to 2021 Adjusted Operating Margin 1 down 10 basis points from 2021 Diluted EPS up $0.36 or 8.9% from 2021 Adjusted Diluted EPS 1 up $0.28 or 6.8% from 2021 During the year ended December 31, 2022, revenues increased by $921 million as compared to the year ended December 31, 2021, representing growth of 5.0%, or 7.5% on a constant currency basis 1 .
Added
In the second quarter of 2023, we initiated the NextGen program aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. Our drive for simplification includes operating with fewer layers in an effort to enhance agility and enable faster decision making.
Removed
Revenues in our Financial Services segment reflect the negative impact of the previously disclosed sale of the Samlink subsidiary, which was completed on February 1, 2022. For further details, see the " Revenues - Reportable Business Segments" section within the Results of Operations .
Added
We expect the savings generated by the program to help fund continued investments in our people, revenue growth opportunities and the modernization of our office space. In connection with the NextGen program, in 2023 we incurred $115 million of employee separation costs and $114 million of facility exit and other costs totaling $229 million.
Removed
Revenue growth was driven by our clients' continued adoption and integration of digital technologies as well as pricing improvements but was negatively impacted by challenges attracting and retaining personnel and slowing demand for our services through the second half of 2022.
Added
See Note 4 to our audited consolidated financial statements. We currently expect to incur total costs of approximately $300 million with approximately $70 million of such costs anticipated in 2024.
Removed
Attrition and hiring challenges have also resulted in increased cost of delivery. 1 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures.
Added
The estimates of the charges and expenditures that we expect to incur in connection with the NextGen program, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates.
Removed
Our 2022 operating margin was positively impacted by economies of scale that allowed us to leverage our cost structure over a larger organization, delivery efficiencies, pricing improvements and the depreciation of the Indian rupee against the U.S. dollar, parti ally offset by increased compensation costs for our delivery personnel (including employees and subcontractors) as well as a 30 basis point negative impact due to the impairment of certain capitalized costs related to a large volume-based contract with a Health Sciences client.
Added
In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen program. 2023 Financial Results 1 Revenues Income from Operations Operating Margin Diluted EPS GAAP Adjusted 1 GAAP Adjusted 1 GAAP Adjusted 1 Revenue declined $75 million or 0.4% from 2022; a decline of 0.3% in constant currency 1 Income from Operations declined $279 million or 9.4% from 2022 Adjusted Income from Operations 1 declined $50 million or 1.7% from 2022 Operating margin down 140 bps compared to 2022 Adjusted Operating Margin 1 down 20 basis points from 2022 Diluted EPS declined $0.20 or 4.5% from 2022 Adjusted Diluted EPS 1 increased $0.15 or 3.4% from 2022 1 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth are not measurements of financial performance prepared in accordance with GAAP.
Removed
Our 2021 GAAP operating margin was negatively impacted by the Class Action Settlement Loss, which was excluded from our Adjusted Operating Margin 2 in 2021. Business Outlook See "Overview" within Part I, Item 1. Business for information on our four strategic priorities.
Added
See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures.
Removed
Our success is dependent, in large part, on our ability to keep our supply of skilled employees, in particular those with experience in key digital areas, in balance with client demand. Competition for skilled employees in the current labor market is intense and in 2021 and 2022, we experienced significantly elevated voluntary attrition.
Added
Cognizant 28 December 31, 2023 Form 10-K Table of Contents During the year ended December 31, 2023, revenues decreased by $75 million as compared to the year ended December 31, 2022, representing a decrease of 0.4%, or a decrease of 0.3% on a constant currency basis 2 .
Removed
We saw improvement in our annualized attrition rate for the three months ended December 31, 2022 and we expect our annualized attrition rate for the first quarter of 2023 to be lower than our full year 2022 rate. Attrition can be difficult to predict as it is impacted by both macroeconomic and internal factors.
Added
Our 2023 GAAP and Adjusted Operating Margins were negatively impacted by increased compensation costs, primarily as a result of two merit increase cycles for the majority of our employees since October 2022, partially offset by the benefit of the depreciation of the Indian rupee against the U.S. dollar, savings generated from our NextGen program and improvement in profitability of a large contract with a Health Sciences client in 2023.
