2023 Annual Report Move with purpose
To our shareholders, associates, clients and partners,
In 2024, we celebrate our 30th year
as a digital and technology services
business that is built on industry expertise,
collaboration and innovation. Cognizant’s
long-standing roots have allowed us to help
our clients through pivotal moments over
these three decades—from the emergence
of cloud to digital platforms and now to
generative artificial intelligence (gen AI).
As I begin my second year as CEO, I see
us in a far stronger position than when
I wrote to you last year, one that sets us
up to take our strategy, which intersects
technology and industry, to the next phase.
We have invested in talent, platforms and
innovation to strengthen our capabilities,
help our clients navigate uncertainty
and embrace the opportunities ahead.
In 2023, we focused on the following
three capabilities to position
the company for success:
Deeper industry expertise. During
the year, we strengthened our vertical
capabilities by increasing investments
in industry platforms, creating a
dedicated industry solutions group and
sharpening our focus on consulting-
led transformation and partnerships,
including with hyperscalers and next-
generation software-as-a-service (SaaS)
providers. One example is our strategic
partnership with ServiceNow to advance
the adoption of AI-driven automation
across industries to help solve complex
problems and enhance experiences
for our employees and customers.
Closer collaborative innovation. We also
drove deeper into understanding our
clients’ businesses from their perspectives.
To do this, we launched an internal
grassroots idea incubator called Bluebolt
that capitalizes on the scale and diversity
of our teams and our belief that the drive
3
2023 Cognizant Annual Report for innovation lives within everyone. We
invited all employees, regardless of role
or title, to think as big as possible by
participating in Bluebolt, providing them
a platform to challenge the status quo.
Since Bluebolt’s launch, our employees
have developed more than 115,000
ideas, 22,000 of which we have already
implemented and we have more to come,
helped in part by our new Innovation
Assistant, a gen AI-powered tool we
developed with Microsoft. These projects
have already produced a positive economic
impact for our clients and for Cognizant.
Broader engagement flexibility. Our culture
of client centricity focuses on partnering
with clients to better align our offerings
with their most relevant needs, reinforcing
our belief in our flexible operating model.
By co-creating solutions with those clients,
we help them build their own technology
muscle. For example, we signed an
agreement with biopharmaceutical leader
Takeda to support its transformation
of its infrastructure and application
management approaches. This kind of
successful co-creation and growth is
rewarding for our employees and clients
in a self-reinforcing virtuous cycle.
The effective execution of these
three business imperatives helps
us get closer to our clients and
helps them better understand their
own customers’ challenges.
Cognizant’s support has complemented our continuous
innovation and digital growth. This continued relationship will
enable Takeda to accelerate our digital transformation journey,
modernize our operational model, and speed time to market.”
Sanjay Patel
Global Head of Innovation Capability Solutions, Data, Digital & Technology at Takeda
4
2023 Cognizant Annual Report Accelerating revenue growth
In 2023, we pivoted our strategy and
operations towards the goal of recapturing
our place as a market leader in growth.
We improved our overall bookings growth
last year, with full-year bookings growth
of 9%, driven by strong growth in
large deals and new business.
Increasing our
value to clients
Our clients shared their feedback in our
2023 client Net Promoter Score (NPS)
survey, which significantly improved year
over year, earning us our highest-ever
NPS result. Clients remarked that our
leadership, account management and
delivery are especially important to them,
and the survey results reflect our progress
in these areas. Innovation and thought
leadership are also critical priorities for
our clients, reaffirming our investments
in Bluebolt and our co-innovation labs.
As we drive to win, we understand
that building momentum requires
successful execution against
Cognizant’s three strategic priorities:
• Accelerating revenue growth
• Becoming an employer of
choice in our industry
• Simplifying our
operations
“Through this collaboration,
Cognizant has provided critical
expertise to progress our digital
transformation journey while
enabling more stable, more
secure operations. This has
allowed us to further advance
research and commercialization
of transformative treatments
for some of the world’s most
challenging diseases. We look
forward to expanding this
partnership to advance to the next
phases of our capability roadmap.”
Marc Berson
Senior Vice President and Chief
Information Officer at Gilead Sciences
help Gilead get products to market faster.
This is an expansion of an existing Gilead-
Cognizant partnership.
We’re also succeeding across other
industries. Earlier this year, Technicolor
Creative Studios—which brought “The
Wizard of Oz” and countless other films,
television shows and games to colorful life—
chose Cognizant as its global IT and Digital
Transformation partner. Under the five-year
agreement, Cognizant will provide an end-
to-end managed service for Technicolor’s
users, applications and infrastructure.
An important element of our strategy is
winning larger deals and accelerating
Cognizant’s commercial momentum, which
forms the foundation for improved revenue
growth and forward-planning visibility.
During 2023, we saw strong total contract
value (TCV) growth among large deals, with
TCV for deals above $100 million increasing
42% year-over-year.
We’ve shown pronounced deal strength in
healthcare, including Horizon Healthcare’s
choice of Cognizant to manage its
complex claims processing, provider
configuration and enrollment services for
more than one million of its members.
In addition, Gilead Sciences chose
Cognizant to manage its global
IT infrastructure and lead digital
transformation initiatives designed to
enhance overall client experience and
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2023 Cognizant Annual Report
We selected Cognizant as it was important for us that we
partner with an organization that understands our industry and
comes with the right mindset to collaborate on a challenging
transformation that brings mutual success. We look forward to
collaborating with Cognizant as we bring that vision to life.”
Robin Underwood
Head of Enterprise Technology at Technicolor Creative Studios
We believe this growing cross-industry
strength is a result of reorienting our
teams to large-deal demand generation
and execution across all service lines
while building our ability to seed, shape
and sell large deals. Moreover, we made
progress industrializing delivery with
automation and productivity tools to
create repeatable solutions and enable
a consistent and efficient delivery
operating model for large deals.
We have worked to establish a
distinctive position developing industry-
specific platforms for our clients. These
include Cognizant TriZetto, designed
to drive administrative efficiency
and improve quality of healthcare;
our Shared Investigator Platform,
built to streamline clinical trials; and
Asset Performance Excellence, which
enables the remote monitoring and
predictive maintenance of assets.
We see a future where modern business
is powered by artificial intelligence, and
we believe our ongoing investments in
gen AI capabilities help put Cognizant
in position to be a leader in driving
gen AI-led transformation.
We are currently building platforms and
infrastructure to advance the power of
gen AI foundation models to enterprise
grade. At this scale, our work includes
building accuracy in output to reduce
false or misleading information known as
“hallucinations,” continuously reinforcing
learning and testing, incorporating
transparency and accountability, and
iteratively driving performance optimization.
Through our platforms, we are also
managing, governing and optimizing gen
AI initiatives to help ensure the responsible
use of this nascent technology.
7
2023 Cognizant Annual Report In 2023, we launched a deliberate
investment strategy to support our
gen AI capabilities spanning people,
platforms, partnerships, and mergers and
acquisitions. We believe gen AI will drive
tomorrow’s economy and society. This
belief is underscored by our recent study in
partnership with Oxford Economics, which
predicts gen AI could inject up to $1 trillion
into the US economy over 10 years. Our joint
research also predicts that 90% of jobs will
be disrupted in some way by this technology.
a partnership with Google where we
are building on Google Cloud’s gen AI
technology to tackle highly complex
healthcare administration tasks across
provider, patient and administrative users.
We sharpened this focus in early 2024,
when we joined with Microsoft through
our TriZetto platform to infuse gen AI
into healthcare administration, helping
to increase productivity and efficiency
for healthcare payers and providers
while improving care for patients.
Gen AI could inject up to
$1 trillion into the US economy
over 10 years and 90% of jobs
in the US will be disrupted in
some way by this technology.
Cognizant Research in partnership with
Oxford Economics, “New Work, New World”
These findings have helped inform and
reaffirm our work preparing and dissecting
the anatomy of tasks, occupations and
work for key operational roles across all our
clients’ industries. We are expanding this
exercise to all operations jobs across our
key client industries, measuring AI exposure
scores and proposing the AI tooling needed
to drive significant transformation and
repurpose tasks and jobs in the gen AI age.
In healthcare, for example, we see a robust
pipeline of opportunities to drive AI-led
transformation. In 2023, we expanded
We continue to push deeper into designing
gen AI offerings for industry solutions and
cross-industry use cases under themes such
as productivity enablement, transforming
core processes, improving the customer and
employee experience, innovating products
at clock speed and developing software.
We also introduced several new AI solutions
and platforms in 2023. These include
Cognizant Neuro® IT Operations, an AI-led
platform built to reduce the complexity
and costs of enterprise infrastructure;
Cognizant Skygrade,™ a cloud orchestration
platform designed to help clients rapidly
transition to modern cloud-native
architectures; and Cognizant Neuro® AI, a
new platform designed to speed clients’
adoption of gen AI by quickly building AI
enablement use cases tailored to their
businesses. We also recently launched
Cognizant Flowsource,™ a gen AI-enabled
platform that tracks and expedites every
stage of the software delivery lifecycle.
To provide clients with best-in-class industry
solutions based on AI systems, we expanded
8
2023 Cognizant Annual Report our alliance with Google Cloud, which
includes launching the Cognizant Google
Cloud AI University—a program that aims
to train 25,000 Cognizant professionals
on Google Cloud AI technologies. We are
offering this program to our clients as well.
We have expanded our relationship with
Microsoft to deliver industry solutions and
enable AI-led business transformation. We
are broadening the focus of our Microsoft
Center of Excellence in AI and other next-
gen technologies to drive competencies
across architecture, technology leadership,
value delivery tools and enablement.
Innovation inside Cognizant is happening
at an accelerated pace. In addition to
our global co-innovation AI lab network,
in March 2024, we launched Cognizant
Advanced AI Labs, where our most
sophisticated researchers can research,
design, enable and showcase advanced
applications. This effort contributes to
AI-augmented business decision-making
built on a foundation of research and
Cognizant’s own intellectual property. This
lab joins new AI co-innovation labs that we
launched in 2023 in New York, Bangalore,
Dallas and London to provide clients
with an immersive experience as we help
drive the art of the possible with them.
We are also utilizing our acquisition strategy
to further support our AI investments. In
early 2024, we acquired Thirdera, an Elite
ServiceNow partner that specializes in
solutions for the ServiceNow platform.
Adding Thirdera brings an on-and-
near-shore global presence to our
own ServiceNow Business Group and
supports our strategy to rapidly scale
this partnership in the years ahead.
Becoming an employer of choice
We believe that when our employees
feel valued and respected, so do our
clients—and it’s a combination that
helps differentiate us. To this end, our
value proposition to our teams includes
the prospect of internal mobility, the
opportunity to work on cutting-edge
technology and access to lifelong learning.
This opportunity to learn and develop was
one of the highest-scoring engagement
drivers in Cognizant’s 2023 People
Engagement Survey, confirming our strong
investment in our employees’ continuous
training and reskilling. In 2023, 90% of our
global workforce invested in learning,
with 270,000 of our employees acquiring
at least one new skill or proficiency
and 88,000 completing courses on AI
and gen AI. We have encouraged our
employees to incorporate AI into their
thinking and skilling and to take advantage
of our company’s AI investments and
infrastructure to prepare for a future of
work shaped by this new era of technology.
Our 2023 People Engagement Survey
showed meaningfully improved
engagement over the previous year and
we saw significant increases in three
areas strongly correlated to engagement:
Would you recommend Cognizant as a
great place to work? Are you excited about
Cognizant’s future? And do you plan to
9
2023 Cognizant Annual Report 10
2023 Cognizant Annual Report
be working at Cognizant two years from
now? It is my belief that we can create
a virtuous cycle of positive growth when
happy employees drive positive client
engagement. It drives up our NPS, feeds
relationships and enhances the possibility
to win more opportunities with clients.
Overall, I believe the cultural renewal at
Cognizant has produced a new level of
teamwork, responsiveness and confidence.
And we are optimistic these characteristics
will expand through Shakti, a unified
framework of women-centric programs
and policies to accelerate careers and
boost women’s leadership in technology
and our next step in weaving diversity
and inclusion into everything we do.
Simplifying our operations
During 2023, we executed well on our
NextGen program, which aims to simplify
our operating model, optimize corporate
functions and consolidate and realign
office space to reflect the post-pandemic
work environment. Our cost management
enabled us to achieve an adjusted
operating margin performance in 2023
that exceeded our expectations from
earlier in the year. We intend to reinvest
the majority of our savings into growth
opportunities, while continuing to target
modest margin expansion in 2024.
We remain focused on driving further
efficiencies in our business model by
improving utilization, increasing our
operational discipline, and automating
more of our tools and processes.
Simplifying our business goes beyond
structurally reducing costs. It also helps
us become more agile, productive and
innovative. Last year, we further streamlined
our operating model to focus primarily
on our markets and integrated practice
groups. We are moving toward having
fewer layers in the organization in order to
bring us closer to our clients and associates,
help drive stronger coordination across
the company and further empower
account teams to make decisions.
Empowering the
future technology
workforce
In our view, the traditional skilling model
is not keeping pace with the evolving
workforce or tomorrow’s jobs. So, in 2023,
we launched a new program, Synapse,
that aims to train one million individuals
in our client and employee communities
around the world with technology skills
that can support gainful employment by
2026. We also plan to build a consortium
of partners for training and jobs that
then will employ individuals upskilled
through the Synapse program.
Skilling and upskilling are key to
addressing our business needs while also
unleashing prosperity in the underserved
communities where Cognizant and our
clients do business. Cognizant’s heritage
of volunteerism prepares us to lead in
this area, especially in partnership with
clients, by focusing on increasing inclusion
11
2023 Cognizant Annual Report in technology and using technology for
good. In 2023, approximately 53,000
of our employees devoted over 165,000
hours to this kind of volunteering.
Future-ready
In 2024, we will continue our work
accelerating revenue growth. We will keep
pushing to be our industry’s employer
of choice and continue optimizing to
further simplify our operations. We
believe this new comprehensive strategy
best positions Cognizant to help clients
identify and apply best-in-class AI-led
innovation to enterprise landscapes.
I recognize what a privilege it is to
lead Cognizant and to be a steward
of its vast talent, capabilities and
resources. I am indebted to our board
of directors for their guidance and
support throughout the year and to our
associates, who deliver for our clients.
Thank you for the opportunity to
earn your confidence and trust.
Ravi Kumar S
Chief Executive Officer
April 23, 2024
12
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2023 Cognizant Annual Report
2023 Cognizant Annual Report About Cognizant
We are a global professional services
company that engineers modern
businesses to improve everyday life.
Our technical and business experts in
nearly 50 countries combine proven
industry expertise and industry-leading
collaboration to help our clients become
intuitive enterprises—so they can sense
what’s next and stay ahead in a fast-
changing world.
What we do
Industry recognition
We transform experiences so
our clients reach new levels of
growth and brand loyalty.
We reimagine processes with
automation and capabilities that
instill insight, precision and speed.
We modernize technologies that
help our clients remain relevant
and ready for the future.
Why clients choose us
Industry
expertise
Collaborative
innovation
Engagement
flexibility
America’s Greatest Workplaces for Diversity
Newsweek
America’s Most Innovative Companies
Fortune
Equality 100 Award
Human Rights Campaign Foundation
Forbes’ World’s Best Employers
Forbes
Gold Employer
The India Workplace Equality Index
2023 Cognizant Annual Report
13
Financial performance
In 2023, against a backdrop of macroeconomic uncertainty, revenue declined
modestly while we delivered adjusted operating margin above our expectations,
strong cash flow and significantly improved employee attrition. We remain committed
to investing in future revenue growth while focusing on gradual margin expansion,
which we believe will help drive increasing shareholder returns over the long term.
Financial results
$19.4B Revenue
0.4% decline Y/Y as reported
0.3% decline Y/Y constant currency1
13.9%
GAAP Operating
Margin
15.1%
Adjusted Operating
Margin1
Capital allocation
$1.7B
Returned to shareholders
through share repurchases
and dividends
$409M Capital deployed
on acquisitions
Cash generation
$2.3B
Cash Flow from
Operations
$2.0B Free Cash
Flow1
Global delivery capabilities
Revenue mix
By industry
30%
17%
24%
29%
Financial Services
Communications, Media
& Technology
Products & Resources
Health Sciences
By geography*
North America
Rest of world
Continental Europe
7%
10%
74%
10%
United Kingdom
*Does not sum to 100%
due to rounding
We ended 2023 with approximately 347,700 associates supporting our clients around the world.
