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What changed in Cognizant's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Cognizant's 2023 and 2024 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 2024 report.

+309 added−315 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-14)

Top changes in Cognizant's 2024 10-K

309 paragraphs added · 315 removed · 225 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

55 edited+28 added−30 removed21 unchanged
Biggest changeWe 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.
Biggest changeOur People and Culture Cognizant is a people-centric company, with a distinct culture that is highly collaborative, innovative and supportive. We aim to be the employer of choice in our industry and for our people to feel motivated, engaged, included and empowered to do their best work through meaningful careers.
A loss of a significant client or a few significant clients in a particular segment could materially reduce revenues for that segment. The services we provide to our larger clients are often critical to their operations and a termination of our services would typically require an extended transition period with gradually declining revenues.
A loss of a significant client or a few significant clients in a particular segment could materially reduce revenues for that segment. The services we provide to our larger clients are often critical to their operations and termination of our services would typically require an extended transition period with gradually declining revenues.
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.
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 practice 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.
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.
Accordingly, we rely on the following to compete effectively: • investments to scale our AI capabilities; • our recruiting, training and retention model; • an entrepreneurial culture and approach to our work; • a broad client referral base; • investment in process improvement and knowledge capture; • our global delivery model; • 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.
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.
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 SVP, Head of Global Total Rewards at Cognizant from July 2020 until September 2023.
Our consulting professionals have deep industry-specific expertise and work closely across our practices to create intuitive operating models that leverage a wide range of digital technologies across our clients’ enterprises to deliver higher levels of efficiency, new value for their customers and business outcomes that align to their industries.
Our consulting professionals have deep industry-specific expertise and work closely across our practices to create intuitive operating models that leverage a wide range of technologies across our clients’ enterprises to deliver higher levels of efficiency, new value for their customers and business outcomes that align to their industries.
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
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, 2024 Form 10-K Table of Contents
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.
Our collaborative services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, engineering research and development, application maintenance, infrastructure and security as well as business process services and automation. Digital, AI-enhanced services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.
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.
Cognizant 5 December 31, 2024 Form 10-K Table of Contents Reportable Business Segments In 2024, we went to market across seven industry-based operating segments, which are aggregated into four reportable business segments: • Health Sciences (HS) - This reportable business segment is comprised of a single operating segment of the same name. • Financial Services (FS) ◦ Banking ◦ Insurance • 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.
We seek to drive organic growth through investments in our digital capabilities across industries and geographies, including the extensive training and reskilling of our technical teams and the expansion of our local workforces in the United States and other markets around the world.
In executing our strategy, we seek to drive organic growth through investments in our digital and AI capabilities across industries and geographies, including the extensive training and reskilling of our technical teams and the expansion of our local workforces in the United States and other markets around the world.
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.
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 agreements.
Services and Solutions 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. Additionally, we develop, license, implement and support proprietary and third-party software products and platforms.
Services and Solutions Our services include AI and other technology 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. Additionally, we develop, license, implement and support proprietary and third-party software products and platforms.
Prior to joining Cognizant, Mr. Kumar was the President of Infosys, where he led the Infosys Global Services Organization across all global industry segments from January 2016 to October 2022. While serving as President of Infosys, he also served as Chairman of the Board of various Infosys subsidiaries. Prior to such role, Mr.
Prior to joining Cognizant, Mr. Kumar was the President of Infosys, an Indian multinational technology company, where he led the Infosys Global Services Organization across all global industry segments from January 2016 to October 2022. While serving as President of Infosys, he also served as Chairman of the Board of various Infosys subsidiaries. Prior to such role, Mr.
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 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.
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.
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, Chief Legal Officer, Chief Administrative Officer and Corporate Secretary since February 2024.
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.
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. He is also on the Board of Directors for the U.S. Chamber of Commerce. Mr.
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.
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. Dalal has earned an Advanced Computer Security Certificate from Stanford University. Mr.
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.
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 develop and deploy our client-centric culture, innovating together to produce transformative outcomes. Our FS segment includes banking, capital markets, payments and insurance companies.
We believe that our deep knowledge of our clients’ businesses and the industries we serve 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.
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.
Central to our strategy to align with our clients’ need for continuous transformation is our sustained investment in new technologies, including new forms of AI, cloud, data modernization, automation, digital engineering and IoT.
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.
He joined Wipro in 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.
Demand in this segment is driven by our clients’ focus on improving the efficiency and sustainability of their operations; the enablement and integration of mobile platforms to support sales and other omni-channel commerce initiatives; the generational shift from mechanical to software-defined, experience-driven vehicles; grid modernization to prepare for a decarbonized and consumer-driven energy landscape; and their adoption and integration of digital technologies, such as the application of intelligent systems to manage supply chains and enhance overall customer experiences, and IoT to instrument functions for factories, real estate, fleets and products to increase access to insight-generating data.
Demand in this segment is driven by our clients’ focus on improving the efficiency and sustainability of their operations; the enablement and integration of mobile platforms to support sales and customer experience enhancement initiatives; the generational shift from mechanical to software-defined, experience-driven vehicles; grid modernization to support a consumer-driven energy landscape that enables cleaner, more efficient energy use; and their adoption and integration of digital technologies, such as intelligent systems to manage supply chains and enhance overall customer experiences, and IoT to generate data and insights for factories, fleets, products and real estate companies.
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.
Demand in this segment is driven by our clients’ need to modernize legacy infrastructure and adopt digital technologies to serve their customers while complying with significant regulatory requirements and adapting to market changes. These technologies enable enhanced customer experience, through automation, analytics and AI-driven value creation in areas such as digital lending, hyper-personalized banking, fraud detection, underwriting and next-generation payments.
Nevertheless, the volume of work performed for specific clients may vary significantly from year to year. See Note 2 to our consolidated financial statements for additional information related to disaggregation of revenues by client location, service line and contract-type for each of our reportable business segments.
See Note 2 to our consolidated financial statements for additional information related to disaggregation of revenues by client location, service line and contract-type for each of our reportable business segments.
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.
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.
Software and Platform Engineering Our Software and Platform Engineering practice helps clients develop modern enterprises through digital software engineering products, services and solutions that support optimization and modernization of their IT estates and deliver new value for their customers.
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.
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.
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.
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.
We seek IP protection for many of our innovations and rely on a combination of patent, copyright and trade secret laws, confidentiality procedures and contractual provisions, to protect our IP.
Accordingly, we have made investments in protecting our IP, including areas directed at AI-related technologies. We seek IP protection for many of our innovations and rely on a combination of patent, copyright and trade secret laws, confidentiality procedures and contractual provisions to protect our IP.
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.
Our direct competitors include, among others, Accenture, Atos, Capgemini, CGI, 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 .
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.
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 today's fast-changing world, where AI is beginning to reshape organizations in every field.
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.
Information About Our Executive Officers The following table identifies our current executive officers: Name Age Capacities in Which Served Ravi Kumar S 53 Chief Executive Officer Jatin Dalal 50 Chief Financial Officer Balu Ganesh Ayyar 63 EVP and President, Intuitive Operations and Automation and Industry Solutions Kathryn Diaz 55 EVP, Chief People Officer Surya Gummadi 48 EVP and President, Americas John Kim 57 EVP, Chief Legal Officer, Chief Administrative Officer and Corporate Secretary Robert Telesmanic 58 SVP, Controller and Chief Accounting Officer Rajesh Varrier 55 EVP, Global Head of Operations, and Chairman and Managing Director, Cognizant India Cognizant 11 December 31, 2024 Form 10-K Table of Contents Ravi Kumar Singisetti (also referred to as Ravi Kumar S or Ravi Kumar) has been our Chief Executive Officer since January 2023.
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.
Intuitive Operations and Automation Our Intuitive Operations and Automation practice helps clients build and run modern operations through two main vehicles: AI-led automation, which includes advisory and process and IT automation solutions designed to simplify and accelerate automation adoption, and business process outsourcing services, which help deliver business outcomes including revenue growth, increased customer and employee satisfaction and cost savings.
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.
For the year ended December 31, 2024, 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. The volume of work performed for specific clients may vary significantly from year to year.
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.
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 Cognizant 6 December 31, 2024 Form 10-K Table of Contents process automation, AI adoption, operational efficiency, unified user experiences and the generation of new revenue streams.
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.
Areas of focus within this practice are: • AI and analytics, which helps clients identify and adopt the best AI use cases for their enterprise and formulate actionable insights from unstructured data to drive a greater understanding of their customers and operations; • Cloud, infrastructure and security, which helps simplify, modernize and safeguard IT environments, creating a solid foundation for AI innovation; and • IoT, which enables the convergence of the physical and the digital in smart products.
This Annual Report on Form 10-K also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners.