Removed
Challenges attracting and retaining personnel have negatively impacted and may continue to negatively impact cost of delivery and our ability to satisfy client demand. Further, our ongoing and anticipated future efforts with respect to recruitment, talent management and employee engagement may not be successful and may continue to result in increased compensation costs.
Added
In addition, as discussed in Note 4 to our audited consolidated financial statements, our 2023 GAAP operating margin was negatively impacted by the NextGen charges, which were excluded from our Adjusted Operating Margin.
Removed
While we strive to adjust pricing to reduce the impact of compensation increases on our operating margin, we may not be successful in fully recovering these increases, which could adversely affect our profitability.
Added
We finished 2023 with approximately 347,700 employees as compared to 355,300 employees at the end of 2022. Business Outlook See "Overview" within Part I, Item 1. Business for information on our six strategic priorities. We continue to expect the long-term focus of our clients to be on their digital transformation into software-driven, data-enabled, customer-centric and differentiated businesses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+0 added−0 removed6 unchanged
Biggest changeAs of December 31, 2022, a 100 basis point change in interest rates, with all other variables held constant, would have an immaterial effect on the fair value of our available-for-sale and held-to-maturity securities.
Biggest changeOur long-term investments primarily consist of restricted time deposits and cash equivalents related to the ITD dispute and equity method investments. As of December 31, 2023, a 100 basis point change in interest rates, with all other variables held constant, would have an immaterial effect on the fair value of our cash equivalents as well as short- and long-term investments.
The New Credit Agreement requires interest to be paid, at our option, at either the Term Benchmark, Adjusted Daily Simple RFR or the ABR Rate (each as defined in the New Credit Agreement), plus, in each case, an Applicable Margin (as defined in the New Credit Agreement). The New Term Loan is a Term Benchmark loan.
The Credit Agreement requires interest to be paid, at our option, at either the Term Benchmark, Adjusted Daily Simple RFR or the ABR Rate (each as defined in the Credit Agreement), plus, in each case, an Applicable Margin (as defined in the Credit Agreement). The Term Loan is a Term Benchmark loan.
We use foreign exchange forward contracts that are scheduled to mature in the first quarter of 2023 to provide an economic hedge against balance sheet exposure to certain monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary.
We use foreign exchange forward contracts that are scheduled to mature in the first quarter of 2024 to provide an economic hedge against balance sheet exposure to certain monetary assets and liabilities denominated in currencies other than the functional currency of the subsidiary.
These foreign currency exchange rate fluctuations have an impact on our results of operations. We have entered into a series of foreign exchange forward contracts that are designated as cash flow hedges of certain Indian rupee denominated payments in India.
These foreign currency exchange rate fluctuations have an impact on our results of operations. We have entered into a series of foreign exchange forward and option contracts that are designated as cash flow hedges of certain Indian rupee denominated payments in India.
Based upon a sensitivity analysis at December 31, 2022, which estimates the fair value of the contracts assuming certain market exchange rate fluctuations, a 10.0% change in the foreign currency exchange rate against the U.S. dollar with all other variables held constant would have resulted in a change in the fair value of our foreign exchange forward contracts designated as cash flow hedges of approximately $267 million.
Based upon a sensitivity analysis at December 31, 2023, which estimates the fair value of the contracts assuming certain market exchange rate fluctuations, a 10.0% change in the foreign currency exchange rate against the U.S. dollar with all other variables held constant would have resulted in a change in the fair value of our foreign exchange forward contracts designated as cash flow hedges of approximately $278 million.
Based upon a sensitivity analysis of our foreign exchange forward contracts at December 31, 2022, which estimates the fair value of the contracts assuming certain market exchange rate fluctuations, a 10.0% change in the foreign currency exchange rate against the U.S. dollar with all other variables held constant would have resulted in a change in the fair value of our foreign exchange forward contracts not designated as hedges of approximately $79 million.