254,000
India
40,500
North America
16,300
Continental Europe
8,500
United Kingdom
28,400
Rest of world
14
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2023 Cognizant Annual Report
1 Constant currency revenue growth, adjusted operating margin and free cash flow are
not measurements of financial performance prepared in accordance with GAAP. See
“Non-GAAP Financial Measures” in our 10-K, pages 35-36, for more information and a
reconciliation to the most directly comparable GAAP financial measure, as applicable.
2023 Cognizant Annual Report UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-24429
OR
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
13-3728359
(I.R.S. Employer
Identification No.)
300 Frank W. Burr Blvd.
Teaneck, New Jersey 07666
(Address of Principal Executive Offices including Zip Code)
Registrant’s telephone number, including area code: (201) 801-0233
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class A Common Stock, $0.01 par value
per share
Trading Symbol(s)
Name of each exchange on which registered
CTSH
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☒ Yes ☐ No
☐ Yes ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
☒
Non-accelerated Filer
☐
Smaller Reporting Company
Emerging Growth Company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an
error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
The aggregate market value of the registrant’s voting shares of common stock held by non-affiliates of the registrant on June 30, 2023, based on $65.28 per share, the last reported sale
price on the Nasdaq Global Select Market of the Nasdaq Stock Market LLC on that date, was $32.9 billion.
The number of shares of Class A common stock, $0.01 par value, of the registrant outstanding as of February 9, 2024 was 497,842,032 shares.
The following documents are incorporated by reference into the Annual Report on Form 10-K: Portions of the registrant’s definitive Proxy Statement for its 2024 Annual Meeting of
Stockholders are incorporated by reference into Part III of this Report.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Item
GLOSSARY
FORWARD LOOKING STATEMENTS
PART I
1.
Business
1A. Risk Factors
1B. Unresolved Staff Comments
1C. Cybersecurity
2.
3.
Properties
Legal Proceedings
4. Mine Safety Disclosures
PART II
PART III
PART IV
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
6.
[Reserved]
7. Management's Discussion and Analysis of Financial Condition and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
8.
9.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
9A. Controls and Procedures
9B. Other Information
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
10. Directors, Executive Officers and Corporate Governance
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
13. Certain Relationships and Related Transactions, and Director Independence
14. Principal Accountant Fees and Services
15. Exhibits, Financial Statements Schedules
16. Form 10-K Summary
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
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49
F-1
Defined Term
10b5-1 Plan
2009 Incentive Plan
2017 Incentive Plan
2023 Incentive Plan
GLOSSARY
Definition
Trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act
Cognizant Technology Solutions Corporation Amended and Restated 2009 Incentive
Compensation Plan
Cognizant Technology Solutions Corporation 2017 Incentive Award Plan
Cognizant Technology Solutions Corporation 2023 Incentive Award Plan
Adjusted Diluted EPS
Adjusted diluted earnings per share
AustinCSI
CODM
COVID-19
Devbridge
DevOps
AI
APA
ASC
CC
CE
CEO
CFO
CIO
CITA
CMT
CPI
CSO
D&I
DOJ
DPDP
DSO
DTSA
EPS
ESG
EU
EVP
FCPA
FS
GAAP
GenAI
HR
HRC
HS
Credit Agreement
Credit agreement with a commercial bank syndicate dated October 6, 2022
CTS India
Our principal operating subsidiary in India
Artificial Intelligence
Advance Pricing Agreement
Accounting Standards Codification
Austin CSI, LLC
Constant Currency
Continental Europe
Chief Executive Officer
Chief Financial Officer
Chief Information Officer
Commissioner of Income Tax (Appeals) in India
Communications, Media and Technology
Chief Operating Decision Maker
The novel coronavirus disease
Consumer Price Index
Agile relationship between development and IT operations
United States Department of Justice
Digital Personal Data Protection Act, 2023
Chief Security Officer
Diversity and Inclusion
Devbridge Group LLC
Days Sales Outstanding
Defend Trade Secrets Act
Earnings Per Share
ESG Mobility GmbH
European Union
Executive Vice President
ESG Mobility
Environmental, social and corporate governance
Exchange Act
Securities Exchange Act of 1934, as amended
Executive Committee
Cognizant's Chief Executive Officer and his key direct reports
Foreign Corrupt Practices Act
Financial Services
Generally Accepted Accounting Principles in the United States of America
High Court
Madras, India High Court
Generative Artificial Intelligence
Human Resources
Human Rights Campaign
Health Sciences
Cognizant
1
December 31, 2023 Form 10-K
TABLE OF CONTENTS
Item
GLOSSARY
PART I
FORWARD LOOKING STATEMENTS
1.
Business
1A. Risk Factors
1B. Unresolved Staff Comments
1C. Cybersecurity
2.
3.
Properties
Legal Proceedings
4. Mine Safety Disclosures
PART II
Equity Securities
6.
[Reserved]
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
7. Management's Discussion and Analysis of Financial Condition and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
8.
9.
9A. Controls and Procedures
9B. Other Information
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
10. Directors, Executive Officers and Corporate Governance
11. Executive Compensation
Matters
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
13. Certain Relationships and Related Transactions, and Director Independence
14. Principal Accountant Fees and Services
PART IV
SIGNATURES
15. Exhibits, Financial Statements Schedules
16. Form 10-K Summary
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
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3
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5
14
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42
42
43
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44
44
44
44
44
45
45
48
49
F-1
Defined Term
10b5-1 Plan
2009 Incentive Plan
2017 Incentive Plan
2023 Incentive Plan
GLOSSARY
Definition
Trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act
Cognizant Technology Solutions Corporation Amended and Restated 2009 Incentive
Compensation Plan
Cognizant Technology Solutions Corporation 2017 Incentive Award Plan
Cognizant Technology Solutions Corporation 2023 Incentive Award Plan
Adjusted Diluted EPS
Adjusted diluted earnings per share
AI
APA
ASC
AustinCSI
CC
CE
CEO
CFO
CIO
CITA
CMT
CODM
COVID-19
CPI
Artificial Intelligence
Advance Pricing Agreement
Accounting Standards Codification
Austin CSI, LLC
Constant Currency
Continental Europe
Chief Executive Officer
Chief Financial Officer
Chief Information Officer
Commissioner of Income Tax (Appeals) in India
Communications, Media and Technology
Chief Operating Decision Maker
The novel coronavirus disease
Consumer Price Index
Credit Agreement
CSO
Credit agreement with a commercial bank syndicate dated October 6, 2022
Chief Security Officer
CTS India
D&I
Devbridge
DevOps
DOJ
DPDP
DSO
DTSA
EPS
ESG
ESG Mobility
EU
EVP
Exchange Act
Executive Committee
FCPA
FS
GAAP
GenAI
Our principal operating subsidiary in India
Diversity and Inclusion
Devbridge Group LLC
Agile relationship between development and IT operations
United States Department of Justice
Digital Personal Data Protection Act, 2023
Days Sales Outstanding
Defend Trade Secrets Act
Earnings Per Share
Environmental, social and corporate governance
ESG Mobility GmbH
European Union
Executive Vice President
Securities Exchange Act of 1934, as amended
Cognizant's Chief Executive Officer and his key direct reports
Foreign Corrupt Practices Act
Financial Services
Generally Accepted Accounting Principles in the United States of America
Generative Artificial Intelligence
High Court
Madras, India High Court
HR
HRC
HS
Cognizant
Human Resources
Human Rights Campaign
Health Sciences
1
December 31, 2023 Form 10-K
Defined Term
Hunter
India Defined Contribution
Obligation
Definition
Certain net assets of Hunter Technical Resources, LLC
Certain statutory defined contribution obligations of employees and employers in India
India Tax Law
New tax regime enacted by the Government of India enacted December 2019
IP
IoT
IRS
IT
ITAT
ITD
Linium
Magenic
Mobica
NA
NASSCOM
OECD
PSU
Purchase Plan
P&R
ROU
RoW
RSU
SCI
SEC
Second Circuit
Servian
SEZ
SG&A
SVP
Syntel
Tax Reform Act
Term Loan
Thirdera
TQS
TriZetto
UK
USDC-NJ
USDC-SDNY
Utegration
Intellectual property
Internet of Things
Internal Revenue Service
Information Technology
Income Tax Appellate Tribunal in India
Indian Income Tax Department
The ServiceNow business of Ness Digital Engineering
Magenic Technologies, LLC
MOBICA HOLDINGS LIMITED
North America
National Association of Software and Services Companies
Organization for Economic Cooperation and Development
Performance Stock Units
Cognizant Technology Solutions Corporation 2004 Employee Stock Purchase Plan, as amended
Products and Resources
Right of Use
Rest of World
Restricted Stock Units
Supreme Court of India
United States Securities and Exchange Commission
United States Court of Appeals for the Second Circuit
SVN HoldCo Pty Limited
Special Economic Zone
Selling, general and administrative
Senior Vice President
Syntel Sterling Best Shores Mauritius Ltd.
Tax Cuts and Jobs Act
Unsecured term loan under the Credit Agreement
Thirdera Holdings, LLC
TQS Integration Limited
The TriZetto Group, Inc., now known as Cognizant Technology Software Group, Inc.
United Kingdom
United States District Court for the District of New Jersey
United States District Court for the Southern District of New York
Utegration, LLC
Forward Looking Statements
The statements contained in this Annual Report on Form 10-K that are not historical facts are forward-looking statements
(within the meaning of Section 21E of the Exchange Act) that involve risks and uncertainties. Such forward-looking statements
may be identified by, among other things, the use of forward-looking terminology such as “believe,” “expect,” “may,” “could,”
“would,” “plan,” “intend,” “estimate,” “predict,” “potential,” “continue,” “should” or “anticipate” or the negative thereof or
other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. From
time to time, we or our representatives have made or may make forward-looking statements, orally or in writing.
Such forward-looking statements may be included in various filings made by us with the SEC, in press releases or in oral
statements made by or with the approval of one of our authorized executive officers. These forward-looking statements, such as
statements regarding our anticipated future revenues, operating margin, earnings, capital expenditures, impacts to our business,
financial results and financial condition as a result of the competitive marketplace for talent and future attrition trends,
anticipated effective income tax rate and income tax expense, liquidity, financing strategy, access to capital, capital return
strategy, investment strategies, cost management, plans and objectives, including those related to the NextGen program,
investment in our business, potential acquisitions, industry trends, client behaviors and trends, the outcome of and costs
associated with regulatory and litigation matters, the appropriateness of the accrual related to the India Defined Contribution
Obligation and other statements regarding matters that are not historical facts, are based on our current expectations, estimates
and projections, management’s beliefs and certain assumptions made by management, many of which, by their nature, are
inherently uncertain and beyond our control. Actual results, performance, achievements and outcomes could differ materially
from the results expressed in, or anticipated or implied by, these forward-looking statements. There are a number of important
factors that could cause our results to differ materially from those indicated by such forward-looking statements, including:
economic and geopolitical conditions globally, in particular in the markets in which our clients and operations are
concentrated;
control;
achieve our targeted growth rates;
ultimate benefits of such plans;
our ability to attract, train and retain skilled employees, including highly skilled technical personnel and personnel
with experience in key digital areas and senior management to lead our business globally, at an acceptable cost;
unexpected terminations of client contracts on short notice or reduced spending by clients for reasons beyond our
challenges related to growing our business organically as well as inorganically through acquisitions, and our ability to
our ability to successfully implement our NextGen program and the amount of costs, timing of incurring costs, and
our ability to achieve our profitability goals and maintain our capital return strategy;
fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations;
our ability to meet specified service levels or milestones required by certain of our contracts;
intense and evolving competition and significant technological advances that our service offerings must keep pace with
in the rapidly changing markets we compete in;
our ability to successfully use AI-based technologies in our client offerings and our own internal operations;
legal, reputation and financial risks if we fail to protect client and/or our data from security breaches and/or cyber
attacks;
the impact of future pandemics, epidemics or other outbreaks of disease, on our business, results of operations,
liquidity and financial condition;
climate change impact on our business;
our ability to meet ESG expectations and commitments;
the effectiveness of our risk management, business continuity and disaster recovery plans and the potential that our
global delivery capabilities could be impacted;
restrictions on visas, in particular in the United States, UK and EU, or immigration more generally or increased costs
of such visas or the wages we are required to pay employees on visas, which may affect our ability to compete for and
provide services to our clients;
risks related to anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing,
both of which could impair our ability to serve our clients;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Cognizant
2
December 31, 2023 Form 10-K
Cognizant
3
December 31, 2023 Form 10-K
Defined Term
Hunter
Obligation
India Tax Law
India Defined Contribution
Definition
Certain net assets of Hunter Technical Resources, LLC
Certain statutory defined contribution obligations of employees and employers in India
New tax regime enacted by the Government of India enacted December 2019
NASSCOM
National Association of Software and Services Companies
Organization for Economic Cooperation and Development
Purchase Plan
Cognizant Technology Solutions Corporation 2004 Employee Stock Purchase Plan, as amended
IP
IoT
IRS
IT
ITAT
ITD
Linium
Magenic
Mobica
NA
OECD
PSU
P&R
ROU
RoW
RSU
SCI
SEC
Servian
SEZ
SG&A
SVP
Syntel
Thirdera
TQS
TriZetto
UK
Intellectual property
Internet of Things
Internal Revenue Service
Information Technology
Income Tax Appellate Tribunal in India
Indian Income Tax Department
The ServiceNow business of Ness Digital Engineering
Magenic Technologies, LLC
MOBICA HOLDINGS LIMITED
North America
Performance Stock Units
Products and Resources
Right of Use
Rest of World
Restricted Stock Units
Supreme Court of India
SVN HoldCo Pty Limited
Special Economic Zone
Selling, general and administrative
Senior Vice President
Thirdera Holdings, LLC
TQS Integration Limited
United Kingdom
Second Circuit
United States Court of Appeals for the Second Circuit
United States Securities and Exchange Commission
Tax Reform Act
Term Loan
Syntel Sterling Best Shores Mauritius Ltd.
Tax Cuts and Jobs Act
Unsecured term loan under the Credit Agreement
The TriZetto Group, Inc., now known as Cognizant Technology Software Group, Inc.
USDC-NJ
USDC-SDNY
Utegration
United States District Court for the District of New Jersey
United States District Court for the Southern District of New York
Utegration, LLC
Forward Looking Statements
The statements contained in this Annual Report on Form 10-K that are not historical facts are forward-looking statements
(within the meaning of Section 21E of the Exchange Act) that involve risks and uncertainties. Such forward-looking statements
may be identified by, among other things, the use of forward-looking terminology such as “believe,” “expect,” “may,” “could,”
“would,” “plan,” “intend,” “estimate,” “predict,” “potential,” “continue,” “should” or “anticipate” or the negative thereof or
other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. From
time to time, we or our representatives have made or may make forward-looking statements, orally or in writing.