Cognizant 9 December 31, 2024 Form 10-K Table of Contents Cognizant® and other trademarks appearing in this report are registered trademarks or trademarks of Cognizant and its affiliates in the United States and other countries. This Annual Report on Form 10-K also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners.
These four capabilities enable clients to put data at the core of their operations, improve the experiences they offer to their customers, tap into new revenue streams, automate operations, defend against technology-enabled competitors and reduce costs.
These capabilities enable clients to put AI at the core of their operations, improve the experiences they offer to their customers, tap into new revenue streams, automate operations, defend against digital- and AI-native competitors and reduce costs. In most cases, our clients operate in hybrid technology environments, running critical new digital initiatives alongside essential legacy systems.
Demand is also created by the adoption and integration of digital technologies such as AI to shape personalized care plans and predictive data analytics to improve clinical trial designs, patient engagement and care outcomes. Our P&R segment includes manufacturers, automakers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services.
Demand is also created by the adoption and integration of digital technologies such as AI and predictive data analytics to improve clinical trial designs, data security, patient engagement and care outcomes. Our FS segment includes banking, capital markets, payments and insurance companies.
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.
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 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.
Enterprise Platform Services Our Enterprise Platform Services practice helps our clients 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 financial processes. Our services decrease time to market, drive efficiencies and deliver impactful experiences.
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.
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.
We balance the portion of our employees in the United States and other jurisdictions that rely on visas with consideration of the needs of our business to fulfill client demand and risks to our business from potential changes in immigration laws and regulations that may increase the costs associated with and ability to staff employees on visas to work in-country.
Globally, we balance the portion of our employees that rely on visas with consideration of the needs of our business to fulfill client demand and the risks to our business, including the costs associated with and ability to staff employees on visas to work in-country. For additional information, see Part I, Item 1A.
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.
We had approximately 336,800 employees at the end of 2024, with 241,500 in India, 42,800 in North America, 15,700 in Continental Europe, 8,200 in the United Kingdom and 28,600 in various other locations throughout the rest of the world. As of December 31, 2024, women represented approximately 38% of our workforce.
Competition The markets for our services are highly competitive, characterized by a large number of participants and subject to rapid change. Competitors may include systems integration firms, contract programming companies, application software companies, cloud computing service providers, traditional consulting firms, professional services groups of computer equipment companies, infrastructure management companies, outsourcing companies and boutique digital companies.
Competitors may include systems integration firms, contract programming companies, application software companies, cloud computing service providers, traditional consulting firms, professional services groups of computer equipment companies, infrastructure management companies, outsourcing companies, boutique digital companies and clients' in-house technology resources, such as GCCs.
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.
In response to this demand, our focus areas include network monetization, media supply chain transformation, product engineering, AI integration, verticalization, data modernization and customer experience design.
Our clients seek to partner with service providers that have a deep understanding of their businesses, industry initiatives, customers, markets and cultures and the ability to create solutions tailored to meet their individual business needs. Across industries, our clients are confronted with the risk of being disrupted by nimble, digital-native competitors.
These changes reflect how the operating segments will be managed and reported to the CODM but will not affect the reportable segments' financial results. Our clients seek to partner with service providers that have a deep understanding of their businesses, industry initiatives, customers, markets and cultures and the ability to create solutions tailored to meet their individual business needs.
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.
These practices are Core Technologies and Insights, Enterprise Platform Services, Industry Solutions, Intuitive Operations and Automation, Software and Platform Engineer ing, and Cognizant Moment, our new digital experience practice.
They are therefore redirecting their focus and investment to digital operating models and embracing DevOps and key technologies that enable quick adjustments to shifts in their markets.
Across industries, our clients are confronted with the risk of being disrupted by nimble, digital-native competitors. Our clients increasingly feel the need to transform and are therefore redirecting their focus and investment to new operating models and embracing DevOps, AI and other key technologies that enable quick adjustments to shifts in their markets.
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.
In order to achieve this vision and support our clients, we are focusing on accelerating growth, becoming an employer of choice and simplifying our operations through modernization and an AI-enabled IT roadmap.
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.
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 revenue cycle management.
Global Delivery Model We operate in an integrated global delivery model, with delivery centers worldwide to provide our full range of services to our clients. Our delivery model includes employees deployed at client sites, local or in-country delivery centers, regional delivery centers and offshore delivery centers, as required to best serve our clients.
Our employees are deployed at client sites, local or in-country delivery centers, regional delivery centers and offshore delivery centers, as required to best serve our clients. Our extensive facilities, technology and communications infrastructure are designed to enable the effective collaboration of our global workforce across locations and geographies.
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.
This practice manages delivery platforms that enable enterprise transformation at scale and accelerate the wide use of generative AI in the enterprise. 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.
In the post-pandemic environment, our clients have a sustained need to modernize their businesses, which has led to increased demand for digital capabilities such as mobile workplace solutions, e-commerce, automation, AI and cybersecurity services and solutions.
In the AI era, our clients have an accelerated need to modernize their businesses, which has intensified demand for next-gen capabilities in AI, automation, digital commerce and secure distributed work.
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.
Additionally, we pursue select strategic acquisitions to expand our talent, experience and capabilities in key technologies or in particular geographies or industries.
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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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Our purpose, vision and values are central to Cognizant's strategic approach. We have evolved our values to prioritize those that support our vision and enhance our ability to innovate and co-create with our clients.
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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.
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In 2024, we acquired Belcan, a leading global supplier of engineering research & development services for the commercial aerospace, defense, space, marine and industrial verticals, and Thirdera, an Elite ServiceNow Partner specializing in advisory, implementation and optimization solutions related to the ServiceNow platform. See Note 3 to our consolidated financial statements for additional information.
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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.
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We are focused on expanding our partner ecosystem across a broad range of technology companies, including hyperscalers, cloud providers, enterprise software companies, best-in-class digital software enterprises and emerging start-ups. We believe this partner ecosystem will enable us to enhance our innovative, integrated offerings, by combining third-party products with our service solutions, to deliver enterprise-wide digital transformation.
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In many cases, our clients' new digital systems are built on the backbone of their existing legacy systems, which can increase complexity and impact business continuity.
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Beginning in 2025, we go to market across four industry-based operating segments, which will match our four reportable business segments - (i) Health Sciences (ii) Financial Services (iii) Products and Resources and (iv) Communications, Media and Technology.
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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.
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Our HS segment consists of healthcare providers and payers, and 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 care, digital health and delivering seamless, patient-centered experiences.
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As we continue to scale our digital services and solutions, we are focused on hiring in the United States and other countries where we deliver services to our clients to expand our in-country delivery capabilities. Our extensive facilities, technology and communications infrastructure are designed to enable the effective collaboration of our global workforce across locations and geographies.
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Clients are also increasingly leveraging technology services partners as end-to-end orchestrators uniting hyperscalers, independent software vendors, fintech players, data providers, and enterprise and business process management platforms to deliver integrated solutions at scale and speed. Our P&R segment includes manufacturers, automakers, retailers, consumer goods companies, and travel and hospitality companies, as well as businesses providing logistics, energy and utility services.
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Cognizant® and other trademarks appearing in this report are registered trademarks or trademarks of Cognizant and its affiliates in the United States and other countries, or third parties, as applicable. This Annual Report on Form 10-K includes trademarks and service marks owned by us.
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We believe our deep understanding of our clients' established systems and their digital ambitions provides us with a unique advantage as we work with them to architect solutions that are both transformative and practical. Our services and solutions are organized into six integrated practices, which help us deliver these capabilities in ways that align with each client’s specific transformation journey.
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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.
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Cognizant 7 December 31, 2024 Form 10-K Table of Contents Core Technologies and Insights Our Core Technologies and Insights practice helps clients build agile and relevant organizations that apply the power of AI, cloud, data and IoT to help them perform better and innovate faster.
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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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Areas of focus are: • Digital engineering, which delivers modern business software; • Application development and management, which improves or reimagines applications; and • Quality engineering and assurance, which helps clients build and run the highest quality software.
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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.
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Cognizant 8 December 31, 2024 Form 10-K Table of Contents Digital Experience Services (Cognizant Moment) Established in 2024, Cognizant Moment is our digital experience practice, designed to help clients leverage the power of AI to reimagine customer experiences and engineer innovative strategies aimed at driving growth.
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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.
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Cognizant Moment delivers intelligent ecosystem orchestration, connecting experiences as well as their underlying data, technology and operations across the entire enterprise. This approach enables clients to leverage generative AI's content generation capabilities alongside human ingenuity to innovate and differentiate by informing and automating processes, and creating dynamic, hyper-personalized experiences for their customers.
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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.