Based upon a sensitivity analysis of our foreign exchange forward contracts at December 31, 2023, which estimates the fair value of the contracts assuming certain market exchange rate fluctuations, a 10.0% change in the foreign currency exchange rate against the U.S. dollar with all other variables held constant would have resulted in a change in the fair value of our foreign exchange forward contracts not designated as hedges of approximately $87 million.
Accordingly, our revenues may be affected by fluctuations in the exchange rates, primarily th e British pound and the Euro, a s compared to the U.S. dollar. A predominant portion of our costs in India are denominated in the Indian rupee, representing 23.5% of our global operating costs during 2022, and are subject to foreign currency exchange rate fluctuations.
Accordingly, our revenues may be affected by fluctuations in the exchange rates, primarily th e British pound and the Euro, a s compared to the U.S. dollar. A predominant portion of our costs in India are denominated in the Indian rupee, representing 24% of our global operating costs during 2023, and are subject to foreign currency exchange rate fluctuations.
All hedging transactions are authorized and executed pursuant to regularly reviewed policies and procedures. Revenues from our clients in the United Kingdom, Continental Europe and Rest of World represented 9.3%, 9.2% and 7.1%, respectively, of our 2022 revenues, and are typically denominated in currencies other than the U.S. dollar.
All hedging transactions are authorized and executed pursuant to regularly reviewed policies and procedures. Revenues from our clients in the United Kingdom, Continental Europe and Rest of World represented 9.7%, 9.9% and 6.7%, respectively, of our 2023 revenues, and are typically denominated in currencies other than the U.S. dollar.
In 2022, we reported foreign currency exchange losses, exclusiv e of hedging gains, of approximately $16 million, which were primarily attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries.
In 2023, we reported foreign currency exchange gains, exclusive of hedging gains, of approximately $42 million, which were primarily attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries.
At December 31, 2022, the notional value of these outstanding contracts was $1,433 million and the net unrealized loss was $1 million.
At December 31, 2023, the notional value of these outstanding contracts was $1,317 million and the net unrealized loss was $8 million.
As of December 31, 2022, the notional value and weighted average contract rates of these contracts by year of maturity were as follows: Notional Value (in millions) Weighted Average Contract Rate (Indian rupee to U.S. dollar) 2023 $ 1,865 81.3 2024 1,010 84.3 Total $ 2,875 82.3 As of December 31, 2022, the net unrealized loss on our outstanding foreign exchange forward contracts designated as cash flow hedges was $68 million.
As of December 31, 2023, the notional value and weighted average contract rates of these contracts by year of maturity were as follows: Notional Value (in millions) Weighted Average Contract Rate (Indian rupee to U.S. dollar) 2024 $ 1,878 84.3 2025 1,020 86.3 Total $ 2,898 85.0 As of December 31, 2023, the net unrealized gain on our outstanding foreign exchange forward and option contracts designated as cash flow hedges was $13 million.
Cognizant 40 December 31, 2022 Form 10-K Table of Contents We have $1,238 million of cash equivalents and $310 million of short-term investments as of December 31, 2022. Our cash equivalents consist of commercial paper, money market funds and time deposits.
Cognizant 41 December 31, 2023 Form 10-K Table of Contents We have $1,161 million of cash equivalents, $14 million of short-term investments and $435 million of long-term investments as of December 31, 2023. Our cash equivalents consist of money market funds and time deposits.
Interest Rate Risk In October 2022, we completed a debt refinancing and entered into the New Credit Agreement with a commercial bank syndicate providing for a $650 million New Term Loan and a $1,850 million unsecured revolving credit facility, which are due to mature in October 2027.
Interest Rate Risk We have a Credit Agreement providing for a $650 million Term Loan and a $1,850 million unsecured revolving credit facility, which are due to mature in October 2027.
Our short-term investments consist primarily of certificates of deposits and commercial paper, classified as either available-for-sale or held-to-maturity, and time deposits. Our investments are exposed to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments.
Our short-term investments consist primarily of a U.S. dollar denominated investment in a fixed income mutual fund. Our investments are exposed to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments.

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