Such forward-looking statements may be included in various filings made by us with the SEC, in press releases or in oral
statements made by or with the approval of one of our authorized executive officers. These forward-looking statements, such as
statements regarding our anticipated future revenues, operating margin, earnings, capital expenditures, impacts to our business,
financial results and financial condition as a result of the competitive marketplace for talent and future attrition trends,
anticipated effective income tax rate and income tax expense, liquidity, financing strategy, access to capital, capital return
strategy, investment strategies, cost management, plans and objectives, including those related to the NextGen program,
investment in our business, potential acquisitions, industry trends, client behaviors and trends, the outcome of and costs
associated with regulatory and litigation matters, the appropriateness of the accrual related to the India Defined Contribution
Obligation and other statements regarding matters that are not historical facts, are based on our current expectations, estimates
and projections, management’s beliefs and certain assumptions made by management, many of which, by their nature, are
inherently uncertain and beyond our control. Actual results, performance, achievements and outcomes could differ materially
from the results expressed in, or anticipated or implied by, these forward-looking statements. There are a number of important
factors that could cause our results to differ materially from those indicated by such forward-looking statements, including:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
economic and geopolitical conditions globally, in particular in the markets in which our clients and operations are
concentrated;
our ability to attract, train and retain skilled employees, including highly skilled technical personnel and personnel
with experience in key digital areas and senior management to lead our business globally, at an acceptable cost;
unexpected terminations of client contracts on short notice or reduced spending by clients for reasons beyond our
control;
challenges related to growing our business organically as well as inorganically through acquisitions, and our ability to
achieve our targeted growth rates;
our ability to successfully implement our NextGen program and the amount of costs, timing of incurring costs, and
ultimate benefits of such plans;
our ability to achieve our profitability goals and maintain our capital return strategy;
fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations;
our ability to meet specified service levels or milestones required by certain of our contracts;
intense and evolving competition and significant technological advances that our service offerings must keep pace with
in the rapidly changing markets we compete in;
our ability to successfully use AI-based technologies in our client offerings and our own internal operations;
legal, reputation and financial risks if we fail to protect client and/or our data from security breaches and/or cyber
attacks;
the impact of future pandemics, epidemics or other outbreaks of disease, on our business, results of operations,
liquidity and financial condition;
climate change impact on our business;
our ability to meet ESG expectations and commitments;
the effectiveness of our risk management, business continuity and disaster recovery plans and the potential that our
global delivery capabilities could be impacted;
restrictions on visas, in particular in the United States, UK and EU, or immigration more generally or increased costs
of such visas or the wages we are required to pay employees on visas, which may affect our ability to compete for and
provide services to our clients;
risks related to anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing,
both of which could impair our ability to serve our clients;
Cognizant
2
December 31, 2023 Form 10-K
Cognizant
3
December 31, 2023 Form 10-K
•
•
•
•
risks and costs related to complying with numerous and evolving legal and regulatory requirements and client
expectations in the many jurisdictions in which we operate;
potential changes in tax laws, or in their interpretation or enforcement, failure by us to adapt our corporate structure
and intercompany arrangements, or adverse outcomes of tax audits, investigations or proceedings;
potential exposure to litigation and legal claims in the conduct of our business; and
the other factors set forth in Part I, in the section entitled “Item 1A. Risk Factors” in this report.
You are advised to consult any further disclosures we make on related subjects in the reports we file with the SEC,
including this report in the sections titled “Part I, Item 1. Business,” “Part I, Item 1A. Risk Factors” and “Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as
may be required under applicable securities laws.
Item 1. Business
Overview
PART I
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. 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. 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 purpose, vision and values are central to Cognizant's strategic approach.
In order to achieve this vision and support our clients, we are focusing our business on six strategic initiatives to simplify
our operations, become an employer of choice and accelerate growth. These 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
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
•
•
•
•
•
•
and governance;
lead with AI.
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. 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.
Responsible operations and transparency around environmental and social efforts are important to our stakeholders, which
is why our ESG program is designed to align with our clients’ and employees’ focus on ESG-related topics in our value chain,
including but not limited to, our supply chain, delivery and solutions.
Cognizant
4
December 31, 2023 Form 10-K
Cognizant
5
December 31, 2023 Form 10-K
•
•
•
•
risks and costs related to complying with numerous and evolving legal and regulatory requirements and client
expectations in the many jurisdictions in which we operate;
potential changes in tax laws, or in their interpretation or enforcement, failure by us to adapt our corporate structure
and intercompany arrangements, or adverse outcomes of tax audits, investigations or proceedings;
potential exposure to litigation and legal claims in the conduct of our business; and
the other factors set forth in Part I, in the section entitled “Item 1A. Risk Factors” in this report.
You are advised to consult any further disclosures we make on related subjects in the reports we file with the SEC,
including this report in the sections titled “Part I, Item 1. Business,” “Part I, Item 1A. Risk Factors” and “Part II, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We undertake no obligation to
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as
may be required under applicable securities laws.
Item 1. Business
Overview
PART I
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. 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. 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 purpose, vision and values are central to Cognizant's strategic approach.
In order to achieve this vision and support our clients, we are focusing our business on six strategic initiatives to simplify
our operations, become an employer of choice and accelerate growth. These 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.
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. 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.
Responsible operations and transparency around environmental and social efforts are important to our stakeholders, which
is why our ESG program is designed to align with our clients’ and employees’ focus on ESG-related topics in our value chain,
including but not limited to, our supply chain, delivery and solutions.
Cognizant
4
December 31, 2023 Form 10-K
Cognizant
5
December 31, 2023 Form 10-K
Reportable Business Segments
We go to market across seven industry-based operating segments, which are aggregated into four reportable business
segments:
For the year ended December 31, 2023, the distribution of our revenues across our four reportable business segments was
as follows:
Revenues by business segment for 2023
•
•
•
•
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.
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. 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. 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. 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. 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. 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.
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 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.
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. 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.
Financial Services: 30.0%
Health Sciences: 29.3%
Communications,
Media and
Technology: 16.8%
Products and
Resources: 23.9%
The services we provide are distributed among a number of clients in each of our reportable business segments. 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. 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.
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. 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. 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. 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. 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. 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.
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 Engineering. 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.
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.
Areas of focus within this practice are:
business opportunities;
• Cloud, infrastructure and security, which helps simplify, modernize and safeguard IT environments, creating new
• AI and analytics, which helps clients formulate actionable insights from unstructured data to drive a greater
understanding of their customers and operations; and
•
IoT, which unlocks greater insights and new business models.
Cognizant
6
December 31, 2023 Form 10-K
Cognizant
7
December 31, 2023 Form 10-K
Reportable Business Segments
segments:
We go to market across seven industry-based operating segments, which are aggregated into four reportable business
For the year ended December 31, 2023, the distribution of our revenues across our four reportable business segments was
as follows:
Revenues by business segment for 2023
Health Sciences (HS) - This reportable business segment is comprised of a single operating segment of the
Financial Services (FS)
Banking
Insurance
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.
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. 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. 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. 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. 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. 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.
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 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.
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. 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.
Financial Services: 30.0%
Health Sciences: 29.3%
Communications,
Media and
Technology: 16.8%
Products and
Resources: 23.9%
The services we provide are distributed among a number of clients in each of our reportable business segments. 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. 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.
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. 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. 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. 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. 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. 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.
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 Engineering. 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.
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.
Areas of focus within this practice are:
• Cloud, infrastructure and security, which helps simplify, modernize and safeguard IT environments, creating new
business opportunities;
• AI and analytics, which helps clients formulate actionable insights from unstructured data to drive a greater
understanding of their customers and operations; and
•
IoT, which unlocks greater insights and new business models.
Cognizant
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
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. 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. 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. 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. Our automation advisory, implementation and managed
services experts partner with clients to transform end-to-end processes, design and manage the next-generation human and
digital workforce, enable seamless experiences and achieve multi-fold productivity increases. Our technology-driven business
process outsourcing services help clients transform and run functions and industry-specific processes such as finance and
accounting, omni-channel customer care, loan origination, annotation services, location-based services and medical data
management. 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.
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. 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.
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. 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.
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. Our direct
competitors include, among others, Accenture, Atos, Capgemini, Deloitte Digital, DXC Technology, EPAM Systems, Genpact,
HCL Technologies, IBM Consulting, Infosys Technologies, Tata Consultancy Services and Wipro. In addition, we compete
with numerous smaller local companies in the various geographic markets in which we operate. For additional information, see
Part I, Item 1A. Risk Factors.
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. 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.
Intellectual Property, Certain Trademarks, Trade Names and Service Marks
We provide value to our clients based, in part, on our proprietary innovations, methodologies, software, reusable
knowledge capital and other IP assets. We recognize the importance of IP and its ability to differentiate us from our
competitors. 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. We have registered, and applied for the
registration of, U.S. and international trademarks, service marks, and domain names to protect our brands, including our
Cognizant brand, which is one of our most valuable assets. We own or are licensed under a number of patents, trademarks and
copyrights of varying duration, relating to our products and services. We also have policies requiring our employees to respect
the IP rights of others. While our proprietary IP rights are important to our success, we believe our business as a whole is not
materially dependent on any particular IP right or any particular group of patents, trademarks, copyrights or licenses, other than
our Cognizant brand.
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. 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. Solely for convenience, trademarks, trade names and service marks referred to in this Annual Report on Form 10-K
may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not
assert, to the fullest extent under applicable law, our rights to these trademarks, trade names and service marks. We do not
intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not
be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
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 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.
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. For additional
information, see Part I, Item 1A. Risk Factors.
Cognizant
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
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. 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. 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. 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. Our automation advisory, implementation and managed
services experts partner with clients to transform end-to-end processes, design and manage the next-generation human and
digital workforce, enable seamless experiences and achieve multi-fold productivity increases. Our technology-driven business
process outsourcing services help clients transform and run functions and industry-specific processes such as finance and
accounting, omni-channel customer care, loan origination, annotation services, location-based services and medical data
management. 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.
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. 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.
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. 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.
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. Our direct
competitors include, among others, Accenture, Atos, Capgemini, Deloitte Digital, DXC Technology, EPAM Systems, Genpact,
HCL Technologies, IBM Consulting, Infosys Technologies, Tata Consultancy Services and Wipro. In addition, we compete
with numerous smaller local companies in the various geographic markets in which we operate. For additional information, see
Part I, Item 1A. Risk Factors.
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. 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.
Intellectual Property, Certain Trademarks, Trade Names and Service Marks
We provide value to our clients based, in part, on our proprietary innovations, methodologies, software, reusable
knowledge capital and other IP assets. We recognize the importance of IP and its ability to differentiate us from our
competitors. 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. We have registered, and applied for the
registration of, U.S. and international trademarks, service marks, and domain names to protect our brands, including our
Cognizant brand, which is one of our most valuable assets. We own or are licensed under a number of patents, trademarks and
copyrights of varying duration, relating to our products and services. We also have policies requiring our employees to respect
the IP rights of others. While our proprietary IP rights are important to our success, we believe our business as a whole is not
materially dependent on any particular IP right or any particular group of patents, trademarks, copyrights or licenses, other than
our Cognizant brand.
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. 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. Solely for convenience, trademarks, trade names and service marks referred to in this Annual Report on Form 10-K
may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not
assert, to the fullest extent under applicable law, our rights to these trademarks, trade names and service marks. We do not
intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not
be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
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 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.
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. For additional
information, see Part I, Item 1A. Risk Factors.
Cognizant
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
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. We aim to be the employer of choice in our industry and
for our employees to feel motivated, engaged, and empowered to do their best work through careers they find meaningful.
•
Engagement & Retention: In a market where competition for skilled IT professionals is intense, we routinely focus
on listening to, engaging with and investing in our people through a comprehensive talent approach.
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. In
Highlights include:
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. 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. 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 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 workforce strengthens our ability to innovate and to
understand our clients’ needs and aspirations.
Highlights from our D&I efforts include:
– Global D&I organization embedded within our HR function to drive accountability through our people,
processes and systems;
– Global D&I training and programs for leaders;
– Hiring policies and initiatives such as our Returnship Program, a 3-month paid, immersive experience for
experienced professionals who have taken an extended career break;
– Eight global affinity groups sponsored by Executive Committee members that welcome, nurture and provide
safe spaces in which our employees can share their unique interests and aspirations;
– Our sponsorships with the PGA, LPGA, where we doubled the Cognizant Founders Cup purse, and the Aston
Martin Cognizant Formula One Team, where we partnered with Racing Pride to promote LGBTQ+ inclusivity
in motor racing, demonstrate our commitment to equality around the world; and
– In 2023, we were recognized as a "Best Place to Work for the LGBTQ+ Equality" by HRC Equidad MX in
Mexico and HRC Equidade BR in Brazil; each of these is a foremost benchmarking survey related to LGBTQ+
workplace equality.
As of each of December 31, 2023 and 2022, women represented approximately 38% of our workforce.
In our 2023 engagement survey, D&I continued to score higher than external benchmarks, showing as a consistent
strength for Cognizant.
• High Performance Culture: We aim to create a work environment where every person is inspired to achieve, driven
to perform and rewarded for their contributions. Our culture of meritocracy fosters individual and team high
performance to fuel our growth.
Highlights include:
– Structured performance evaluation processes to ensure that expectations are clear and employees are rewarded
for achieving and exceeding established goals;
– Annual performance-based promotions and merit increases for eligible employees at all levels;
– Encouraging regular role movement and career growth through our internal job moves initiative. This program
is enhancing career velocity and bringing fresh thinking to our clients as employees identify new lateral and
next-level opportunities across our organization; and
– Continuously fostering a culture focused on recognition, Cognizant has created programs to reward all levels
of employees through both monetary recognition as well as peer-driven non-monetary recognition.
•
Learning & Upskilling: From campus hire training for entry-level workforce to providing capability assurance
programs for professional practitioners, our skilling ecosystem offers growth for employees at all levels. Training our
talent in new digital skills supports career growth, internal talent movement, and helps build capabilities in new and
emerging technologies and subject areas. These trainings are provided in collaboration with the world’s leading
educational and technology partners.
– In 2023, more than 265,000 of our employees acquired one or more skills utilizing our learning ecosystem;
– Robust technical programs that reskill and upskill our employees with a focus on building digital skills in areas
such as AI, GenAI, IoT, digital engineering, data and cloud. We trained 137,000 employees across a variety of
digital skills;
– Innovative pre-employment training programs for graduates and early to mid-career professionals that focus on
cultivating technology skills required for the next-generation workforce;
– Our in-house, access-from-anywhere learning experience platform provides a marketplace recognizing both
formal and informal learning, as well as recommended learning journeys;
– Development plans for all levels to encourage employees to own and prioritize their growth; and
– Our approach to talent development has been recognized by leading learning and development organizations,
such as the Association for Talent Development, NASSCOM and the Brandon Hall group.
•
Leadership Development & Talent Management: Cognizant continuously fosters its pipeline of high-performing
leaders who have the breadth and versatility to drive growth. We are focused on building leadership capability at all
levels - whether someone is a first-time manager, taking on a larger team or scope of responsibility, or leading at an
executive level - through continuous assessment and high impact development opportunities.
Highlights include:
– Targeted talent programs for key talent pools that include various training opportunities, digital leadership
programs, custom leadership development initiatives and leadership transition programs to equip employees
for taking on a leadership role;
– Fast-tracking high-performing and high-potential leadership talent through personalized assessments,
executive coaching and executive education programs;
– More than 1,300 leaders have participated in our LEAD@Cognizant partnership with Harvard University,
which is a 4.5-month leadership capability program designed exclusively for Cognizant leaders to learn,
practice and internalize how to set the course, connect the dots, inspire followership and deliver results through
strategic alignment, collaboration and building high performing teams;
– Accelerating a diverse leadership pipeline through programs like Propel, an initiative focused on priming the
next level of women leaders within Cognizant. More than 1,600 women have progressed through this
initiative; and
– Periodic talent processes such as talent reviews aim to help individuals develop in role and prepare for the
future, while strengthening our leadership pipeline overall.
Cognizant
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
– We monitor engagement levels and assess employee sentiment through a third-party engagement survey. In
Highlights include:
– Annual performance-based promotions and merit increases for eligible employees at all levels;
– Encouraging regular role movement and career growth through our internal job moves initiative. This program
is enhancing career velocity and bringing fresh thinking to our clients as employees identify new lateral and
next-level opportunities across our organization; and
– Continuously fostering a culture focused on recognition, Cognizant has created programs to reward all levels
of employees through both monetary recognition as well as peer-driven non-monetary recognition.
•
Learning & Upskilling: From campus hire training for entry-level workforce to providing capability assurance
programs for professional practitioners, our skilling ecosystem offers growth for employees at all levels. Training our
talent in new digital skills supports career growth, internal talent movement, and helps build capabilities in new and
emerging technologies and subject areas. These trainings are provided in collaboration with the world’s leading
educational and technology partners.