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Global Delivery Model We operate in an integrated global delivery model, with delivery centers worldwide to provide our full range of services to our clients. Our model leverages methodologies, tools, AI and other enablers to optimize delivery by enhancing people's capabilities through technology. We continue to modernize our delivery operations through lean processes, increased automation and integrated, AI-infused systems.
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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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe also engage third-party cybersecurity experts to assist with risk assessment and conduct penetration testing among other items. Key findings from the audits and third-party risk assessments are summarized and communicated to the Company’s senior leadership and the Audit Committee, and remediation actions are implemented to enhance our overall cybersecurity program.
Biggest changeKey findings from the audits and third-party risk assessments are summarized and communicated to the Company’s senior leadership and the Audit Committee, and remediation actions are implemented to enhance our overall cybersecurity program. We require our vendors to comply with privacy and cybersecurity requirements, and we perform risk assessments of vendors, including their ability to protect data from unauthorized access.
Our ability to successfully manage change associated with the various business transformation initiatives is critical for the overall strategy execution.
Our ability to successfully manage change associated with the various business transformation initiatives is critical for our overall strategy execution.
Our clients may maintain their own proprietary, sensitive, or confidential information that could be compromised in a cybersecurity attack, or their systems may be disabled or disrupted as a result of such an attack.
Our clients maintain their own proprietary, sensitive, or confidential information that could be compromised in a cybersecurity attack, or their systems may be disabled or disrupted as a result of such an attack.
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.
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, standards, 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.
Our success is dependent, in large part, on our ability to keep our supply of skilled employees, including project managers, IT engineers and senior technical personnel, in particular those with experience in key digital areas, in balance with client demand around the world and on our ability to attract and retain senior management with the knowledge and skills to lead our business globally.
Our success is dependent, in large part, on our ability to keep our supply of skilled employees, including project managers, IT engineers and senior technical personnel, in particular those with experience in key AI and digital areas, in balance with client demand around the world and on our ability to attract and retain senior management with the knowledge and skills to lead our business globally.
If we are unable to attract, train and retain skilled employees to satisfy client demand, including highly skilled technical personnel and personnel with experience in key digital areas, as well as senior management to lead our business globally, our business and results of operations may be materially adversely affected.
If we are unable to attract, train and retain skilled employees to satisfy client demand, including highly skilled technical personnel and personnel with experience in key AI and digital areas, as well as senior management to lead our business globally, our business and results of operations may be materially adversely affected.
To achieve such growth, we must, among other things, continue to significantly expand our global operations, in particular with respect to digital, and scale our infrastructure to support such business growth and ensure that our service offerings remain responsive to market demand.
To achieve such growth, we must, among other things, continue to significantly expand our global operations, in particular with respect to AI and digital, and scale our infrastructure to support such business growth and ensure that our service offerings remain responsive to market demand.
Any such claims of IP infringement could harm our reputation, cause us to incur substantial costs in defending ourselves, expose us to considerable legal liability or prevent us from offering some services or solutions in the future.
Any such claims of IP infringement could harm our reputation, cause us to incur substantial costs in defending ourselves or our clients, expose us to considerable legal liability or prevent us from offering some services or solutions in the future.
Additionally, we expect to continue pursuing strategic and targeted acquisitions and investments to enhance our offerings of services and solutions or to enable us to expand our talent, experience and capabilities in key digital areas or in particular geographies or industries.
Additionally, we expect to continue pursuing strategic and targeted acquisitions and investments to enhance our offerings of services and solutions or to enable us to expand our talent, experience and capabilities in key AI and digital areas or in particular geographies or industries.
We have entered into foreign exchange forward contracts intended to partially offset the impact of the movement of the exchange rates on future operating costs and to mitigate foreign currency risk on foreign currency denominated net monetary assets.
We have entered into foreign exchange forward and option contracts intended to partially offset the impact of the movement of the exchange rates on future operating costs and to mitigate foreign currency risk on foreign currency denominated net monetary assets.
Our failure to meet specified service levels or milestones required by certain of our client contracts may result in our client contracts being less profitable, potential liability for penalties or damages or reputational harm. Many of our client contracts include clauses that tie our compensation to the achievement of agreed-upon performance standards or milestones.
Our failure to meet specified service levels or milestones required by certain of our client contracts may result in our client contracts being less profitable, potential liability for penalties or damages or reputational harm. Many of our client contracts include clauses that tie our compensation to the achievement of agreed-upon performance standards, productivity improvements or milestones.
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.
For example, we may experience increased costs in 2025 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.
Risks Related to our Business and Operations Our results of operations could be adversely affected by economic and political conditions globally and in particular in the markets in which our clients and operations are concentrated. Global macroeconomic conditions have a significant effect on our business as well as the businesses of our clients.
Risks Related to our Business and Operations Our results of operations could be adversely affected by economic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated. Global macroeconomic conditions have a significant effect on our business as well as the businesses of our clients.
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.
Climate change, extreme weather and risks arising from the transition to a lower-carbon economy may impact our business. There are inherent climate- and weather-related risks everywhere that we conduct our business.
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.
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 the impact of extreme weather conditions), and public health emergencies, epidemics and pandemics, affecting the geographies where our people, equipment and clients are located.
Tax laws and regulations affecting us and our clients, including applicable tax rates, and the interpretation and enforcement of such laws and regulations are subject to change as a result of economic, political and other factors, and any such changes or changes in tax accounting principles could increase our effective worldwide income tax rate and have a material adverse effect on our net income, cash flows and financial condition.
Tax laws and regulations affecting us and our clients, including applicable tax rates, and the interpretation and enforcement of such laws and regulations are subject to change as a result of macroeconomic, geopolitical and other factors, and any such changes or changes in tax accounting principles could increase our effective worldwide income tax rate and have a material adverse effect on our net income, cash flows and financial condition.
Our cybersecurity risk management program, which is managed by Cognizant’s Corporate Security team, is designed to identify, assess and manage risks from cybersecurity threats and provides a framework for handling cybersecurity threats and incidents. The program is also aligned with the risk assessment framework that has been established by the enterprise risk management team.
Our cybersecurity risk management program, which is managed by Cognizant’s Corporate Security team, is designed to identify, assess and manage risks from cybersecurity threats and provides a framework for handling cybersecurity threats and incidents. The program is also aligned with the risk assessment framework established by the enterprise risk management team.
Failure to satisfy these requirements could significantly reduce our fees under the contracts, increase the cost to us of meeting performance standards or milestones, delay expected payments, subject us to potential damage claims under the contract terms or harm our reputation.
Failure to satisfy any such requirements could significantly reduce our fees under the contracts, increase the cost to us of meeting performance standards or milestones, delay expected payments, subject us to potential damage claims under the contract terms or harm our reputation.
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.
For example, in 2024 some of our clients continued to reduce 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.
In addition, the products, services and software that we provide to our clients, or the third-party components we use to provide such products, services and software, may unintentionally contain or introduce cybersecurity threats or vulnerabilities to our clients’ information technology networks.
In addition, the products, services and software that we provide to our clients, or the third-party components we use to provide such products, services and software, have in the past and may in the future unintentionally contain or introduce cybersecurity threats or vulnerabilities to our clients’ information technology networks.
Governance As part of our overall enterprise risk management program, we prioritize the identification and management of cybersecurity risk at several levels.
“Risk Factors” . Governance As part of our overall enterprise risk management program, we prioritize the identification and management of cybersecurity risk at several levels.
Our employees, subcontractors, vendors, agents, alliance partners, the companies we acquire and their employees, vendors and agents, and other third parties with which we associate, could take actions that violate policies or procedures designed to promote legal and regulatory compliance or applicable anticorruption laws or regulations.
Our employees, subcontractors, vendors, agents, alliance partners, the companies we acquire and their employees, vendors and agents, and other third parties with which we associate, have in the past and could in the future take actions that violate policies or procedures designed to promote legal and regulatory compliance or applicable anticorruption laws or regulations.
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.
If we do not sufficiently invest in new technologies, successfully adapt to industry developments and changing demand, develop new tools and platforms that meet our clients' productivity expectations 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.
Our principal operating subsidiary in the United States utilizes a high number of skilled workers holding H-1B and L-1 visas and, as a result, may be subject to increased costs if any such laws, regulations, policy changes or executive orders go into effect.
Our principal operating subsidiary in the United States utilizes a high number of skilled workers holding H-1B and L-1 visas and, as a result, may be subject to increased costs upon the effectiveness of any such laws, regulations, policy changes or executive orders.
We also must continue to maintain a senior leadership team that, among other things, is effective in executing on our strategic goals and growing our digital business.
We also must continue to maintain a senior leadership team that, among other things, is effective in executing on our strategic goals and growing our service capabilities.
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.
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 macroeconomic and geopolitical conditions.