– In 2023, more than 265,000 of our employees acquired one or more skills utilizing our learning ecosystem;
– Robust technical programs that reskill and upskill our employees with a focus on building digital skills in areas
such as AI, GenAI, IoT, digital engineering, data and cloud. We trained 137,000 employees across a variety of
digital skills;
– Innovative pre-employment training programs for graduates and early to mid-career professionals that focus on
cultivating technology skills required for the next-generation workforce;
– Our in-house, access-from-anywhere learning experience platform provides a marketplace recognizing both
formal and informal learning, as well as recommended learning journeys;
– Development plans for all levels to encourage employees to own and prioritize their growth; and
– Our approach to talent development has been recognized by leading learning and development organizations,
such as the Association for Talent Development, NASSCOM and the Brandon Hall group.
•
Leadership Development & Talent Management: Cognizant continuously fosters its pipeline of high-performing
leaders who have the breadth and versatility to drive growth. We are focused on building leadership capability at all
levels - whether someone is a first-time manager, taking on a larger team or scope of responsibility, or leading at an
executive level - through continuous assessment and high impact development opportunities.
Highlights include:
– Targeted talent programs for key talent pools that include various training opportunities, digital leadership
programs, custom leadership development initiatives and leadership transition programs to equip employees
for taking on a leadership role;
– Fast-tracking high-performing and high-potential leadership talent through personalized assessments,
executive coaching and executive education programs;
– More than 1,300 leaders have participated in our LEAD@Cognizant partnership with Harvard University,
which is a 4.5-month leadership capability program designed exclusively for Cognizant leaders to learn,
practice and internalize how to set the course, connect the dots, inspire followership and deliver results through
strategic alignment, collaboration and building high performing teams;
– Accelerating a diverse leadership pipeline through programs like Propel, an initiative focused on priming the
next level of women leaders within Cognizant. More than 1,600 women have progressed through this
initiative; and
– Periodic talent processes such as talent reviews aim to help individuals develop in role and prepare for the
future, while strengthening our leadership pipeline overall.
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. We aim to be the employer of choice in our industry and
for our employees to feel motivated, engaged, and empowered to do their best work through careers they find meaningful.
•
Engagement & Retention: In a market where competition for skilled IT professionals is intense, we routinely focus
on listening to, engaging with and investing in our people through a comprehensive talent approach.
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;
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. 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. 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 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 workforce strengthens our ability to innovate and to
understand our clients’ needs and aspirations.
Highlights from our D&I efforts include:
processes and systems;
– Global D&I training and programs for leaders;
– Global D&I organization embedded within our HR function to drive accountability through our people,
– Hiring policies and initiatives such as our Returnship Program, a 3-month paid, immersive experience for
experienced professionals who have taken an extended career break;
– Eight global affinity groups sponsored by Executive Committee members that welcome, nurture and provide
safe spaces in which our employees can share their unique interests and aspirations;
– Our sponsorships with the PGA, LPGA, where we doubled the Cognizant Founders Cup purse, and the Aston
Martin Cognizant Formula One Team, where we partnered with Racing Pride to promote LGBTQ+ inclusivity
in motor racing, demonstrate our commitment to equality around the world; and
– In 2023, we were recognized as a "Best Place to Work for the LGBTQ+ Equality" by HRC Equidad MX in
Mexico and HRC Equidade BR in Brazil; each of these is a foremost benchmarking survey related to LGBTQ+
workplace equality.
As of each of December 31, 2023 and 2022, women represented approximately 38% of our workforce.
In our 2023 engagement survey, D&I continued to score higher than external benchmarks, showing as a consistent
strength for Cognizant.
• High Performance Culture: We aim to create a work environment where every person is inspired to achieve, driven
to perform and rewarded for their contributions. Our culture of meritocracy fosters individual and team high
performance to fuel our growth.
Highlights include:
– Structured performance evaluation processes to ensure that expectations are clear and employees are rewarded
for achieving and exceeding established goals;
Cognizant
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
•
Supporting Wellbeing at Work and Home: Our Be Well program offers a portfolio of benefits and rewards across
all dimensions of wellbeing - physical, mental, financial and life & work. These offerings aim to care for the diverse
needs of our employees to assist them in feeling resilient, innovative and engaged. These include total compensation
programs, health benefits, risk protection coverage, overall wellbeing and family care, tax savings programs, income
protection, retirement and financial planning resources, time off programs, recognition and voluntary programs. We
continually review and enhance our offerings to best meet the needs of today's modern workforce.
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 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 is also an alumnus of the Advanced Management Program of The Wharton
School of the University of Pennsylvania.
Highlights include:
– Our WorkFlex program, which provides employees greater flexibility to complete their required hours outside
2022 and assumed additional responsibilities for Industry Solutions in April 2023. Previously, he was Executive Vice President
their standard schedule or to transition to a part-time schedule to accommodate personal priorities;
– We provide access and support for mental health for our employees globally through a robust Employee
Assistance Program;
– We provide various resources and access to third party mental health platforms, webinars, and events
throughout the year. This includes global and regional wellbeing challenges that bring employees and their
families together (in person and virtually) to partake in physical activities and mental health events; and
– Managers are equipped with tools and resources to support the engagement and wellbeing of their teams.
These tools include guides and training on topics such as engaging hybrid teams, preventing fatigue and
burnout, and more.
Governmental Regulation
As a result of the size, breadth and geographic diversity of our business, our operations are subject to a variety of laws and
regulations in the jurisdictions in which we operate, including with respect to import and export controls, temporary work
authorizations or work permits and other immigration laws, content requirements, trade restrictions, tariffs, taxation, anti-
corruption, the environment, government affairs, internal and disclosure control obligations, data privacy, intellectual property,
employee and labor relations. For additional information, see Part I, Item 1A. Risk Factors as well as the "Business Outlook"
section within Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Executive Summary.
Information About Our Executive Officers
The following table identifies our current executive officers:
Name
Ravi Kumar S
Jatin Dalal
Age
52 Chief Executive Officer
49 Chief Financial Officer
Capacities in Which Served
Balu Ganesh Ayyar
62 EVP and President, Intuitive Operations and Automation and Industry Solutions
Kathryn Diaz
Surya Gummadi
John Kim
Robert Telesmanic
54 EVP, Chief People Officer
47 EVP and President, Americas
56 EVP, General Counsel, Chief Corporate Affairs Officer and Secretary
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. 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. 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 has a bachelor’s degree in Engineering from Shivaji University and an
MBA from Xavier Institute of Management, India.
Jatin Dalal has been our Chief Financial Officer since December 2023. Prior to joining Cognizant, Mr. Dalal served as
Chief Financial Officer of Wipro Limited, a publicly traded multinational technology and services consulting company, from
April 2015 to November 2023 and assumed additional responsibilities as President from December 2019 to November 2023.
Previously, he held various leadership positions at Wipro, including CFO, IT Business from 2011 to 2015. He joined Wipro in
Balu Ganesh Ayyar has been our Executive Vice President and President, Intuitive Operations and Automation since July
and President, Digital Operations from August 2019 to June 2022. Prior to joining Cognizant, Mr. Ayyar was the CEO of
Mphasis, a global IT services company listed in India, from 2009 to 2017. Prior to Mphasis, Mr. Ayyar spent nearly two
decades with Hewlett-Packard, holding a variety of leadership roles across multiple geographies.
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. Prior to joining Cognizant in 2020, Ms.
Diaz was VP, Total Rewards at Pearson, a multinational publishing and education company. She was the VP of Global
Compensation, Global Mobility and HR Systems at PVH (the parent company of Calvin Klein and Tommy Hilfiger).
Previously, Ms. Diaz spent over 20 years in a series of HR leadership positions at Merck & Co, Inc. She holds a bachelor’s
degree in Accounting from Rider University and an MBA from Lehigh University.
Surya Gummadi has been our Executive Vice President and President, Americas since January 2023. He held the role on
an interim basis from late June 2022 to January 2023. Prior to being appointed President of the Americas, Mr. Gummadi served
as Senior Vice President of our Health Sciences business segment from April 2022 to January 2023, Senior Vice President and
head of our Healthcare business from July 2020 to April 2022, Vice President and market leader of our Healthcare business
from February 2020 to July 2020 and Vice President and market head for our Health Plans business from October 2017 to
February 2020. 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. 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. Counsel for WNS Global
Services from July 2009 to June 2011 and held a variety of leadership roles at Cendant Travel Distribution Services (now
known as Travelport) from January 2001 to June 2006, including General Counsel and Chief Compliance Officer. He holds a
bachelor’s degree in English Literature from Columbia University and obtained his law degree from Cornell Law School.
Robert Telesmanic has been our Senior Vice President, Controller and Chief Accounting Officer since January 2017, a
Senior Vice President since 2010 and our Corporate Controller since 2004. Prior to that, he served as our Assistant Corporate
Controller from 2003 to 2004. Prior to joining Cognizant, Mr. Telesmanic spent over 14 years with Deloitte & Touche LLP.
Mr. 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.
Corporate History
Available Information
We began our IT development and maintenance services business in early 1994 as an in-house technology development
center for The Dun & Bradstreet Corporation and its operating units. In 1996, we were spun-off from The Dun & Bradstreet
Corporation and, in 1998, we completed an initial public offering to become a public company.
We make our SEC filings available free of charge through our website at www.cognizant.com as soon as reasonably
practicable after we electronically file such material with, or furnish such material to, the SEC.
No information on our website is incorporated by reference into this Form 10-K or any other public filing made by us
with the SEC. 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
12
December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
•
Supporting Wellbeing at Work and Home: Our Be Well program offers a portfolio of benefits and rewards across
all dimensions of wellbeing - physical, mental, financial and life & work. These offerings aim to care for the diverse
needs of our employees to assist them in feeling resilient, innovative and engaged. These include total compensation
programs, health benefits, risk protection coverage, overall wellbeing and family care, tax savings programs, income
protection, retirement and financial planning resources, time off programs, recognition and voluntary programs. We
continually review and enhance our offerings to best meet the needs of today's modern workforce.
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 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 is also an alumnus of the Advanced Management Program of The Wharton
School of the University of Pennsylvania.
Highlights include:
– Our WorkFlex program, which provides employees greater flexibility to complete their required hours outside
their standard schedule or to transition to a part-time schedule to accommodate personal priorities;
– We provide access and support for mental health for our employees globally through a robust Employee
Assistance Program;
– We provide various resources and access to third party mental health platforms, webinars, and events
throughout the year. This includes global and regional wellbeing challenges that bring employees and their
families together (in person and virtually) to partake in physical activities and mental health events; and
– Managers are equipped with tools and resources to support the engagement and wellbeing of their teams.
These tools include guides and training on topics such as engaging hybrid teams, preventing fatigue and
burnout, and more.
Governmental Regulation
As a result of the size, breadth and geographic diversity of our business, our operations are subject to a variety of laws and
regulations in the jurisdictions in which we operate, including with respect to import and export controls, temporary work
authorizations or work permits and other immigration laws, content requirements, trade restrictions, tariffs, taxation, anti-
corruption, the environment, government affairs, internal and disclosure control obligations, data privacy, intellectual property,
employee and labor relations. For additional information, see Part I, Item 1A. Risk Factors as well as the "Business Outlook"
section within Part I. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Executive Summary.
Information About Our Executive Officers
The following table identifies our current executive officers:
Name
Ravi Kumar S
Jatin Dalal
52 Chief Executive Officer
49 Chief Financial Officer
Age
Capacities in Which Served
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. 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. 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 has a bachelor’s degree in Engineering from Shivaji University and an
MBA from Xavier Institute of Management, India.
Jatin Dalal has been our Chief Financial Officer since December 2023. Prior to joining Cognizant, Mr. Dalal served as
Chief Financial Officer of Wipro Limited, a publicly traded multinational technology and services consulting company, from
April 2015 to November 2023 and assumed additional responsibilities as President from December 2019 to November 2023.
Previously, he held various leadership positions at Wipro, including CFO, IT Business from 2011 to 2015. He joined Wipro in
Balu Ganesh Ayyar has been our Executive Vice President and President, Intuitive Operations and Automation since July
2022 and assumed additional responsibilities for Industry Solutions in April 2023. Previously, he was Executive Vice President
and President, Digital Operations from August 2019 to June 2022. Prior to joining Cognizant, Mr. Ayyar was the CEO of
Mphasis, a global IT services company listed in India, from 2009 to 2017. Prior to Mphasis, Mr. Ayyar spent nearly two
decades with Hewlett-Packard, holding a variety of leadership roles across multiple geographies.
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. Prior to joining Cognizant in 2020, Ms.
Diaz was VP, Total Rewards at Pearson, a multinational publishing and education company. She was the VP of Global
Compensation, Global Mobility and HR Systems at PVH (the parent company of Calvin Klein and Tommy Hilfiger).
Previously, Ms. Diaz spent over 20 years in a series of HR leadership positions at Merck & Co, Inc. She holds a bachelor’s
degree in Accounting from Rider University and an MBA from Lehigh University.
Surya Gummadi has been our Executive Vice President and President, Americas since January 2023. He held the role on
an interim basis from late June 2022 to January 2023. Prior to being appointed President of the Americas, Mr. Gummadi served
as Senior Vice President of our Health Sciences business segment from April 2022 to January 2023, Senior Vice President and
head of our Healthcare business from July 2020 to April 2022, Vice President and market leader of our Healthcare business
from February 2020 to July 2020 and Vice President and market head for our Health Plans business from October 2017 to
February 2020. 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. 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. Counsel for WNS Global
Services from July 2009 to June 2011 and held a variety of leadership roles at Cendant Travel Distribution Services (now
known as Travelport) from January 2001 to June 2006, including General Counsel and Chief Compliance Officer. He holds a
bachelor’s degree in English Literature from Columbia University and obtained his law degree from Cornell Law School.
Robert Telesmanic has been our Senior Vice President, Controller and Chief Accounting Officer since January 2017, a
Senior Vice President since 2010 and our Corporate Controller since 2004. Prior to that, he served as our Assistant Corporate
Controller from 2003 to 2004. Prior to joining Cognizant, Mr. Telesmanic spent over 14 years with Deloitte & Touche LLP.
Mr. 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.
Corporate History
We began our IT development and maintenance services business in early 1994 as an in-house technology development
center for The Dun & Bradstreet Corporation and its operating units. In 1996, we were spun-off from The Dun & Bradstreet
Corporation and, in 1998, we completed an initial public offering to become a public company.
Available Information
We make our SEC filings available free of charge through our website at www.cognizant.com as soon as reasonably
practicable after we electronically file such material with, or furnish such material to, the SEC.
No information on our website is incorporated by reference into this Form 10-K or any other public filing made by us
with the SEC. 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
12
December 31, 2023 Form 10-K
Cognizant
13
December 31, 2023 Form 10-K
Item 1A. Risk Factors
We face various important risks and uncertainties, including those described below, that could adversely affect our
business, results of operations and financial condition and, as a result, cause a decline in the trading price of our common
stock.
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.
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. 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.
Our business is particularly susceptible to economic and political conditions in the markets where our clients or operations
are concentrated. 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. Many of our clients are in the financial services and healthcare industries, so any decrease in growth or significant
consolidation in these industries or regulatory policies that restrict these industries may reduce demand for our services.
Economic and political developments in India, where a significant majority of our operations and technical personnel are
located, or in other countries where we maintain delivery operations, may also have a significant impact on our business and
costs of operations. As a developing country, India has experienced and may continue to experience high inflation and wage
growth, fluctuations in gross domestic product growth and volatility in currency exchange rates, any of which could materially
adversely affect our cost of operations. Additionally, we benefit from governmental policies in countries that encourage foreign
investment and promote the ease of doing business, such as tax incentives, and any change in policy or circumstances that
results in the elimination of such benefits or degradation of the rule of law, or imposition of new adverse restrictions or costs on
our operations could have a material adverse effect on our business, results of operations and financial condition.
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.
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. In 2021 and most of 2022, we, and we believe the IT industry as a whole, experienced unprecedented
attrition. As a result, we hired over a hundred thousand new employees in each of 2021 and 2022, and over sixty thousand in
2023. 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. The rate of attrition began to decrease in the second half of
2022, but if such attrition levels increase again in the future, it could materially adversely affect our business and results of
operations. 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. The loss of senior executives, or the failure to attract, integrate and retain
new senior executives as the needs of our business require, could have a material adverse effect on our business and results of
operations.
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. 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
significant. If we are unable to hire or deploy employees with the needed skillsets or if we are unable to adequately equip our
employees with the skills needed, this could materially adversely affect our business.
Additionally, if we are unable to offer our employees a value proposition that is competitive and appealing, it could have
an adverse effect on engagement and retention, which may materially adversely affect our business.
Many of our contracts with clients are short-term, and our business, results of operations and financial condition
could be adversely affected if our clients terminate their contracts on short notice.
Consistent with industry practice, many of our contracts with clients are short-term or can be terminated by our clients
with short notice and without significant early termination cost. Even if not terminated, clients may be able to delay, reduce or
eliminate spending on the services and solutions we provide, choose not to retain us for additional stages of a project, try to
renegotiate the terms of a contract or cancel or delay additional planned work. Terminations and such other events may result
from factors that are beyond our control and unrelated to our work product or the progress of the project, including the business,
financial or labor conditions of a client, changes in ownership, management or the strategy of a client or economic or market
conditions generally or specific to a client’s industry. When contracts are terminated or spending delayed, we lose the
anticipated revenues and might not be able to eliminate our associated costs in a timely manner. In particular, the loss of a
significant client or a few significant clients could materially reduce revenues for the Company as a whole or for a particular
business segment. In addition, our operating margins in subsequent periods could be lower than expected. If we are unable to
replace the lost revenues with other work on terms we find acceptable or effectively eliminate costs, our business, results of
operations and financial condition could be adversely affected.
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. 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. Continued business growth increases the complexity of
our business and places significant strain on our management, employees, operations, systems, delivery, financial resources,
and internal financial control and reporting functions, which we will have to continue to develop and improve to sustain such
growth. Our ability to successfully manage change associated with the various business transformation initiatives is critical for
the overall strategy execution. We must continually recruit and train new employees, retain and reskill, as necessary, existing
sales, technical, finance, marketing and management employees with the knowledge, skills and experience that our business
model requires and effectively manage our employees worldwide to support our culture, values, strategies and goals.
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. We may not be successful in identifying suitable opportunities, completing targeted transactions or
achieving the desired results in the timeframe we expect or at all, such opportunities may divert our management's time and
focus away from our core business and realizing the desired results of a particular transaction may depend upon competition,
market trends, regulatory developments, additional costs or investments and the actions of suppliers or other third parties. 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.
If we are unable to manage our growth effectively, complete acquisitions of the number, magnitude and nature we have
targeted, or successfully integrate any acquired businesses into our operations, we may not be able to achieve our targeted
growth rates or improve our market share, profitability or competitive position generally or in specific markets or services.
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.
Guided by our strategic priorities, in the second quarter of 2023 we initiated the NextGen program aimed at simplifying
our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic
hybrid work environment. Our drive for simplification will include operating with fewer layers in an effort to enhance agility
and enable faster decision making.
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. We
Cognizant
14
December 31, 2023 Form 10-K
Cognizant
15
December 31, 2023 Form 10-K
We face various important risks and uncertainties, including those described below, that could adversely affect our
business, results of operations and financial condition and, as a result, cause a decline in the trading price of our common
Item 1A. Risk Factors
stock.
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.
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. 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.
Our business is particularly susceptible to economic and political conditions in the markets where our clients or operations
are concentrated. 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. Many of our clients are in the financial services and healthcare industries, so any decrease in growth or significant
consolidation in these industries or regulatory policies that restrict these industries may reduce demand for our services.
Economic and political developments in India, where a significant majority of our operations and technical personnel are
located, or in other countries where we maintain delivery operations, may also have a significant impact on our business and
costs of operations. As a developing country, India has experienced and may continue to experience high inflation and wage
growth, fluctuations in gross domestic product growth and volatility in currency exchange rates, any of which could materially
adversely affect our cost of operations. Additionally, we benefit from governmental policies in countries that encourage foreign
investment and promote the ease of doing business, such as tax incentives, and any change in policy or circumstances that
results in the elimination of such benefits or degradation of the rule of law, or imposition of new adverse restrictions or costs on
our operations could have a material adverse effect on our business, results of operations and financial condition.
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.
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. In 2021 and most of 2022, we, and we believe the IT industry as a whole, experienced unprecedented
attrition. As a result, we hired over a hundred thousand new employees in each of 2021 and 2022, and over sixty thousand in
2023. 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. The rate of attrition began to decrease in the second half of
2022, but if such attrition levels increase again in the future, it could materially adversely affect our business and results of
operations. 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. The loss of senior executives, or the failure to attract, integrate and retain
new senior executives as the needs of our business require, could have a material adverse effect on our business and results of
operations.
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. 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
significant. If we are unable to hire or deploy employees with the needed skillsets or if we are unable to adequately equip our
employees with the skills needed, this could materially adversely affect our business.
Additionally, if we are unable to offer our employees a value proposition that is competitive and appealing, it could have
an adverse effect on engagement and retention, which may materially adversely affect our business.
Many of our contracts with clients are short-term, and our business, results of operations and financial condition
could be adversely affected if our clients terminate their contracts on short notice.
Consistent with industry practice, many of our contracts with clients are short-term or can be terminated by our clients
with short notice and without significant early termination cost. Even if not terminated, clients may be able to delay, reduce or
eliminate spending on the services and solutions we provide, choose not to retain us for additional stages of a project, try to
renegotiate the terms of a contract or cancel or delay additional planned work. Terminations and such other events may result
from factors that are beyond our control and unrelated to our work product or the progress of the project, including the business,
financial or labor conditions of a client, changes in ownership, management or the strategy of a client or economic or market
conditions generally or specific to a client’s industry. When contracts are terminated or spending delayed, we lose the
anticipated revenues and might not be able to eliminate our associated costs in a timely manner. In particular, the loss of a
significant client or a few significant clients could materially reduce revenues for the Company as a whole or for a particular
business segment. In addition, our operating margins in subsequent periods could be lower than expected. If we are unable to
replace the lost revenues with other work on terms we find acceptable or effectively eliminate costs, our business, results of
operations and financial condition could be adversely affected.
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. 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. Continued business growth increases the complexity of
our business and places significant strain on our management, employees, operations, systems, delivery, financial resources,
and internal financial control and reporting functions, which we will have to continue to develop and improve to sustain such
growth. Our ability to successfully manage change associated with the various business transformation initiatives is critical for
the overall strategy execution. We must continually recruit and train new employees, retain and reskill, as necessary, existing
sales, technical, finance, marketing and management employees with the knowledge, skills and experience that our business
model requires and effectively manage our employees worldwide to support our culture, values, strategies and goals.
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. We may not be successful in identifying suitable opportunities, completing targeted transactions or
achieving the desired results in the timeframe we expect or at all, such opportunities may divert our management's time and
focus away from our core business and realizing the desired results of a particular transaction may depend upon competition,
market trends, regulatory developments, additional costs or investments and the actions of suppliers or other third parties. 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.
If we are unable to manage our growth effectively, complete acquisitions of the number, magnitude and nature we have
targeted, or successfully integrate any acquired businesses into our operations, we may not be able to achieve our targeted
growth rates or improve our market share, profitability or competitive position generally or in specific markets or services.
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.
Guided by our strategic priorities, in the second quarter of 2023 we initiated the NextGen program aimed at simplifying
our operating model, optimizing corporate functions and consolidating and realigning office space to reflect the post-pandemic
hybrid work environment. Our drive for simplification will include operating with fewer layers in an effort to enhance agility
and enable faster decision making.
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. We
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December 31, 2023 Form 10-K
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December 31, 2023 Form 10-K
currently expect to incur total costs of approximately $300 million with approximately $70 million of such costs anticipated in
2024. 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. There can be no
assurance that we will be successful in implementing our NextGen program, which may be disruptive to our operations, or may
cause difficulties in the retention of our remaining employees or reduced productivity among remaining employees. 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. If the actual amount and timing of costs differ from our
current expectations and estimates or we are unable to realize the expected operational efficiencies and cost savings from the
NextGen program, our operating results and financial condition would be adversely affected. Furthermore, we may incur
unanticipated charges or be required to make cash payments as a result of our NextGen program that were not previously
contemplated, which could result in an adverse effect on our business or results of operations.
We may not be able to achieve our profitability goals and maintain our capital return strategy.
Our goals for profitability and capital return rely upon a number of assumptions, including our ability to improve the
efficiency of our operations and make successful investments to grow and further develop our business. Our 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 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. We have incurred, and may continue to incur, substantial costs related to
implementing our strategy to optimize such costs, and we may not realize the ultimate cost savings that we expect. We may not
be able to efficiently utilize our employees if increased regulation, policy changes or administrative burdens of immigration,
work visas or client worksite placement prevents us from deploying our employees on a timely basis, or at all, to fulfill the
needs of our clients. 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. Increases in
wages and other costs, including as a result of attrition, may also put pressure on our profitability.
With respect to capital return, our ability and decisions to pay dividends and repurchase shares depend on a variety of
factors, including the cash flow generated from operations, our cash and investment balances, our net income, our overall
liquidity position, potential alternative uses of cash, such as acquisitions, and anticipated future economic conditions and
financial results. 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.
profitability.
Fluctuations in foreign currency exchange rates can also have adverse effects on our revenues, income from operations
and net income when items denominated in other currencies are translated or remeasured into U.S. dollars for presentation of
our consolidated financial statements. 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. 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. We are
particularly susceptible to wage and cost pressures in India and the exchange rate of the Indian rupee relative to the currencies
of our client contracts due to the fact that the substantial majority of our employees are in India while our contracts with clients
are typically in the local currency of the country where our clients are located.
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. 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. The use of new technologies in our offerings (including GenAI) can expose us
to additional risks if those technologies fail to work as predicted, which could lead to cost overruns, project delays, financial
penalties, or damage to our reputation. 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. These goals can be complex and may depend on our clients’ actual levels of business
activity or may be based on assumptions that are later determined not to be achievable or accurate. As such, these provisions
may increase the variability in revenues and margins earned on those contracts and have in the past resulted, and could in the
future result, in significant losses on such contracts. 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.
We face intense and evolving competition and our service offerings must keep pace with significant technological
advances in the rapidly changing markets we compete in.
The markets we serve and operate in are highly competitive, subject to rapid change and characterized by a large number
of participants, as described in “Part I, Item 1. Business-Competition.” We compete on the basis of 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 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. In addition to large, global competitors, we face competition
in many geographic markets from numerous smaller, local competitors that may have more experience with operations in these
markets, have well-established relationships with our desired clients, or be able to provide services and solutions at lower costs
or on terms more attractive to clients than we can. 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, concurrent use by many clients of multiple professional service providers means that we are required
to be continually competitive on the quality, scope and pricing of our offerings or face a reduction or elimination of our
business. Competitors may also be willing, at times, to take on more risk or price contracts lower than us in an effort to enter
the market or increase market share. If we are not able to supply clients with services that they deem superior and successfully
apply current business models with market level pricing while managing discounts, we may lose business to competitors and
face downward pressure on gross margins and profitability. Any inability to compete effectively would materially adversely
affect our business, results of operations and financial condition.
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. There can be no assurance that we will be able to maintain such relationships or that such components will be
available on the expected timelines or for anticipated prices. Among other things, such alliance partners may in the future
decide to compete with us, form exclusive or more favorable arrangements with our competitors or otherwise reduce our access
to their products, thereby impairing our ability to provide the services and solutions demanded by clients. Any performance
failure on the part of our alliance partners, or the discontinuance by such alliance partners of services that we have relied on
them to perform for our clients, could delay our performance or require us to engage alternative third parties to perform the
services at our cost or to perform them ourselves, any of which could deprive us of potential revenue or adversely impact our
Our competitiveness also depends on our ability to continue to develop and implement services and solutions that
anticipate and respond to rapid and continuing changes in technology to serve the evolving needs of our clients. 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. If we do not sufficiently invest in new technologies, successfully adapt to industry developments and
changing demand, and evolve and expand our business at sufficient speed and scale to keep pace with the demands of the
markets we serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy,
which would materially adversely affect our business, results of operations and financial condition. In addition, 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. Further, as we expand into these areas, we may
be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such new areas, which may
negatively affect our reputation and demand for our services and solutions.
Our use of AI technologies may not be successful and may present business, financial, legal, and reputational risks.
We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. As
with many innovations, AI presents risks and challenges that could adversely impact our business.
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
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
currently expect to incur total costs of approximately $300 million with approximately $70 million of such costs anticipated in
2024. 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. There can be no
assurance that we will be successful in implementing our NextGen program, which may be disruptive to our operations, or may
cause difficulties in the retention of our remaining employees or reduced productivity among remaining employees. 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. If the actual amount and timing of costs differ from our
current expectations and estimates or we are unable to realize the expected operational efficiencies and cost savings from the
NextGen program, our operating results and financial condition would be adversely affected. Furthermore, we may incur
unanticipated charges or be required to make cash payments as a result of our NextGen program that were not previously
contemplated, which could result in an adverse effect on our business or results of operations.
We may not be able to achieve our profitability goals and maintain our capital return strategy.
Our goals for profitability and capital return rely upon a number of assumptions, including our ability to improve the
efficiency of our operations and make successful investments to grow and further develop our business. Our 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 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. We have incurred, and may continue to incur, substantial costs related to
implementing our strategy to optimize such costs, and we may not realize the ultimate cost savings that we expect. We may not
be able to efficiently utilize our employees if increased regulation, policy changes or administrative burdens of immigration,
work visas or client worksite placement prevents us from deploying our employees on a timely basis, or at all, to fulfill the
needs of our clients. 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. Increases in
wages and other costs, including as a result of attrition, may also put pressure on our profitability.
With respect to capital return, our ability and decisions to pay dividends and repurchase shares depend on a variety of
factors, including the cash flow generated from operations, our cash and investment balances, our net income, our overall
liquidity position, potential alternative uses of cash, such as acquisitions, and anticipated future economic conditions and
financial results. 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 can also have adverse effects on our revenues, income from operations
and net income when items denominated in other currencies are translated or remeasured into U.S. dollars for presentation of
our consolidated financial statements. 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. 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. We are
particularly susceptible to wage and cost pressures in India and the exchange rate of the Indian rupee relative to the currencies
of our client contracts due to the fact that the substantial majority of our employees are in India while our contracts with clients
are typically in the local currency of the country where our clients are located.
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. 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. The use of new technologies in our offerings (including GenAI) can expose us
to additional risks if those technologies fail to work as predicted, which could lead to cost overruns, project delays, financial
penalties, or damage to our reputation. 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. These goals can be complex and may depend on our clients’ actual levels of business
activity or may be based on assumptions that are later determined not to be achievable or accurate. As such, these provisions
may increase the variability in revenues and margins earned on those contracts and have in the past resulted, and could in the
future result, in significant losses on such contracts. 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.
We face intense and evolving competition and our service offerings must keep pace with significant technological
advances in the rapidly changing markets we compete in.
The markets we serve and operate in are highly competitive, subject to rapid change and characterized by a large number
of participants, as described in “Part I, Item 1. Business-Competition.” We compete on the basis of 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 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. In addition to large, global competitors, we face competition
in many geographic markets from numerous smaller, local competitors that may have more experience with operations in these
markets, have well-established relationships with our desired clients, or be able to provide services and solutions at lower costs
or on terms more attractive to clients than we can. 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, concurrent use by many clients of multiple professional service providers means that we are required
to be continually competitive on the quality, scope and pricing of our offerings or face a reduction or elimination of our
business. Competitors may also be willing, at times, to take on more risk or price contracts lower than us in an effort to enter
the market or increase market share. If we are not able to supply clients with services that they deem superior and successfully
apply current business models with market level pricing while managing discounts, we may lose business to competitors and
face downward pressure on gross margins and profitability. Any inability to compete effectively would materially adversely
affect our business, results of operations and financial condition.