Further, if we do not accurately estimate the effort, costs or timing for meeting our contractual commitments or completing engagements to a client's satisfaction, our contracts could have delivery inefficiencies and be less profitable than expected or unprofitable.
Further, if we do not accurately estimate the effort, anticipated productivity improvements, costs or timing for meeting our contractual commitments or completing engagements to a client's satisfaction, our contracts have in the past and could in the future have delivery inefficiencies and be less profitable than expected or unprofitable.
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.
Our clients, regulators, or other third parties have and may in the future attempt to hold us liable for any such losses or damages resulting from such an attack, including through contractual indemnification clauses.
Our relationships with our third-party alliance partners, who supply us with necessary components to the services and solutions we offer our clients, are also critical to our ability to provide many of our services and solutions that address client demands.
Our relationships with our third-party alliance partners, who supply us with necessary components to the services and solutions we offer our clients, are also critical to our ability to provide many of our services and solutions that address client demands. Some of our third-party alliance partners are also clients or suppliers for our internal operations.
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.
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, particularly as we expand the use of such technologies, or may limit or prevent our ability to develop, deploy, or use AI technologies.
Our utilization rates are further affected by a number of factors, including our ability to transition employees from completed projects to new assignments, hire and assimilate new employees, forecast demand for our services and thereby maintain an appropriate headcount in each of our geographies and workforce and manage attrition, and our need to devote time and resources to training, professional development and other typically non-chargeable activities.
Our utilization rates are further affected by a number of factors, including our ability to transition employees from completed projects to new assignments, hire and assimilate new employees, forecast demand for our services and thereby maintain an appropriate headcount in each of our geographies and workforce and manage attrition, and Cognizant 17 December 31, 2024 Form 10-K Table of Contents our need to devote time and resources to training, professional development and other typically non-chargeable activities.
Violations of these laws or regulations by us, our employees or any of these third parties could subject us to criminal or civil enforcement actions (whether or not we participated or knew about the actions leading to the violations), including fines or penalties, disgorgement of profits and suspension or disqualification from work, including U.S. federal contracting, any of which could materially adversely affect our business, including our results of operations and our reputation.
Violations of these laws or regulations by us, our employees or any of these third parties could subject us to criminal or civil Cognizant 22 December 31, 2024 Form 10-K Table of Contents enforcement actions (whether or not we participated or knew about the actions leading to the violations), including fines or penalties, disgorgement of profits and suspension or disqualification from work, including U.S. federal contracting, any of which could materially adversely affect our business, including our results of operations and our reputation.
Many of these recent changes have resulted in, and various proposed changes may result in, increased difficulty in obtaining timely visas that could impact our ability to staff projects, including as a result of visa application rejections and delays in processing applications, and significantly increased costs for us in obtaining visas or as a result of prevailing wage requirements for our employees on visas.
Many of these recent changes have resulted in, and various proposed and enacted changes may result in, increased difficulty in obtaining timely visas, whether as a result of visa application rejections, delays in processing applications, significantly increased costs to obtain visas, prevailing wage requirements for our employees on visas or otherwise, which could in turn impact our ability to staff projects.
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.
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.
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.
Our business has experienced in the past and may experience in the future significant employee attrition, which has caused us to incur increased costs to hire new employees with the desired skills.
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.
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.
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.
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.
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, our efforts to offer our employees a value proposition that is competitive and appealing may be unsuccessful and could have an adverse effect on engagement and retention, which may materially adversely affect 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.
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.
Any remediation measures that we have taken or that we may undertake in the future in response to the security incident announced in April 2020 or other security threats may be insufficient to prevent future attacks or insufficient for us to quickly recover from any future attack to efficiently continue our business operations.
Additionally, any remediation measures that we have taken or that we may undertake in the future may be insufficient to prevent future attacks or insufficient for us to quickly recover from any future attack to efficiently continue our business operations.
However, the hedging strategies that we have implemented, or may in the future implement, to mitigate foreign currency exchange rate risks may not reduce or completely offset our exposure to foreign exchange rate fluctuations and may expose our business to unexpected market, operational and counterparty credit risks.
However, the hedging strategies that we have implemented, or may in the future implement, to mitigate foreign currency exchange rate risks may not reduce or completely offset our exposure to foreign Cognizant 19 December 31, 2024 Form 10-K Table of Contents exchange rate fluctuations and may expose our business to unexpected market, operational and counterparty credit risks.
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.
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.
The less we are able to differentiate our services and solutions and/or clearly convey the value of our services and solutions, the more difficulty we have in winning new work in sufficient volumes and at our target pricing and overall economics.
The less we are able to differentiate our services Cognizant 14 December 31, 2024 Form 10-K Table of Contents and solutions and/or clearly convey the value of our services and solutions, the more difficulty we have in winning new work in sufficient volumes and at our target pricing and overall economics.
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.
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.
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.
In addition, the development, adoption, and use of AI technologies are all 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 consequences.
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.
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. The emergence and maturation of AI capabilities may also lead to new or more sophisticated methods of attack.
Our revenues are highly dependent on clients located in the United States and Europe, and any adverse economic, political or legal uncertainties or adverse developments, including due to the uncertainty related to the economic environment and inflation, may cause clients in these geographies to reduce their spending and materially adversely impact our business.
Our revenues are highly dependent on clients located in the United States and Europe, and any adverse economic, geopolitical or legal uncertainties or adverse developments, including due to the uncertainty related to the economic environment and inflation, natural or man-made disasters and extreme weather, geopolitical events and conflicts, labor or trade disputes or similar events, may cause clients in these geographies to reduce their spending and materially adversely impact our business.
Anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair our ability to serve our clients and materially adversely affect our business, results of operations and financial condition.
Cognizant 21 December 31, 2024 Form 10-K Table of Contents Anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair our ability to serve our clients and materially adversely affect our business, results of operations and financial condition.
Security breaches, employee malfeasance, or human or technological error create risks of shutdowns or disruptions of our operations and potential unauthorized access and/or disclosure of our or our clients’ sensitive data, which in turn could jeopardize projects that are critical to our operations or the operations of our clients’ businesses and have other adverse impacts on our business or the business of our clients.
Security breaches, employee malfeasance, or human or technological error have in the past and could in the future cause shutdowns or disruptions of our or our clients' operations and Cognizant 18 December 31, 2024 Form 10-K Table of Contents potential unauthorized access and/or disclosure of our or our clients’ sensitive data, which in turn could jeopardize projects that are critical to our operations or the operations of our clients’ businesses and have other adverse impacts on our business or the business of our clients.
Our cyber risk assessment program is managed by our Corporate Security team, which is led by our CSO, who has over 25 years of experience in the cybersecurity and technology industry. The CSO reports to Cognizant's Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary.
Cognizant 24 December 31, 2024 Form 10-K Table of Contents Our cyber risk assessment program is managed by our Corporate Security team, which is led by our CSO, who has over 25 years of experience in the cybersecurity and technology industry. The CSO reports to Cognizant's Executive Vice President, Chief Legal Officer, Chief Administrative Officer and Corporate Secretary.
Examples of areas of significant change include digital-, cloud- and security-related offerings, which are continually evolving, as well as developments in areas such as AI, augmented reality, automation, blockchain, IoT, quantum computing and as-a-service solutions, among others.
Examples include digital-, cloud- and security-related offerings, AI, augmented reality, automation, blockchain, IoT, quantum and edge computing, digital engineering and manufacturing and as-a-service solutions, among others, which are continually evolving.
Our acquisition activities have in the past and may in the future be subject to litigation or other claims, including claims from employees, clients, stockholders, or other third parties.
We also face considerable potential legal liability from a variety of other sources. Our acquisition activities have in the past and may in the future be subject to litigation or other claims, including claims from employees, clients, stockholders, or other third parties.
In addition, our clients may delay spending under existing contracts and engagements or delay entering into new contracts while evaluating new technologies. Such delays can negatively impact our results of operations if we are unable to adapt our pricing or the pace and level of spending on new technologies is not sufficient to make up any shortfall.
Such reductions, replacements and delays can negatively impact our results of operations if we are unable to adapt our pricing or the pace and level of spending on new technologies is not sufficient to make up any shortfall.
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.
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, including as a result of inflation, higher interest rates, tightening of credit markets, trade disputes, recession or slowing growth, among others.
Correspondingly, we have needed to reskill, retain, integrate and motivate our large workforce with diverse skills and expertise in order to serve client demands across the globe, respond quickly to rapid and ongoing technological, industry and macroeconomic developments and grow and manage our business.
We must hire or reskill, integrate, retain and motivate our large workforce with diverse skills and expertise to serve client demands across the globe, respond quickly to rapid and ongoing technological, industry and macroeconomic developments and grow and manage our business. In 2021 and most of 2022, we and, we believe, the IT industry generally, experienced unprecedented attrition.