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. There can be no assurance that we will be able to maintain such relationships or that such components will be
available on the expected timelines or for anticipated prices. Among other things, such alliance partners may in the future
decide to compete with us, form exclusive or more favorable arrangements with our competitors or otherwise reduce our access
to their products, thereby impairing our ability to provide the services and solutions demanded by clients. Any performance
failure on the part of our alliance partners, or the discontinuance by such alliance partners of services that we have relied on
them to perform for our clients, could delay our performance or require us to engage alternative third parties to perform the
services at our cost or to perform them ourselves, any of which could deprive us of potential revenue or adversely impact our
profitability.
Our competitiveness also depends on our ability to continue to develop and implement services and solutions that
anticipate and respond to rapid and continuing changes in technology to serve the evolving needs of our clients. 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. If we do not sufficiently invest in new technologies, successfully adapt to industry developments and
changing demand, and evolve and expand our business at sufficient speed and scale to keep pace with the demands of the
markets we serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy,
which would materially adversely affect our business, results of operations and financial condition. In addition, 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. Further, as we expand into these areas, we may
be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such new areas, which may
negatively affect our reputation and demand for our services and solutions.
Our use of AI technologies may not be successful and may present business, financial, legal, and reputational risks.
We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. As
with many innovations, AI presents risks and challenges that could adversely impact our business.
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
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December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
consequences. 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.
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 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. Each of the foregoing may lead to
reduced demand for our services or harm our ability to obtain favorable pricing or other terms for our services, which could
have a material adverse effect on our business, results of operations and financial condition.
Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain including
in the areas of intellectual property, cybersecurity, and privacy and data protection. 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. 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.
In order to provide our services and solutions, we depend on global information technology networks and systems, to
process, transmit, host and securely store electronic information (including our confidential information and the confidential
information of our clients) and to communicate among our locations around the world and with our clients, suppliers and
alliance partners (including numerous cloud service providers). 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.
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. 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, 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.
Like other global companies, we and our clients, suppliers, alliance partners (including numerous cloud service providers)
and other vendors we interact with face threats to data and systems, including by nation state threat actors, insider threats
(including inappropriate access), perpetrators of random or targeted malicious cyberattacks, computer viruses, malware, worms,
bot attacks or other destructive or disruptive software and attempts to misappropriate client information and cause system
failures and disruptions. 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. 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.
A security compromise of our information systems, or of those of businesses with which we interact, that results in
confidential information being accessed by unauthorized or improper persons, could harm our reputation and expose us to
regulatory actions, up to and including criminal prosecution, client attrition due to reputational concerns or otherwise,
containment and remediation expenses, and claims brought by our clients or others for breaching contractual confidentiality and
security provisions or data protection laws. Monetary damages imposed on us could be significant and may impose costs in
excess of insurance policy limits or not be covered by our insurance at all, and our insurers may not continue to provide
coverage on reasonable terms or may disclaim coverage as to any future claims. Techniques used by bad actors to obtain
unauthorized access, disable or degrade service, or sabotage systems continuously evolve and may not immediately produce
signs of intrusion, and we may be unable to anticipate these techniques or to implement adequate preventative measures. In
addition, a security breach could require that we expend substantial additional resources related to the security of our
information systems, diverting resources from other projects and disrupting our businesses.
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. If these third parties do not have adequate safeguards or their safeguards fail, it might result in
breaches of our systems or applications and unauthorized access to or disclosure of our and our clients’ confidential data. In
addition, we are subject to vulnerabilities in third-party technology components we use in our business and are typically not
aware of such vulnerabilities until we receive notice from the third parties who have created the exposure. Due to this delay, our
responses to such vulnerabilities may not be adequate or prompt enough to prevent their exploitation.
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.
Failure to comply with data security and privacy regulations could have a material adverse effect on our business
operations and operating results.
We are required to comply with increasingly complex and changing data security and privacy regulations in the United
States, the EU, India and in other jurisdictions in which we operate. These laws regulate the collection, use and transfer of
personal data and can include significant financial penalties for noncompliance. We may also face audits or investigations by
one or more domestic or foreign government agencies or our customers pursuant to our contractual obligations relating to our
compliance with these regulations. Despite positive developments, such as the new EU-U.S. Data Privacy Framework, which
provides a mechanism for the transfer of personal data from the EU to the United States, there remains regulatory uncertainty
for businesses transferring data globally. New rules and restrictions on the movement of data across national borders could
increase compliance costs, as well as the risk of regulatory enforcement action (including potential financial penalties), private
lawsuits, reputational damage, blockage of international data transfers, disruption to business and loss of customers.
In the United States, federal sectoral laws, such as the Health Insurance Portability and Accountability Act, alongside
growing state level legislation impose or will impose extensive privacy requirements on organizations that handle personal data.
Proposals for federal comprehensive privacy legislation continue and other new state laws are under consideration. In India, the
DPDP was approved on August 11, 2023 and is expected to come into effect in phases over the next 6-12 months. The DPDP is
designed to encourage growth in the technology sector; however, much detail (including on requirements for cross border
transfers) has been left to subordinate legislation which will be prescribed by the executive arm of the government. The DPDP
limits penalties that can be imposed to 2.5 billion Indian rupees or approximately $30 million. Other countries have enacted or
are considering enacting privacy or data localization laws that require certain data to stay within their borders. Developing new
regulations in AI and data use more broadly continue to add to the complexity of the legal environment and managing the
privacy elements of these new rules will be critical to our ability to serve our customers as well as to achieve operational
efficiencies. Complying with these changing regulatory requirements that apply to us directly or indirectly from our impacted
customers requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes
to our business practices in certain jurisdictions, any of which could materially adversely affect our business operations and
operating results.
Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse
impact upon our business, liquidity, results of operations and financial condition.
Any pandemic, epidemic or other outbreak of disease may have, widespread, rapidly evolving, and unpredictable impacts
on global society, economies, financial markets and business practices by, among other things, causing significant loss of life,
curtailing congregation of people and disrupting communications and travel. 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. The vast majority of
our business is with clients in the United States, the United Kingdom and other countries in Europe, all regions that
were significantly impacted by the COVID-19 pandemic and could be impacted by other future outbreaks of disease.
•
Delivery challenges – We could face closures of our clients' facilities that materially impair our ability to deliver
services to our clients and satisfy contractually agreed upon service levels during pandemics, epidemics, or other
outbreaks of disease. For example, the COVID-19 pandemic, particularly in India, but also in the Philippines and other
countries where we have near-shore or offshore delivery operations for clients, as well as our in-country offices and
offices of clients where our employees may normally work, impacted our ability to deliver services to clients.
•
Increased strain on employees and management – The significant challenges presented by a pandemic or other
outbreak of disease, such as the potentially life-threatening health risks to employees and their loved ones and the
unavailability of various services our employees may rely upon, such as childcare, may be a cause of employee morale
concerns and may adversely impact employee productivity, as they did during the COVID-19 pandemic. Addressing
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December 31, 2023 Form 10-K
consequences. 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.
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 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. Each of the foregoing may lead to
reduced demand for our services or harm our ability to obtain favorable pricing or other terms for our services, which could
have a material adverse effect on our business, results of operations and financial condition.
Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain including
in the areas of intellectual property, cybersecurity, and privacy and data protection. 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. Failure to appropriately conform to this evolving landscape may result in legal liability, regulatory action, or
brand and reputational harm.
breaches and/or cyberattacks.
We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from security
In order to provide our services and solutions, we depend on global information technology networks and systems, to
process, transmit, host and securely store electronic information (including our confidential information and the confidential
information of our clients) and to communicate among our locations around the world and with our clients, suppliers and
alliance partners (including numerous cloud service providers). 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.
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. 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, 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.
Like other global companies, we and our clients, suppliers, alliance partners (including numerous cloud service providers)
and other vendors we interact with face threats to data and systems, including by nation state threat actors, insider threats
(including inappropriate access), perpetrators of random or targeted malicious cyberattacks, computer viruses, malware, worms,
bot attacks or other destructive or disruptive software and attempts to misappropriate client information and cause system
failures and disruptions. 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. 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.
A security compromise of our information systems, or of those of businesses with which we interact, that results in
confidential information being accessed by unauthorized or improper persons, could harm our reputation and expose us to
regulatory actions, up to and including criminal prosecution, client attrition due to reputational concerns or otherwise,
containment and remediation expenses, and claims brought by our clients or others for breaching contractual confidentiality and
security provisions or data protection laws. Monetary damages imposed on us could be significant and may impose costs in
excess of insurance policy limits or not be covered by our insurance at all, and our insurers may not continue to provide
coverage on reasonable terms or may disclaim coverage as to any future claims. Techniques used by bad actors to obtain
unauthorized access, disable or degrade service, or sabotage systems continuously evolve and may not immediately produce
signs of intrusion, and we may be unable to anticipate these techniques or to implement adequate preventative measures. In
addition, a security breach could require that we expend substantial additional resources related to the security of our
information systems, diverting resources from other projects and disrupting our businesses.
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. If these third parties do not have adequate safeguards or their safeguards fail, it might result in
breaches of our systems or applications and unauthorized access to or disclosure of our and our clients’ confidential data. In
addition, we are subject to vulnerabilities in third-party technology components we use in our business and are typically not
aware of such vulnerabilities until we receive notice from the third parties who have created the exposure. Due to this delay, our
responses to such vulnerabilities may not be adequate or prompt enough to prevent their exploitation.
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.
Failure to comply with data security and privacy regulations could have a material adverse effect on our business
operations and operating results.
We are required to comply with increasingly complex and changing data security and privacy regulations in the United
States, the EU, India and in other jurisdictions in which we operate. These laws regulate the collection, use and transfer of
personal data and can include significant financial penalties for noncompliance. We may also face audits or investigations by
one or more domestic or foreign government agencies or our customers pursuant to our contractual obligations relating to our
compliance with these regulations. Despite positive developments, such as the new EU-U.S. Data Privacy Framework, which
provides a mechanism for the transfer of personal data from the EU to the United States, there remains regulatory uncertainty
for businesses transferring data globally. New rules and restrictions on the movement of data across national borders could
increase compliance costs, as well as the risk of regulatory enforcement action (including potential financial penalties), private
lawsuits, reputational damage, blockage of international data transfers, disruption to business and loss of customers.
In the United States, federal sectoral laws, such as the Health Insurance Portability and Accountability Act, alongside
growing state level legislation impose or will impose extensive privacy requirements on organizations that handle personal data.
Proposals for federal comprehensive privacy legislation continue and other new state laws are under consideration. In India, the
DPDP was approved on August 11, 2023 and is expected to come into effect in phases over the next 6-12 months. The DPDP is
designed to encourage growth in the technology sector; however, much detail (including on requirements for cross border
transfers) has been left to subordinate legislation which will be prescribed by the executive arm of the government. The DPDP
limits penalties that can be imposed to 2.5 billion Indian rupees or approximately $30 million. Other countries have enacted or
are considering enacting privacy or data localization laws that require certain data to stay within their borders. Developing new
regulations in AI and data use more broadly continue to add to the complexity of the legal environment and managing the
privacy elements of these new rules will be critical to our ability to serve our customers as well as to achieve operational
efficiencies. Complying with these changing regulatory requirements that apply to us directly or indirectly from our impacted
customers requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes
to our business practices in certain jurisdictions, any of which could materially adversely affect our business operations and
operating results.
Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse
impact upon our business, liquidity, results of operations and financial condition.
Any pandemic, epidemic or other outbreak of disease may have, widespread, rapidly evolving, and unpredictable impacts
on global society, economies, financial markets and business practices by, among other things, causing significant loss of life,
curtailing congregation of people and disrupting communications and travel. 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. The vast majority of
our business is with clients in the United States, the United Kingdom and other countries in Europe, all regions that
were significantly impacted by the COVID-19 pandemic and could be impacted by other future outbreaks of disease.
Delivery challenges – We could face closures of our clients' facilities that materially impair our ability to deliver
services to our clients and satisfy contractually agreed upon service levels during pandemics, epidemics, or other
outbreaks of disease. For example, the COVID-19 pandemic, particularly in India, but also in the Philippines and other
countries where we have near-shore or offshore delivery operations for clients, as well as our in-country offices and
offices of clients where our employees may normally work, impacted our ability to deliver services to clients.
Increased strain on employees and management – The significant challenges presented by a pandemic or other
outbreak of disease, such as the potentially life-threatening health risks to employees and their loved ones and the
unavailability of various services our employees may rely upon, such as childcare, may be a cause of employee morale
concerns and may adversely impact employee productivity, as they did during the COVID-19 pandemic. Addressing
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these employee morale and productivity concerns as well as other significant challenges presented by such events,
including various business continuity measures demands significant management time and attention.
If 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
The ultimate extent to which any future pandemics, epidemics or other outbreaks of disease impact our business, liquidity,
results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be
predicted with confidence, including the severity of the disease to which the pandemic, epidemic or other outbreak relates;
delivery, adoption and effectiveness of vaccines or other treatments for the disease, including any variants; the duration and
extent of the event and waves of infection; travel restrictions and social distancing; the duration and extent of business closures
and business disruptions; and the effectiveness of actions taken to contain, treat and prevent the disease. If we or our clients
experience prolonged shutdowns or other business disruptions, our business, liquidity, results of operations, financial condition
and the trading price of our common stock may be materially adversely affected, and our ability to access the capital markets
may be limited. Further, any future pandemic, epidemic or other outbreak of disease, and the volatile regional and global
economic conditions stemming from such an event, could precipitate or amplify the other risk factors that we identify in this
report, any of which could have a material adverse impact to our business.
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. Developments related to regulatory,
social or market dynamics, stakeholder expectations, national and international climate change policies, the actual or perceived
frequency or intensity of extreme weather events or the availability and functionality of critical infrastructure and resources, in
addition to other factors resulting from such developments or that may not otherwise be known to or anticipated by us, could
significantly disrupt our supply chain, our clients' operations and our ability to deliver services. Such events could significantly
increase our costs and expenses and harm our revenues, cash flows and financial performance. Further, natural disasters and
adverse weather events, such as droughts, wildfires, storms, sea-level rise and flooding, occurring more frequently, with less
predictability or with greater intensity, could cause community disruptions and impact our employees’ abilities to commute or
to work from home safely and effectively. For example, we have substantial global delivery operations in Chennai, India, a city
that has experienced severe rains and related flooding. Our exposure to these economic and other risks from climate change
could be exacerbated if government or market action to address climate change and its effects is insufficient or unsuccessful.
Failure to meet ESG expectations or standards or achieve our ESG commitments could adversely affect our
business or damage our reputation.
Our failure or perceived failure to achieve our ESG commitments, maintain ESG practices, or meet evolving stakeholder
expectations could harm our reputation, adversely impact our ability to attract and retain clients and employees, and expose us
to increased scrutiny from the investment community and enforcement authorities. Our ability to achieve our ESG
commitments is subject to numerous risks, many of which are outside of our control. Examples of such risks include the
availability and cost of low- or non-carbon based energy sources and technologies and the availability of suppliers that can meet
our ESG and other standards. Our reputation also may be harmed by the perceptions that our stakeholders have about our action
or inaction on certain ESG-related issues, or because they may disagree with our goals and initiatives. Damage to our reputation
may reduce demand for our services and thus have an adverse effect on our future financial performance, as well as require
additional resources to rebuild our reputation.
In addition, governmental bodies, investors, clients, businesses, employees and potential employees are increasingly
focused on ESG issues, including climate change, diversity and inclusion, human rights and supply-chain issues, which has
resulted and may in the future continue to result in the adoption of new laws and regulations, reporting requirements and
changing bid and buying practices. 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. As these
new laws, regulations, treaties and similar initiatives and programs continue to be adopted and implemented, we will be
required to comply or potentially face market access limitations, enforcement actions, civil suits or sanctions, including fines. If
new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased
compliance burdens and costs to meet such obligations. If we fail to comply with new laws, regulations, treaties, or reporting
requirements, our reputation and business could be adversely impacted.
Cognizant
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harm to our reputation.
Our business model is dependent on our global delivery capabilities, which include coordination between our delivery
centers in India, our other global and regional delivery centers, the offices of our clients and our associates worldwide. 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.
Our risk management, business continuity and disaster recovery plans may not be effective at predicting or mitigating the
effects of such disruptions, particularly in the case of catastrophic events or longer term, increasingly severe developments that
may occur as a result of climate change. Even if our operations are unaffected or recover quickly from any such events, if our
clients cannot timely resume their own operations due to a catastrophic event, they may reduce or terminate our services, which
may adversely affect our results of operations. Any such disruption may result in lost revenues, a loss of clients, liabilities
relating to disruptions in service, expenditures to repair or replace damaged property and reputational damage, and could
demand significant management time and attention, any of which would have an adverse effect on our business, results of
operations and financial condition.
Legal, Regulatory and Legislative Risks
A substantial portion of our employees in the United States, United Kingdom, EU and other jurisdictions rely on
visas to work in those areas such that any restrictions on such visas or immigration more generally or increased costs of
obtaining such visas or increases in the wages we are required to pay employees on visas may affect our ability to
compete for and provide services to clients in these jurisdictions, which could materially adversely affect our business,
results of operations and financial condition.
A substantial portion of our employees in the United States and in many other jurisdictions, including countries in
Europe, rely upon temporary work authorization or work permits, which makes our business particularly vulnerable to changes
and variations in immigration laws and regulations, including written changes and policy changes to the manner in which the
laws and regulations are interpreted or enforced, and potential enforcement actions and penalties that might cause us to lose
access to such visas. The political environment in the United States, the United Kingdom and other countries in recent years has
included significant support for anti-immigrant legislation and administrative changes. 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.
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. 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. In the EU, many countries continue to implement new regulations to move into compliance with the EU
Directive of 2014 to harmonize immigration rules for intracompany transferees in most EU member states and to facilitate the
transfer of managers, specialists and graduate trainees both into and within the region. The changes have had significant impact
on mobility programs and have led to new notification and documentation requirements for companies sending employees to
EU countries. Recent changes or any additional adverse revisions to immigration laws and regulations in the jurisdictions in
which we operate may cause us delays, staffing shortages, additional costs or an inability to bid for or fulfill projects for clients,
any of which could have a material adverse effect on our business, results of operations and financial condition.
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
The practice of outsourcing services to organizations operating in other countries is a topic of political discussion in the
United States, which is our largest market, as well as other regions in which we have clients. For example, in the United States,
measures aimed at limiting or restricting the performance of services from an offshore location or imposing burdens on U.S.
companies that utilize such services have been put forward for consideration at both the federal and state levels to address
concerns over the perceived association between offshore outsourcing and the loss of jobs domestically. If any such measure is
enacted in the United States or another region in which we have clients, our ability to provide services to our clients could be
condition.
impaired.
Cognizant
these employee morale and productivity concerns as well as other significant challenges presented by such events,
including various business continuity measures demands significant management time and attention.
The ultimate extent to which any future pandemics, epidemics or other outbreaks of disease impact our business, liquidity,
results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be
predicted with confidence, including the severity of the disease to which the pandemic, epidemic or other outbreak relates;
delivery, adoption and effectiveness of vaccines or other treatments for the disease, including any variants; the duration and
extent of the event and waves of infection; travel restrictions and social distancing; the duration and extent of business closures
and business disruptions; and the effectiveness of actions taken to contain, treat and prevent the disease. If we or our clients
experience prolonged shutdowns or other business disruptions, our business, liquidity, results of operations, financial condition
and the trading price of our common stock may be materially adversely affected, and our ability to access the capital markets
may be limited. Further, any future pandemic, epidemic or other outbreak of disease, and the volatile regional and global
economic conditions stemming from such an event, could precipitate or amplify the other risk factors that we identify in this
report, any of which could have a material adverse impact to our business.
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. Developments related to regulatory,
social or market dynamics, stakeholder expectations, national and international climate change policies, the actual or perceived
frequency or intensity of extreme weather events or the availability and functionality of critical infrastructure and resources, in
addition to other factors resulting from such developments or that may not otherwise be known to or anticipated by us, could
significantly disrupt our supply chain, our clients' operations and our ability to deliver services. Such events could significantly
increase our costs and expenses and harm our revenues, cash flows and financial performance. Further, natural disasters and
adverse weather events, such as droughts, wildfires, storms, sea-level rise and flooding, occurring more frequently, with less
predictability or with greater intensity, could cause community disruptions and impact our employees’ abilities to commute or
to work from home safely and effectively. For example, we have substantial global delivery operations in Chennai, India, a city
that has experienced severe rains and related flooding. Our exposure to these economic and other risks from climate change
could be exacerbated if government or market action to address climate change and its effects is insufficient or unsuccessful.
Failure to meet ESG expectations or standards or achieve our ESG commitments could adversely affect our
business or damage our reputation.
Our failure or perceived failure to achieve our ESG commitments, maintain ESG practices, or meet evolving stakeholder
expectations could harm our reputation, adversely impact our ability to attract and retain clients and employees, and expose us
to increased scrutiny from the investment community and enforcement authorities. Our ability to achieve our ESG
commitments is subject to numerous risks, many of which are outside of our control. Examples of such risks include the
availability and cost of low- or non-carbon based energy sources and technologies and the availability of suppliers that can meet
our ESG and other standards. Our reputation also may be harmed by the perceptions that our stakeholders have about our action
or inaction on certain ESG-related issues, or because they may disagree with our goals and initiatives. Damage to our reputation
may reduce demand for our services and thus have an adverse effect on our future financial performance, as well as require
additional resources to rebuild our reputation.
In addition, governmental bodies, investors, clients, businesses, employees and potential employees are increasingly
focused on ESG issues, including climate change, diversity and inclusion, human rights and supply-chain issues, which has
resulted and may in the future continue to result in the adoption of new laws and regulations, reporting requirements and
changing bid and buying practices. 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. As these
new laws, regulations, treaties and similar initiatives and programs continue to be adopted and implemented, we will be
required to comply or potentially face market access limitations, enforcement actions, civil suits or sanctions, including fines. If
new laws or regulations are more stringent than current legal or regulatory requirements, we may experience increased
compliance burdens and costs to meet such obligations. If we fail to comply with new laws, regulations, treaties, or reporting
requirements, our reputation and business could be adversely impacted.
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.
Our business model is dependent on our global delivery capabilities, which include coordination between our delivery
centers in India, our other global and regional delivery centers, the offices of our clients and our associates worldwide. 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.
Our risk management, business continuity and disaster recovery plans may not be effective at predicting or mitigating the
effects of such disruptions, particularly in the case of catastrophic events or longer term, increasingly severe developments that
may occur as a result of climate change. Even if our operations are unaffected or recover quickly from any such events, if our
clients cannot timely resume their own operations due to a catastrophic event, they may reduce or terminate our services, which
may adversely affect our results of operations. Any such disruption may result in lost revenues, a loss of clients, liabilities
relating to disruptions in service, expenditures to repair or replace damaged property and reputational damage, and could
demand significant management time and attention, any of which would have an adverse effect on our business, results of
operations and financial condition.
Legal, Regulatory and Legislative Risks
A substantial portion of our employees in the United States, United Kingdom, EU and other jurisdictions rely on
visas to work in those areas such that any restrictions on such visas or immigration more generally or increased costs of
obtaining such visas or increases in the wages we are required to pay employees on visas may affect our ability to
compete for and provide services to clients in these jurisdictions, which could materially adversely affect our business,
results of operations and financial condition.
A substantial portion of our employees in the United States and in many other jurisdictions, including countries in
Europe, rely upon temporary work authorization or work permits, which makes our business particularly vulnerable to changes
and variations in immigration laws and regulations, including written changes and policy changes to the manner in which the
laws and regulations are interpreted or enforced, and potential enforcement actions and penalties that might cause us to lose
access to such visas. The political environment in the United States, the United Kingdom and other countries in recent years has
included significant support for anti-immigrant legislation and administrative changes. 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.
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. 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. In the EU, many countries continue to implement new regulations to move into compliance with the EU
Directive of 2014 to harmonize immigration rules for intracompany transferees in most EU member states and to facilitate the
transfer of managers, specialists and graduate trainees both into and within the region. The changes have had significant impact
on mobility programs and have led to new notification and documentation requirements for companies sending employees to
EU countries. Recent changes or any additional adverse revisions to immigration laws and regulations in the jurisdictions in
which we operate may cause us delays, staffing shortages, additional costs or an inability to bid for or fulfill projects for clients,
any of which could have a material adverse effect on our business, results of operations and financial condition.
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.
The practice of outsourcing services to organizations operating in other countries is a topic of political discussion in the
United States, which is our largest market, as well as other regions in which we have clients. For example, in the United States,
measures aimed at limiting or restricting the performance of services from an offshore location or imposing burdens on U.S.
companies that utilize such services have been put forward for consideration at both the federal and state levels to address
concerns over the perceived association between offshore outsourcing and the loss of jobs domestically. If any such measure is
enacted in the United States or another region in which we have clients, our ability to provide services to our clients could be
impaired.
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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. Current or prospective clients may elect to perform certain services themselves or may be
discouraged from utilizing global service delivery providers like us due to negative perceptions that may be associated with
using global service delivery models or firms. Any slowdown or reversal of existing industry trends toward global service
delivery would seriously harm our ability to compete effectively with competitors that provide the majority of their services
from within the country in which our clients operate.
We are subject to numerous and evolving legal and regulatory requirements and client expectations in the many
jurisdictions in which we operate, and violations of, unfavorable changes in or an inability to meet such requirements or
expectations could harm our business.
We provide services to clients and have operations in many parts of the world and in a wide variety of different industries,
subjecting us to numerous, evolving, and sometimes conflicting, laws and regulations on matters as diverse as trade controls
and sanctions, immigration (including temporary work authorizations or work permits), content requirements, trade restrictions,
tariffs, taxation, antitrust laws, anti-money laundering and anti-corruption laws (including the FCPA and the U.K. Bribery Act),
the environment, including climate change regulation and reporting requirements, government affairs, internal and disclosure
control obligations, data privacy, intellectual property, employment and labor relations, human rights and AI. We face
significant regulatory compliance costs and risks as a result of the size and breadth of our business. 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.
We are also subject to a wide range of potential enforcement actions, audits or investigations regarding our compliance
with these laws or regulations in the conduct of our business, and any finding of a violation could subject us to a wide range of
civil or criminal penalties, including fines, debarment, or suspension or disqualification from government contracting,
prohibitions or restrictions on doing business in one or more jurisdictions, loss of clients and business, legal claims by clients
and unfavorable publicity or damage to our reputation. We could also face significant compliance and operational burdens and
incur significant costs in our efforts to comply with or rectify non-compliance with these laws or regulations. Such burdens or
costs may result in an adverse effect on our financial condition and results of operations.
We commit significant financial and managerial resources to comply with our internal control over financial reporting
requirements, but we have in the past identified and may in the future identify material weaknesses or significant deficiencies in
our internal control over financial reporting that cause us to incur incremental remediation costs in order to maintain adequate
controls.
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. 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.
Changes in tax laws or in their interpretation or enforcement, failure by us to adapt our corporate structure and
intercompany arrangements or adverse outcomes of tax audits, investigations or proceedings could have a material
adverse effect on our effective tax rate, results of operations and financial condition.
The interpretation of tax laws and regulations in the many jurisdictions in which we operate and the related tax accounting
principles are complex and require considerable judgment to determine our income taxes and other tax liabilities worldwide.
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. We routinely review and update our corporate structure and
intercompany arrangements, including transfer pricing policies, consistent with applicable laws and regulations, to align with
our evolving business operations across the numerous jurisdictions, such as the United States, India and the United Kingdom, in
which we operate. Failure to successfully adapt our corporate structure and intercompany arrangements to align with our
evolving business operations may increase our worldwide effective tax rate and have a material adverse effect on our earnings,
cash flows and financial condition.
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. For example, our
cash flows could be materially affected by the issuance of additional interpretive guidance by the U.S. Treasury regarding the
capitalization and amortization of research and experimental expenses for tax purposes, as more fully described in Note 11 to
the consolidated financial statements.
Additionally, we are subject to routine tax audits, investigations and proceedings in various jurisdictions. Tax authorities
have disagreed, and may in the future disagree, with our judgments, and are taking increasingly aggressive positions, including
with respect to our intercompany transactions. For example, we are currently involved in an ongoing dispute with the ITD in
which the ITD asserts that we owe additional taxes for two transactions by which CTS India repurchased shares from its
shareholders, as more fully described in Note 11 to the consolidated financial statements. We may not accurately predict the
outcomes of these audits, investigations and proceedings and the amounts ultimately paid upon their resolution could be
materially different from the amounts previously included in our income tax provision. Adverse outcomes in any such audits,
investigations or proceedings could increase our tax exposure and cause us to incur increased expense, which could materially
adversely affect our results of operations and financial condition.
Our business subjects us to considerable potential exposure to litigation and legal claims and could be materially
adversely affected if we incur legal liability.
We are subject to, and may become a party to, a variety of litigation or other claims and suits that arise from time to time
in the conduct of our business. Our business is subject to the risk of litigation involving current and former employees, clients,
alliance partners, subcontractors, suppliers, competitors, shareholders, government agencies or others through private actions,
class actions, whistleblower claims, administrative proceedings, regulatory actions or other litigation. While we maintain
insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is
subject to various exclusions as well as deductibles and caps on amounts recoverable.
Our client engagements expose us to significant potential legal liability and litigation expense if we fail to meet our
contractual obligations or otherwise breach obligations to third parties or if our subcontractors breach or dispute the terms of
our agreements with them and impede our ability to meet our obligations to our clients. For example, third parties could claim
that we or our clients, whom we typically contractually agree to indemnify with respect to the services and solutions we
provide, infringe upon their IP rights. 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. 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. 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 have also been the subject of a number of putative securities class action complaints and putative
shareholder derivative complaints relating to the matters that were the subject of our now concluded internal investigation into
potential violations of the FCPA and other applicable laws, and may be subject to such legal actions for these or other matters
in the future. See "Part I, Item 3. Legal Proceedings" for more information. We establish reserves for these and other matters
when a loss is considered probable and the amount can be reasonably estimated; however, the estimation of legal reserves and
possible losses involves significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes
inherent in litigation, and the actual losses arising from particular matters may exceed our estimates and materially adversely
affect our results of operations.
Item 1B. Unresolved Staff Comments
None.
Cognizant
22
December 31, 2023 Form 10-K
Cognizant
23
December 31, 2023 Form 10-K
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. Current or prospective clients may elect to perform certain services themselves or may be
discouraged from utilizing global service delivery providers like us due to negative perceptions that may be associated with
using global service delivery models or firms. Any slowdown or reversal of existing industry trends toward global service
delivery would seriously harm our ability to compete effectively with competitors that provide the majority of their services
from within the country in which our clients operate.
We are subject to numerous and evolving legal and regulatory requirements and client expectations in the many
jurisdictions in which we operate, and violations of, unfavorable changes in or an inability to meet such requirements or
expectations could harm our business.
We provide services to clients and have operations in many parts of the world and in a wide variety of different industries,
subjecting us to numerous, evolving, and sometimes conflicting, laws and regulations on matters as diverse as trade controls
and sanctions, immigration (including temporary work authorizations or work permits), content requirements, trade restrictions,
tariffs, taxation, antitrust laws, anti-money laundering and anti-corruption laws (including the FCPA and the U.K. Bribery Act),
the environment, including climate change regulation and reporting requirements, government affairs, internal and disclosure
control obligations, data privacy, intellectual property, employment and labor relations, human rights and AI. We face
significant regulatory compliance costs and risks as a result of the size and breadth of our business. 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.
We are also subject to a wide range of potential enforcement actions, audits or investigations regarding our compliance
with these laws or regulations in the conduct of our business, and any finding of a violation could subject us to a wide range of
civil or criminal penalties, including fines, debarment, or suspension or disqualification from government contracting,
prohibitions or restrictions on doing business in one or more jurisdictions, loss of clients and business, legal claims by clients
and unfavorable publicity or damage to our reputation. We could also face significant compliance and operational burdens and
incur significant costs in our efforts to comply with or rectify non-compliance with these laws or regulations. Such burdens or
costs may result in an adverse effect on our financial condition and results of operations.