Consolidation activity may also result in new competitors with greater scale, a broader footprint or vertical integration that makes them more attractive to clients as a single provider of integrated products and services.
Additionally, we face competition from clients' in-house technology resources, such as GCCs, which may provide a lower cost alternative to our services. Consolidation activity may also result in new competitors with greater scale, a broader footprint or vertical integration that makes them more attractive to clients as a single provider of integrated products and services.
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.
In addition, we may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our NextGen program due to unforeseen difficulties or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from our NextGen program, our operating results and financial condition would be adversely affected.
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.
Our profitability also depends on the efficiency with which we run our operations (including our ability to leverage new technologies to improve productivity) and the cost of our operations, especially the compensation and benefits costs of our employees.
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.
Bribery Act), the environment, including climate change regulation and reporting requirements, government affairs, internal and disclosure control obligations, data security, privacy and data protection, intellectual property, employment and labor relations, human rights and AI.
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.
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.
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.
Our NextGen program may result in the loss of institutional knowledge and expertise, the reallocation of certain roles and responsibilities across the Company, difficulties in the retention of our remaining employees and reduced productivity among our remaining employees, all of which could have a material adverse affect on our operations.
Failure to meet ESG expectations or standards or achieve our ESG commitments could adversely affect our business or damage our reputation.
Failure to meet ESG expectations or standards or achieve our ESG ambitions could adversely affect our business or damage our reputation. Shifting stakeholder expectations and evolving regulatory and disclosure standards around ESG could impact our business.
Competition for skilled labor is intense and, in some jurisdictions in which we operate and in key digital areas, there are more open positions than qualified persons to fill these positions. We compete for employees not only with other companies in our industry but also with companies in other industries, such as software services, engineering services and financial services companies.
Competition for skilled labor is intense and, in some jurisdictions in which we operate and in key AI and digital areas, there are more open positions than qualified persons to fill these positions.
For example, in April 2020, we announced a security incident involving a Maze ransomware attack. The attack resulted in unauthorized access to certain data and caused significant disruption to our business.
For example, we have experienced a security incident involving a ransomware attack, which resulted in unauthorized access to certain data and caused significant disruption to our business. Such attacks, or other currently unanticipated threats, could occur in the future.
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.
AI technology and services are part of a highly competitive and rapidly evolving market. 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 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.
In 2024, we incurred $134 million of employee separation, facility exit and other costs related to the program, bringing the total costs incurred since inception to $363 million. See Note 4 to our consolidated financial statements.
The internal committee is responsible for assessing the materiality of cybersecurity threats and incidents and informs designated members of executive leadership and of the Board of Directors of material cybersecurity threats and incidents. Cognizant's cyber risk management program is periodically audited as part of external certification audits.
The internal committee is responsible for assessing the materiality of cybersecurity threats and incidents and informs designated members of executive leadership and of the Board of Directors of material cybersecurity threats and incidents. Cognizant's cybersecurity risk management program is guided by industry-recognized security frameworks, including ISO/IEC 27001, TISAX and NIST.
We may face challenges in effectively integrating acquired businesses into our ongoing operations and in assimilating and retaining employees of those businesses into our culture and organizational structure, and these risks may be magnified by the size and number of transactions we execute.
We may face challenges in effectively integrating acquired businesses into our ongoing operations, including the implementation of controls, processes and policies appropriate for a multinational public company at acquired companies that may have previously lacked such functions in areas such as cybersecurity, IT and privacy, among others, and in assimilating and retaining employees of those businesses into our culture and organizational structure, and these risks may be magnified by the size and number of transactions we execute.
We face challenges related to growing our business organically as well as inorganically through acquisitions, and we may not be able to achieve our targeted growth rates. Achievement of our targeted growth rates requires continued significant organic growth of our business as well as inorganic growth through acquisitions.
Achievement of our targeted growth rates requires continued significant organic growth of our business as well as inorganic growth through acquisitions.
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.
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.
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.
Enforcing our rights may require considerable time, money and oversight, and we may not be successful in our efforts. Item 1B . Unresolved Staff Comments None. Item 1C . Cybersecurity Risk Management and Strategy Cybersecurity risk management is an integral part of our overall enterprise risk management program.
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.
We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from cybersecurity incidents.
In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. In 2020, we experienced a previously-disclosed cybersecurity incident that resulted in unauthorized access to certain data and caused significant disruptions to our business operations.
We include data protection and security content as part of annual training required of employees. In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. For further discussion of the cybersecurity risks and threats we face, please see Item 1A.
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.
We are subject to, and expect to become increasingly subject to, laws, regulations and international treaties relating to ESG, including the European Union's Corporate Sustainability Reporting Directive (CSRD) and California's climate change disclosure requirements.
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.
Such consequences may include, for example, employees making decisions based on biased or inaccurate information; unauthorized disclosure of sensitive information; operational inefficiencies leading to decreased productivity; deliberate misuse; or infringement of third-party IP rights. Additionally, the use of AI by us or our business partners may create new cybersecurity vulnerabilities, including those which may not be recognized at the time.
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.
We have incurred and plan to continue to incur significant development and operational costs to build and support our AI capabilities, including costs to ensure ongoing compliance with the complex and rapidly evolving legal landscape around AI and automation.
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.
Our NextGen program and the associated reductions in headcount and consolidation of office space could disrupt our business and may not result in anticipated savings. At the end of 2024, we completed our NextGen program, which was aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment.
We may have to engage in legal action to protect our own IP rights, and enforcing our rights may require considerable time, money and oversight, and existing laws in the various countries in which we provide services or solutions may offer only limited protection. We also face considerable potential legal liability from a variety of other sources.
We rely on a combination of patent, copyright and trade secret laws, confidentiality procedures and contractual provisions to protect our IP. The existing laws in the various countries in which we provide services or solutions may offer only limited protection of our intellectual property and are subject to change at any time.
The current U.S. administration has continued to explore visa and immigration reform and there continues to be political support for potential new laws and regulations relating to visas or immigration and the implementation of these or similar measures in the future may have a material adverse impact on companies like ours that have a substantial percentage of our employees on visas.
In addition, immigration reform, including as a result of changes to immigration policies, and the increased uncertainty surrounding such policies in light of the incoming U.S. administration's expected immigration agenda, may have a material adverse impact on companies like ours that have a substantial percentage of our employees on visas.
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.
Such events may have a material adverse impact upon, our business, liquidity, results of operations and financial condition, including as a result of reduced client demand for our services, closures of our clients' facilities that materially impair our ability to deliver services to our clients and satisfy contractually agreed upon service levels and increased strain on employees and management, as we saw at the height of the COVID-19 pandemic.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur 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).
Biggest changeOur largest delivery center presence is in India, representing approximately 90% of our total delivery centers on a square-foot basis, with the largest presence in Chennai (8 million square feet), Hyderabad (3 million square feet), Pune (2 million square feet), Bangalore (2 million square feet) and Kolkata (2 million square feet).
We 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 also have a significant number of delivery centers in other countries, including the United States, Philippines, Canada, Mexico and countries throughout Europe. In addition, we have sales and marketing offices, innovation and Gen-AI labs, and digital design and consulting centers in major business markets, including New York, London, Paris, Melbourne and Singapore, among others.
We have over 24 million square feet of owned and leased facilities for our delivery centers.
We have over 22 million square feet of owned and leased facilities for our delivery centers.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeDuring the three months ended December 31, 2024, we repurchased $140 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, 2024 - October 31, 2024 — $ — — $ 1,377 November 1, 2024 - November 30, 2024 1,062,605 77.87 1,062,605 1,295 December 1, 2024 - December 31, 2024 716,060 79.95 716,060 1,237 Total 1,778,665 $ 78.71 1,778,665 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.
We intend to continue to pay quarterly cash dividends in accordance with our capital allocation framework. Future dividend payments depend on a variety of factors, including our cash flow generated from operations, cash and investment balances, net income, overall liquidity position, potential alternative uses of cash, such as acquisitions, and anticipated future economic conditions and financial results.
We intend to continue to pay quarterly cash dividends in accordance with our capital allocation framework. Future dividend payments depend on a variety of factors, including cash flow generated from operations, cash and investment balances, net income, overall liquidity position, potential alternative uses of cash, such as acquisitions, and anticipated future economic conditions and financial results.
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.
The repurchase program does not have an expiration date and had a remaining balance of $1,237 million as of December 31, 2024. 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.
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.
Cognizant 26 December 31, 2024 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, 2019 and ending on the last day of our last completed fiscal year.
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.
For the three months ended December 31, 2024, we purchased 0.2 million shares at an aggregate cost of $14 million in connection with employee tax withholding obligations. Recent Sales of Unregistered Securities None.
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.
Cash Dividends During 2024, we paid quarterly cash dividends of $0.30 per share, or $1.20 per share in total for the year. In February 2025, our Board of Directors approved a cash dividend of $0.31 per share with a record date of February 18, 2025 and a payment date of February 26, 2025.
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 .
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, 2024, the number of holders of record of our Class A common stock was 95 and th e approximate number of beneficial holders of our Class A common stock w as 676,500.
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.
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 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Cognizant Technology Solutions Corp $ 100 $ 133.93 $ 146.84 $ 96.12 $ 129.16 $ 133.62 S&P 500 Index 100 118.40 152.39 124.79 157.59 197.02 S&P 500 Information Technology Index 100 143.89 193.58 139.00 219.40 299.72 (1) Graph assumes $100 invested on December 31, 2019 in our Class A common stock, the S&P 500 Index and the S&P 500 Information Technology Index.

Item 7. Management's Discussion & Analysis

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

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Biggest changeBanking clients in our Financial Services segment, retail and consumer goods clients in our Products and Resources segment and clients in our Communications, Media and Technology segment were particularly affected; • Recently completed acquisitions which contributed 110 basis points of growth to the overall change in revenues, including 230 basis points of growth to our Products and Resources segment (primarily in North America) and 290 basis points of growth to our Communications, Media and Technology segment (primarily in Continental Europe and the United Kingdom); • North America revenues in the Communications, Media and Technology segment included growing demand among the largest clients in this segment, including for services related to digital content; • The resale of third-party products in North America in connection with our integrated offerings strategy, primarily in the Financial Services and Products and Resources segments, contributed 70 basis points of growth to the overall change in revenue; • North America revenues in the Communications, Media and Technology and Products and Resources segments were positively impacted by the ramp up of several recently won large deals; • Revenue growth in the United Kingdom was driven by expansion of work public sector clients included in our Communications, Media and Technology and Financial Services segments; • Revenues in the Continental Europe region were driven by increased demand from pharmaceutical clients within the Health Sciences segment and automotive clients within the Products and Resources segment; and • Revenue decline in our Rest of World region was primarily driven by weakness in the Financial Services segment and the negative impact of foreign currency exchange rate movements. 4 Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP.
Biggest changeClients in our Financial Services, Products and Resources, and Communications, Media and Technology segments were particularly affected; • Revenue decline in our United Kingdom region was primarily driven by weakness in the Communications, Media and Technology and Financial Services segments; and • Revenue decline in our Rest of World region was primarily driven by weakness in the Products and Resources and Financial Services segments. 4 Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP.
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 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 uncertainty related to the global economy, which has affected and may continue to affect their demand for our services.
As these factors may change over time, the actual amounts expended on stock repurchase activity, dividends, and acquisitions, if any, during any particular period cannot be predicted and may fluctuate from time to time. Other Liquidity and Capital Resources Information We seek to ensure that our worldwide cash is available in the locations in which it is needed.
As these factors may change over time, the actual amounts expended on stock repurchase activity, dividends, and acquisitions, if any, during any particular period cannot be predicted and may fluctuate from time to time. Other Liquidity and Capital Resources Information We seek to ensure that our cash is available in the locations in which it is needed.
We expect operating cash flows, cash and short-term investment balances, together with the available capacity under our revolving credit facilities, to be sufficient to meet our operating requirements, including purchase commitments, tax payments, including Tax Reform Act transition tax payments, and servicing our debt for the next twelve months.
We expect operating cash flows, cash and short-term investment balances, together with the available capacity under our revolving credit facilities, to be sufficient to meet our operating requirements, including purchase commitments, tax payments, including the Tax Reform Act transition tax payment, and servicing our debt for the next twelve months.
Such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known. Net changes in estimates of such future costs were immaterial to the consolidated results of operations for the periods presented. Income Taxes.
Such estimates and changes in estimates involve the use of judgment. The cumulative impact of any change in estimates is reflected in the financial reporting period in which the change in estimate becomes known. Net changes in estimates of such future costs were immaterial to the consolidated results of operations for the periods presented. Income Taxes.
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 .
See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable. Cognizant 32 December 31, 2024 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, 2024 .
We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to make significant investments in our AI capabilities to meet the needs of our clients and harness its value in a flexible, secure, scalable and responsible way.
We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to make significant investments in our AI capabilities to meet the needs of our clients and harness AI's value in a flexible, secure, scalable and responsible way.
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.
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, 2024 and through the date of this filing.
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.
Cognizant 29 December 31, 2024 Form 10-K Table of Contents Results of Operations For a discussion of our results of operations for the year ended December 31, 2022, including a year-to-year comparison between 2023 and 2022, 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, 2023.
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).
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).
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.
Our collaborative services include digital services and solutions, consulting, application development, systems integration, quality engineering and assurance, engineering research and development, application maintenance, infrastructure and security as well as business process services and automation. Digital, AI-enhanced services continue to be an important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses.
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.
Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit. Cognizant 38 December 31, 2024 Form 10-K Table of Contents Based on our most recent evaluation of goodwill performed during the fourth quarter of 2024, we concluded that the goodwill in each of our reporting units was not at risk of impairment.
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.
In addition, our 2024 and 2023 GAAP operating margins were negatively impacted by the NextGen charges, as discussed in Note 4 to our consolidated financial statements, 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.
(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.
(3) Presented below are the tax impacts of our non-GAAP adjustments to pre-tax income for the years ended December 31: (in millions) 2024 2023 Non-GAAP income tax benefit (expense) related to: NextGen charges $ 34 $ 59 Foreign currency exchange gains and losses (4) (6) 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.
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.
Cognizant 31 December 31, 2024 Form 10-K Table of Contents Cost of Revenues (Exclusive of Depreciation and Amortization Expense) é $294M é 0.3% 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.
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.
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, 2024, the notional value of our undesignated hedges was $489 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 96 basis points in 2023.
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 25 basis points in 2024.
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.
Investing activities The increase in cash used in investing activities in 2024 compared to 2023 was primarily driven by higher payments for business combinations as well as lower net maturities of investments in 2024.
To the extent that the final outcome of these matters differs from the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. Business Combinations, Goodwill and Intangible Assets . Goodwill and intangible assets, including indefinite-lived intangible assets, arise from the accounting for business combinations.
To the extent that the final outcome of these matters differs from the amounts recorded, such differences may materially impact, positively or negatively, the provision for income taxes in the period in which such determination is made. Business Combinations, Goodwill and Intangible Assets . Goodwill and intangible assets, including indefinite-lived intangible assets, arise from the accounting for business combinations.
Although Management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, we believe that our net income, cash flows, or financial condition will not be materially impacted by Pillar Two.
Although Management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, our net income, cash flows, or financial condition has not and will not in the future be materially impacted by Pillar Two.
Restructuring charges were $229 million or 1.2%, as a percentage of revenues for the year ended December 31, 2023. For further detail on our restructuring charges see Note 4 to our audited consolidated financial statements.
Restructuring charges were $134 million or 0.7%, as a percentage of revenues for the year ended December 31, 2024, as compared to $229 million or 1.2%, as a percentage of revenue, for the year ended December 31, 2023. For further detail on our restructuring charges see Note 4 to our consolidated financial statements.
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.
In addition, our GAAP operating margins for 2024 and 2023, were negatively impacted by the NextGen charges, as discussed in Note 4 to our consolidated financial statements, which were excluded from our Adjusted Operating Margin.
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.
Additionally, we have purchase commitments of approximately $1.1 billion that will be paid over the next four years, of which approximately $440 million will be paid during the next twelve months. In a ddition, see Note 7 to our consolidated financial statements for a description of our operating lease obligations.
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.
As of December 31, 2024, our goodwill balance was $6,953 million. We review our finite-lived assets, including our finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
As AI-based technologies evolve, we expect that some services that we currently perform for our clients will be replaced by AI or forms of automation. This may lead to reduced demand for certain services or harm our ability to obtain favorable pricing or other terms for our services.
As AI-based technologies or other forms of automation evolve, we expect that demand for some services that we currently perform for our clients may be reduced and our ability to obtain favorable pricing or other terms for our services may be diminished.
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.
The following table sets forth total other income (expense), net for the years ended December 31: (in millions) 2024 2023 Increase / Decrease Foreign currency exchange gains (losses) $ (29) $ 42 $ (71) Gains (losses) on foreign exchange forward contracts not designated as hedging instruments 10 (40) 50 Foreign currency exchange gains (losses), net (19) 2 (21) Interest income 119 126 (7) Interest expense (54) (41) (13) Other, net — 11 (11) Total other income (expense), net $ 46 $ 98 $ (52) The foreign currency exchan ge losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries.
A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and may exclude costs that are recurring such as net non-operating foreign currency exchange gains or losses.
A limitation of using non-GAAP financial measures versus financial measures calculated in accordance with GAAP is that non-GAAP financial measures may exclude costs that are recurring such as net non-operating foreign currency exchange gains or losses.
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.
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) 2024 % of Revenues 2023 % of Revenues GAAP income from operations and operating margin $ 2,892 14.7 % $ 2,689 13.9 % NextGen charges (1) 134 0.6 229 1.2 Adjusted Income From Operations and Adjusted Operating Margin $ 3,026 15.3 % $ 2,918 15.1 % GAAP diluted EPS $ 4.51 $ 4.21 Effect of NextGen charges, pre-tax 0.27 0.45 Effect of non-operating foreign currency exchange losses (gains), pre-tax (2) 0.04 — Tax effect of above adjustments (3) (0.07) (0.11) Adjusted Diluted EPS $ 4.75 $ 4.55 Net cash provided by operating activities $ 2,124 $ 2,330 Purchases of property and equipment (297) (317) Free cash flow $ 1,827 $ 2,013 (1) Consists of employee separation, facility exit and other costs incurred in connection with the NextGen program.
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.
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.
The OECD has continued and is continuing to issue additional guidance on the operation of the model rules. While the United States has not enacted Pillar Two, certain countries in which we operate have adopted their own version of the Pillar Two model rules.
While the United States has not enacted Pillar Two, certain countries in which we operate have adopted their own version of the Pillar Two model rules.
See Note 11 to our consolidated financial statements for additional information. In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with a targeted effective date of January 1, 2024.
In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with a targeted effective date of January 1, 2024. The OECD has continued and is continuing to issue additional guidance on the operation of the model rules.
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.
Including the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the year ended December 31, 2024 by 44 basis points as compared to the year ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary 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 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Executive Summary Cognizant is one of the world’s leading professional services companies, engineering modern businesses and delivering strategic outcomes for our clients.
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.
Cognizant 35 December 31, 2024 Form 10-K Table of Contents (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.
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.
Total segment operating profit was as follows for the year ended December 31: (Dollars in millions) 2024 % of Revenues 2023 % of Revenues Increase / (Decrease) Total segment operating profit $ 4,156 21.1 $ 4,117 21.3 $ 39 Less: unallocated costs 1,264 6.4 1,428 7.4 (164) Income from operations $ 2,892 14.7 $ 2,689 13.9 $ 203 The decrease in unallocated costs for 2024 as compared to 2023 was primarily driven by lower corporate expenses as well as lower NextGen charges of $134 million in 2024 as compared to $229 million in 2023 (see Note 4 to our consolidated financial statements).
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.
We monitor turnover, aging and the collection of accounts receivable by client. Our DSO calculation includes receivables, net of allowance for doubtful accounts, and contract assets, reduced by the uncollected portion of deferred revenue. Our DSO was 78 days as of December 31, 2024, 77 days as of December 31, 2023 and 74 days as of December 31, 2022.
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.
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, 2024, we had cash, cash equivalents and short-term investments of $2,243 million. Additionally, as of December 31, 2024, we had available capacity under our credit facilities of approximately $1.55 billion.
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, 2024 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.
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.
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.
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.
Net Income The increase in net income was driven by the increase in income from operations. é $114M é 0.3% as a % of revenues ¡ % of Revenues Cognizant 34 December 31, 2024 Form 10-K Table of Contents Non-GAAP Financial Measures Portions of our disclosure include non-GAAP financial measures.
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.
See Note 10 to our consolidated financial statements. 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 and 50% for share repurchases and dividend payments.
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.
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 .
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.
Potential tax law and other regulatory changes, including possible U.S. corporate income tax reform and the Code on Social Security, 2020 in India, among other items, may impact our future results.
The 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.
The Year Ended December 31, 2024 Compared to The Year Ended December 31, 2023 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) 2024 Revenues 2023 Revenues $ % Revenues $ 19,736 100.0 $ 19,353 100.0 $ 383 2.0 Cost of revenues (a) 12,958 65.7 12,664 65.4 294 2.3 Selling, general and administrative expenses (a) 3,223 16.3 3,252 16.8 (29) (0.9) Restructuring charges 134 0.7 229 1.2 (95) (41.5) Depreciation and amortization expense 529 2.7 519 2.7 10 1.9 Income from operations and operating margin 2,892 14.7 2,689 13.9 203 7.5 Other income (expense), net 46 98 (52) (53.1) Income before provision for income taxes 2,938 14.9 2,787 14.4 151 5.4 Provision for income taxes (713) (668) (45) 6.7 Income (loss) from equity method investments 15 7 8 114.3 Net income $ 2,240 11.3 $ 2,126 11.0 $ 114 5.4 Diluted EPS $ 4.51 $ 4.21 $ 0.30 7.1 Other Financial Information 3 Adjusted Income From Operations and Adjusted Operating Margin $ 3,026 15.3 $ 2,918 15.1 $ 108 3.7 Adjusted Diluted EPS $ 4.75 $ 4.55 $ 0.20 4.4 (a) Exclusive of depreciation and amortization expense 3 3 Adjusted Income from Operations, Adjusted Operating Margin and Adjusted Diluted EPS are not measures of financial performance prepared in accordance with GAAP.
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.
Cognizant 30 December 31, 2024 Form 10-K Table of Contents Revenues - Reportable Business Segments and Geographic Markets Revenues of $19,736 million across our business segments and geographies were as follows for the year ended December 31, 2024: 2024 as compared to 2023 Increase / (Decrease) (Dollars in millions) $ % CC % 4 Health Sciences $ 258 4.5 4.5 Financial Services (56) (1.0) (1.1) Products and Resources 154 3.3 3.2 CMT 27 0.8 0.5 Total revenues $ 383 2.0 1.9 2024 as compared to 2023 Increase / (Decrease) (Dollars in millions) $ % CC % 4 North America $ 435 3.0 3.1 United Kingdom (58) (3.1) (5.1) Continental Europe 23 1.2 0.9 Europe - Total (35) (0.9) (2.1) Rest of World (17) (1.3) — Total revenues $ 383 2.0 1.9 Change in revenues was driven by the following factors: • North America revenues, particularly in the Health Sciences segment, were positively impacted by the ramp up of several recently won large deals; • Recently completed acquisitions contributed 200 basis points of growth to the overall change in revenues, including approximately 600 basis points of growth to our Products and Resources segment (primarily in North America) and approximately 150 basis points of growth to our Communications, Media and Technology segment (primarily in North America); • The resale of third-party products, primarily in North America, in connection with our integrated offerings strategy, contributed 70 basis points of growth to the overall change in revenue; • Reduced demand for discretionary work negatively impacted revenues across all segments.
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results.
Free cash flow is defined as cash flows from operating activities net of purchases of property and equipment. We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results.
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.
Our non-GAAP financial measure Adjusted Diluted EPS excludes unusual items, such as NextGen charges, and net non-operating foreign currency exchange gains or losses and the tax impact of all the applicable adjustments. For further detail on the NextGen charges, see Note 4 to our consolidated financial statements.
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.
The following table provides a summary of our cash flows for the years ended December 31: (in millions) 2024 2023 Increase / Decrease Net cash provided by (used in): Operating activities $ 2,124 $ 2,330 $ (206) Investing activities (1,646) (331) (1,315) Financing activities (915) (1,609) 694 Other Cash Flow Information 6 Free cash flow 1,827 2,013 (186) Operating activities 6 The decrease in cash provided by operating activities in 2024 compared to 2023 was primarily driven by the $360 million payment made in relation to our dispute with the ITD in January 2024 (see Note 11 to our consolidated financial statements).
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.
Our remaining Tax Reform Act transition tax payment of $157 million is due in the second quarter of 2025. In 2024, our Tax Reform Act transition tax payment was $123 million.
In addition, 2023 segment operating margin in Health Sciences benefited from the improvement in profitability of a large contract with a payer client , while segment operating profit in Communications, Media and Technology was negatively affected by higher costs typical to the initial phases of several recently won large deals in this segment.
Segment operating profit in the Health Sciences and Communications, Media and Technology segments was negatively impacted by resales of third-party products in connection with our integrated offerings strategy and higher costs typical to the initial phases of several recently won large deals.
Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final outcome of these matters will not differ from our recorded amounts. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the expiration of the applicable statute of limitations.
We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the expiration of the applicable statute of limitations. Additionally, we have tax positions that we believe are more likely than not to be realized and for which we have therefore not established a reserve.
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.
In 2024, the settlement of our cash flow hedges positively impacted our operating margin by approximately 6 basis points, compared to a negative impact of 13 basis points in 2023.
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.
Segment Operating Profit Segment operating profit and operating margin percentage were as follows: Segment operating profit % Segment operating margin In 2024, segment operating margins across all our segments were negatively impacted by increased compensation costs, partially offset by savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements.
The decrease, as a percentage of revenues, was primarily due to savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by higher compensation costs, primarily as a result of two merit increase cycles for the majority of our employees since October 2022. ê $191M ê 0.9% as a % of revenues ¡ % of Revenues Restructuring Charges Restructuring charges consist of costs related to the NextGen program.
The decrease, as a percentage of revenues, was primarily driven by the net savings generated from our NextGen program, partially offset by the impact of recently completed acquisitions, primarily as a result of transaction and integration related expenses. ê $29M ê 0.5% as a % of revenues ¡ % of Revenues Restructuring Charges Restructuring charges consist of costs related to the NextGen program.
In connection with the NextGen program, in 2023 we incurred $229 million in employee separation, facility exit and other costs. We currently expect to incur total costs of approximately $300 million in connection with the NextGen program, with approximately $70 million of such costs anticipated in 2024.
In 2024, we incurred $134 million of employee separation, facility exit and other costs related to the program, bringing the total costs incurred since inception to $363 million.
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.
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. 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.
Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost-to-cost method, under which the total value of revenues is recognized on the basis of the percentage that each contract’s total labor cost to-date bears to the total expected labor costs.
Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost-to-cost method, 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.
We are required under the Credit Agreement to make scheduled quarterly 6 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, 2024 Form 10-K Table of Contents principal payments on the Term Loan.
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.
At the end of 2024, we completed our NextGen program, which was aimed at simplifying our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. The savings generated by the program are funding continued investments in our people, revenue growth opportunities and the modernization of our office space.
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.
See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures. Cognizant 28 December 31, 2024 Form 10-K Table of Contents Our operating margin and Adjusted Operating Margin 2 increased to 14.7% and 15.3%, respectively, for the year ended December 31, 2024, from 13.9% and 15.1%, respectively, for the year ended December 31, 2023.
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.
For the year ended December 31, 2024 our Voluntary Attrition - Tech Services was 15.9% as compared to 13.8% for the year ended December 31, 2023. We finished 2024 with approximately 336,800 employees as compared to 347,700 employees at the end of 2023. Business Outlook See "Overview" within Part I, Item 1. Business for information on our strategic approach.
Depreciation and Amortization Expense Depreciation and amortization expense decreased by 8.8%, and by 0.2% as a percentage of revenues, in 2023 as compared to 2022, primarily driven by a reduction in amortization expense due to certain intangible assets reaching the end of their useful lives and savings generated from our NextGen program.
Depreciation and Amortization Expense Depreciation and amortization expense increased by 1.9%, and was flat as a percentage of revenues, in 2024 as compared to 2023. The increase in amortization expense driven by intangible assets related to our recently completed acquisitions was partially offset by the decline of depreciation expense, which was driven by actions taken under our NextGen program.
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.
See Note 4 to our consolidated financial statements. 2024 Financial Results 1 Revenues Income from Operations Operating Margin Diluted EPS GAAP Adjusted 1 GAAP Adjusted 1 GAAP Adjusted 1 Revenue up $383 million or 2.0% from 2023; an increase of 1.9% in constant currency 1 Income from Operations up $203 million or 7.5% from 2023 Adjusted Income from Operations 1 up $108 million or 3.7% from 2023 Operating margin up 80 basis points from 2023 Adjusted Operating Margin 1 up 20 basis points from 2023 Diluted EPS up $0.30 or 7.1% from 2023 Adjusted Diluted EPS 1 up $0.20 or 4.4% from 2023 During the year ended December 31, 2024, revenues increased by $383 million as compared to the year ended December 31, 2023, representing an increase of 2.0%, or 1.9% on a constant currency basis 1 .
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.
Additionally, revenues were positively impacted by growth in our Health Sciences segment, partially offset by weakness primarily in our Products and Resources (excluding the impact of our recently completed acquisitions) and Financial Services segments. 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
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.
Added
We help clients modernize technology, reimagine processes and transform experiences so they can stay ahead in today's fast-changing world, where AI is beginning to reshape organizations in every field. We provide industry expertise and close client collaboration, combining critical perspective with a flexible engagement style.
Removed
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.
Added
Our recently completed acquisitions contributed 200 basis points to revenue growth.
Removed
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.
Added
Our 2024 GAAP and Adjusted Operating Margins were positively impacted by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, while being negatively impacted by increased compensation costs, primarily as a result of a merit increase cycle completed during the third quarter of 2024, and the dilutive impact of recently completed acquisitions, primarily driven by transaction and integration related expenses and amortization of acquired intangibles.
Removed
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 .
Added
We continue to expect the focus of our clients to be on their transformation into AI-ready, technology-driven, data-enabled, customer-centric and differentiated businesses. To support this transformation and drive greater business resiliency, we expect clients will continue to demand services and solutions that can enhance productivity and deliver cost savings.
Removed
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.
Added
We expect that the Code on Social Security, 2020, if enacted as currently written, could result in a material one-time increase to our post-employment liability for past service and would also modestly increase our costs for employment and post-employment benefits prospectively. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty.
Removed
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.
Added
We are currently evaluating the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity. For additional information, see Part I, Item 1A. Risk Factors. During the third quarter of 2024, we completed the acquisition of Belcan.
Removed
We are focused on expanding our partner ecosystem across a broad range of technology companies, including hyperscalers, cloud providers, enterprise software companies, best-in-class digital software enterprises and emerging start-ups. We believe this partner ecosystem will enable us to enhance our innovative, integrated offerings, by combining third-party products with our service solutions, to deliver enterprise-wide digital transformation.
Added
See Note 3 to our consolidated financial statements. This acquisition is expected to have a modest near-term dilutive impact to our 2025 operating margin, primarily due to integration-related expenses and amortization of acquired intangibles. 2 Adjusted Operating Margin is not a measurement of financial performance prepared in accordance with GAAP.
Removed
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.
Added
The increase, as a percentage of revenues, was due to higher compensation costs, primarily as a result of a merit increase cycle, and the resale of third-party products in connection with our integrated offerings strategy, partially offset by the beneficial impact of foreign currency exchange rate movements and operational efficiencies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThus, our debt exposes us to market risk from changes in interest rates. We performed a sensitivity analysis to determine the effect of interest rate fluctuations on our interest expense. A 100 basis point change in interest rates, with all other variables held constant, would have an immaterial effect on our reported interest expense.
Biggest changeWe performed a sensitivity analysis to determine the effect of interest rate fluctuations on our interest expense. A 100 basis point change in interest rates, with all other variables held constant, would have an immaterial effect on our reported interest expense. We have $1,031 million of cash equivalents, and $12 million of short-term investments as of December 31, 2024.
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.
We use foreign exchange forward contracts that are scheduled to mature in the first quarter of 2025 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.
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 at December 31, 2024, 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 $277 million.
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.
As of December 31, 2024, 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.
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.
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 9.2%, 9.8% and 6.5%, respectively, of our 2024 revenues, and are typically denominated in currencies other than the U.S. dollar.
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.
In 2024, we reported foreign currency exchange losses, exclusive of hedging gains, of approximately $29 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.
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.
Accordingly, our revenues may be affected by fluctuations in the exchange rates, primarily the British pound and the Eur o, 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 2024, and are subject to foreign currency exchange rate fluctuations.
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.
Based upon a sensitivity analysis of our foreign exchange forward contracts at December 31, Cognizant 39 December 31, 2024 Form 10-K Table of Contents 2024, 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 $30 million.
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.
Our cash equivalents, which consist of money market funds and time deposits, and our short-term investments, which consist primarily of a U.S. dollar denominated investment in a fixed income mutual fund, are exposed to fluctuations in interest rates, which may affect our interest income and the fair market value of the instruments.
At December 31, 2023, the notional value of these outstanding contracts was $1,317 million and the net unrealized loss was $8 million.
At December 31, 2024, the notional value of these outstanding contracts was $489 million and the net unrealized loss was $1 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.
As of December 31, 2024, 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) 2025 $ 2,010 85.8 2026 920 87.5 Total $ 2,930 86.3 As of December 31, 2024, the net unrealized loss on our outstanding foreign exchange forward and option contracts designated as cash flow hedges was $34 million.
Our 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.
As of December 31, 2024, 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-term investments.
Removed
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.
Added
As of December 31, 2024, we had $300 million outstanding on the revolving credit facility, consisting of a Term Benchmark loan with a maturity of October 2027 and an Interest Period (as defined in the Credit Agreement) of one month. Thus, our debt exposes us to market risk from changes in interest rates.

Other CTSH 10-K year-over-year comparisons