We commit significant financial and managerial resources to comply with our internal control over financial reporting
requirements, but we have in the past identified and may in the future identify material weaknesses or significant deficiencies in
our internal control over financial reporting that cause us to incur incremental remediation costs in order to maintain adequate
controls.
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. 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.
Changes in tax laws or in their interpretation or enforcement, failure by us to adapt our corporate structure and
intercompany arrangements or adverse outcomes of tax audits, investigations or proceedings could have a material
adverse effect on our effective tax rate, results of operations and financial condition.
The interpretation of tax laws and regulations in the many jurisdictions in which we operate and the related tax accounting
principles are complex and require considerable judgment to determine our income taxes and other tax liabilities worldwide.
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. We routinely review and update our corporate structure and
intercompany arrangements, including transfer pricing policies, consistent with applicable laws and regulations, to align with
our evolving business operations across the numerous jurisdictions, such as the United States, India and the United Kingdom, in
which we operate. Failure to successfully adapt our corporate structure and intercompany arrangements to align with our
evolving business operations may increase our worldwide effective tax rate and have a material adverse effect on our earnings,
cash flows and financial condition.
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. For example, our
cash flows could be materially affected by the issuance of additional interpretive guidance by the U.S. Treasury regarding the
capitalization and amortization of research and experimental expenses for tax purposes, as more fully described in Note 11 to
the consolidated financial statements.
Additionally, we are subject to routine tax audits, investigations and proceedings in various jurisdictions. Tax authorities
have disagreed, and may in the future disagree, with our judgments, and are taking increasingly aggressive positions, including
with respect to our intercompany transactions. For example, we are currently involved in an ongoing dispute with the ITD in
which the ITD asserts that we owe additional taxes for two transactions by which CTS India repurchased shares from its
shareholders, as more fully described in Note 11 to the consolidated financial statements. We may not accurately predict the
outcomes of these audits, investigations and proceedings and the amounts ultimately paid upon their resolution could be
materially different from the amounts previously included in our income tax provision. Adverse outcomes in any such audits,
investigations or proceedings could increase our tax exposure and cause us to incur increased expense, which could materially
adversely affect our results of operations and financial condition.
Our business subjects us to considerable potential exposure to litigation and legal claims and could be materially
adversely affected if we incur legal liability.
We are subject to, and may become a party to, a variety of litigation or other claims and suits that arise from time to time
in the conduct of our business. Our business is subject to the risk of litigation involving current and former employees, clients,
alliance partners, subcontractors, suppliers, competitors, shareholders, government agencies or others through private actions,
class actions, whistleblower claims, administrative proceedings, regulatory actions or other litigation. While we maintain
insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is
subject to various exclusions as well as deductibles and caps on amounts recoverable.
Our client engagements expose us to significant potential legal liability and litigation expense if we fail to meet our
contractual obligations or otherwise breach obligations to third parties or if our subcontractors breach or dispute the terms of
our agreements with them and impede our ability to meet our obligations to our clients. For example, third parties could claim
that we or our clients, whom we typically contractually agree to indemnify with respect to the services and solutions we
provide, infringe upon their IP rights. 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. 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. 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 have also been the subject of a number of putative securities class action complaints and putative
shareholder derivative complaints relating to the matters that were the subject of our now concluded internal investigation into
potential violations of the FCPA and other applicable laws, and may be subject to such legal actions for these or other matters
in the future. See "Part I, Item 3. Legal Proceedings" for more information. We establish reserves for these and other matters
when a loss is considered probable and the amount can be reasonably estimated; however, the estimation of legal reserves and
possible losses involves significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes
inherent in litigation, and the actual losses arising from particular matters may exceed our estimates and materially adversely
affect our results of operations.
Item 1B. Unresolved Staff Comments
None.
Cognizant
22
December 31, 2023 Form 10-K
Cognizant
23
December 31, 2023 Form 10-K
Item 2. Properties
We have operations in major metro areas across nearly 50 countries around the world, with our worldwide headquarters
located in a leased facility in Teaneck, New Jersey in the United States. We utilize a global delivery model with delivery centers
worldwide, including in-country, regional and global delivery centers. We have over 24 million square feet of owned and leased
facilities for our delivery centers. Our largest delivery center presence is in India, representing 90% of our total delivery centers
on a square-foot basis, with the largest presence in Chennai (9 million square feet), Hyderabad (3 million square feet), Pune (3
million square feet), Kolkata (3 million square feet) and Bangalore (2 million square feet). We 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. Our facilities are
used to support clients across all four reportable business segments.
We believe our current facilities are adequate to support our operations in the immediate future, and that we will be able to
obtain suitable additional facilities on commercially reasonable terms as needed.
Item 3. Legal Proceedings
See Note 15 to our consolidated financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
Item 1C. Cybersecurity
Risk Management and Strategy
Cybersecurity risk management is an integral part of our overall enterprise risk management program. 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 framework includes steps for assessing the severity of a cybersecurity threat
(including an escalation process for potentially material cybersecurity threats and incidents to an internal committee comprised
of members of senior management), identifying the source of a cybersecurity threat (including whether the cybersecurity threat
is associated with a third-party service provider), implementing cybersecurity countermeasures and mitigation strategies. 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. We 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.
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. We include data protection and security content as part
of annual training required of employees.
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. In response, we engaged leading outside forensics and cybersecurity experts, launched a comprehensive
containment and remediation effort and forensic investigation, restored the security of our internal systems and networks and
adopted various enhancements to the security of our systems and networks.
Governance
As part of our overall enterprise risk management program, we prioritize the identification and management of
cybersecurity risk at several levels. Our Board of Directors has overall oversight responsibility for our risk management, and
delegates cybersecurity risk management oversight to the Audit Committee, which is responsible for ensuring that management
has processes in place designed to identify and evaluate cybersecurity risks and implement processes and programs to manage
cybersecurity risks and mitigate cybersecurity incidents. The Audit Committee previously utilized an IT Cybersecurity
Subcommittee, comprised of members of the Audit Committee, to assist in carrying out a portion of these responsibilities. In
December 2023, the Audit Committee transitioned away from use of the subcommittee structure. At all times, the full Audit
Committee has maintained and continues to maintain oversight responsibility for cybersecurity risk management.
Management is responsible for identifying, considering and assessing material cybersecurity risks on an ongoing basis,
establishing processes to ensure that such potential cybersecurity risk exposures are monitored, putting in place appropriate
mitigation measures and maintaining cybersecurity programs.
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. The CSO manages multiple teams within Corporate Security
that are operationally responsible for the security of the Company, including Global Cyber Operations, Business Information
Security, Global Business Resilience and Integrated Risk Management, each of which provides regular updates to the CSO
regarding cyber threat intelligence, cyber incidents and cyber risk metrics as part of their security responsibilities. The CSO
works closely with the CIO, who is responsible for Cognizant's information technology and digital transformation strategy.
Together, the CSO and CIO have a mutual set of responsibilities to align, implement, and govern security policies, standards,
and technology controls throughout the enterprise. On a periodic basis, the CSO and CIO provide updates to the Audit
Committee on, among other things, key cybersecurity metrics, status of projects to strengthen the Company's information
security systems and assessments of the Company's security program. The Audit Committee reports to the Board of Directors,
which also receives periodic updates on such matters.
Cognizant
24
December 31, 2023 Form 10-K
Cognizant
25
December 31, 2023 Form 10-K
Item 2. Properties
We have operations in major metro areas across nearly 50 countries around the world, with our worldwide headquarters
located in a leased facility in Teaneck, New Jersey in the United States. We utilize a global delivery model with delivery centers
worldwide, including in-country, regional and global delivery centers. We have over 24 million square feet of owned and leased
facilities for our delivery centers. Our largest delivery center presence is in India, representing 90% of our total delivery centers
on a square-foot basis, with the largest presence in Chennai (9 million square feet), Hyderabad (3 million square feet), Pune (3
million square feet), Kolkata (3 million square feet) and Bangalore (2 million square feet). We 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. Our facilities are
used to support clients across all four reportable business segments.
We believe our current facilities are adequate to support our operations in the immediate future, and that we will be able to
obtain suitable additional facilities on commercially reasonable terms as needed.
Item 3. Legal Proceedings
See Note 15 to our consolidated financial statements.
Item 4. Mine Safety Disclosures
Not applicable.
Item 1C. Cybersecurity
Risk Management and Strategy
Cybersecurity risk management is an integral part of our overall enterprise risk management program. 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 framework includes steps for assessing the severity of a cybersecurity threat
(including an escalation process for potentially material cybersecurity threats and incidents to an internal committee comprised
of members of senior management), identifying the source of a cybersecurity threat (including whether the cybersecurity threat
is associated with a third-party service provider), implementing cybersecurity countermeasures and mitigation strategies. 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. We 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.
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. We include data protection and security content as part
of annual training required of employees.
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. In response, we engaged leading outside forensics and cybersecurity experts, launched a comprehensive
containment and remediation effort and forensic investigation, restored the security of our internal systems and networks and
adopted various enhancements to the security of our systems and networks.
Governance
As part of our overall enterprise risk management program, we prioritize the identification and management of
cybersecurity risk at several levels. Our Board of Directors has overall oversight responsibility for our risk management, and
delegates cybersecurity risk management oversight to the Audit Committee, which is responsible for ensuring that management
has processes in place designed to identify and evaluate cybersecurity risks and implement processes and programs to manage
cybersecurity risks and mitigate cybersecurity incidents. The Audit Committee previously utilized an IT Cybersecurity
Subcommittee, comprised of members of the Audit Committee, to assist in carrying out a portion of these responsibilities. In
December 2023, the Audit Committee transitioned away from use of the subcommittee structure. At all times, the full Audit
Committee has maintained and continues to maintain oversight responsibility for cybersecurity risk management.
Management is responsible for identifying, considering and assessing material cybersecurity risks on an ongoing basis,
establishing processes to ensure that such potential cybersecurity risk exposures are monitored, putting in place appropriate
mitigation measures and maintaining cybersecurity programs.
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. The CSO manages multiple teams within Corporate Security
that are operationally responsible for the security of the Company, including Global Cyber Operations, Business Information
Security, Global Business Resilience and Integrated Risk Management, each of which provides regular updates to the CSO
regarding cyber threat intelligence, cyber incidents and cyber risk metrics as part of their security responsibilities. The CSO
works closely with the CIO, who is responsible for Cognizant's information technology and digital transformation strategy.
Together, the CSO and CIO have a mutual set of responsibilities to align, implement, and govern security policies, standards,
and technology controls throughout the enterprise. On a periodic basis, the CSO and CIO provide updates to the Audit
Committee on, among other things, key cybersecurity metrics, status of projects to strengthen the Company's information
security systems and assessments of the Company's security program. The Audit Committee reports to the Board of Directors,
which also receives periodic updates on such matters.
Cognizant
24
December 31, 2023 Form 10-K
Cognizant
25
December 31, 2023 Form 10-K
PART II
Performance Graph
Item 5. 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 record of our Class A common stock was 102 and the approximate number of beneficial holders of our
Class A common stock was 575,000.
Cash Dividends
During 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. 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.
Issuer Purchases of Equity Securities
Our stock repurchase program, as amended in November 2022, allows for the repurchase of up to $11.5 billion, excluding
fees and expenses, of our Class A common stock through open market purchases, including under a 10b5-1 Plan in accordance
with applicable federal securities laws. 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.
During 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
October 1, 2023 - October 31, 2023
November 1, 2023 - November 30, 2023
December 1, 2023 - December 31, 2023
Total
Total Number
of Shares
Purchased
Average
Price Paid
per Share
— $
2,287,032
1,930,988
4,218,020 $
—
68.38
73.15
70.56
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)
— $
2,287,032
1,930,988
4,218,020
2,075
1,919
1,777
We regularly purchase shares in connection with our stock-based compensation plans as shares of our Class A common
stock are tendered by employees for payment of applicable statutory tax withholdings. For the three months ended
December 31, 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.
$350
$300
$250
$200
$150
$100
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. The stock performance shown on the graph below is not indicative
of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)
Among Cognizant, the S&P 500 Index and the S&P 500 Information Technology Index
Comparison of Cumulative Five Year Total Return
$50
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
S&P 500 Information Technology Index
Cognizant Technology Solutions Corporation
S&P 500 Index
Company / Index
S&P 500 Index
Cognizant Technology Solutions Corp
$ 100 $ 98.93 $ 132.49 $ 145.26 $ 95.09 $ 127.78
S&P 500 Information Technology Index
100
100
131.49
155.68
200.37
164.08
207.21
150.29
216.25
290.92
208.90
329.73
Base
Period
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
(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.
(2) Cumulative total return assumes reinvestment of dividends.
Item 6. [Reserved]
Cognizant
26
December 31, 2023 Form 10-K
Cognizant
27
December 31, 2023 Form 10-K
PART II
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. The stock performance shown on the graph below is not indicative
of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)
Among Cognizant, the S&P 500 Index and the S&P 500 Information Technology Index
Comparison of Cumulative Five Year Total Return
$350
$300
$250
$200
$150
$100
$50
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
S&P 500 Information Technology Index
Cognizant Technology Solutions Corporation
S&P 500 Index
Item 5. 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 record of our Class A common stock was 102 and the approximate number of beneficial holders of our
Class A common stock was 575,000.
Cash Dividends
During 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. 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.
Issuer Purchases of Equity Securities
Our stock repurchase program, as amended in November 2022, allows for the repurchase of up to $11.5 billion, excluding
fees and expenses, of our Class A common stock through open market purchases, including under a 10b5-1 Plan in accordance
with applicable federal securities laws. 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.
During the three months ended December 31, 2023, we repurchased $298 million of our Class A common stock under
our stock repurchase program as follows:
Total Number
of Shares
Purchased
Average
Price Paid
per Share
— $
2,287,032
1,930,988
4,218,020 $
—
68.38
73.15
70.56
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)
— $
2,287,032
1,930,988
4,218,020
2,075
1,919
1,777
Month
October 1, 2023 - October 31, 2023
November 1, 2023 - November 30, 2023
December 1, 2023 - December 31, 2023
Total
withholding obligations.
Recent Sales of Unregistered Securities
None.
We regularly purchase shares in connection with our stock-based compensation plans as shares of our Class A common
stock are tendered by employees for payment of applicable statutory tax withholdings. For the three months ended
December 31, 2023, we purchased 0.2 million shares at an aggregate cost of $15 million in connection with employee tax
Company / Index
Cognizant Technology Solutions Corp
S&P 500 Index
S&P 500 Information Technology Index
Base
Period
12/31/18
$ 100 $ 98.93 $ 132.49 $ 145.26 $ 95.09 $ 127.78
207.21
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.
(2) Cumulative total return assumes reinvestment of dividends.
Item 6. [Reserved]
Cognizant
26
December 31, 2023 Form 10-K
Cognizant
27
December 31, 2023 Form 10-K
164.08
208.90
200.37
290.92
155.68
216.25
131.49
150.29
100
100
12/31/20
12/31/19
12/31/22
12/31/21
12/31/23
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. 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. 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.
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.
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. 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. 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. 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 Results1
Revenues
Income from Operations
Operating Margin
Diluted EPS
$19,428M $19,353M
$2.97B
$2.97B
$2.92B
15.3%
15.3%
15.1%
$2.69B
13.9%
$4.41
$4.21
$4.40
$4.55
FY '22
FY '23
FY '22 FY '23 FY '22 FY '23
FY '22 FY '23 FY '22 FY '23
FY '22 FY '23 FY '22 FY '23
GAAP Adjusted1
GAAP
Adjusted1
GAAP
Adjusted1
Revenue declined $75 million
or 0.4% from 2022; a decline
of 0.3% in constant currency1
Income from Operations
declined $279 million or 9.4%
from 2022
Adjusted Income from
Operations1 declined $50
million or 1.7% from 2022
Operating margin down 140
bps compared to 2022
Diluted EPS declined $0.20 or
4.5% from 2022
Adjusted Operating Margin1
down 20 basis points from
2022
Adjusted Diluted EPS1
increased $0.15 or 3.4% from
2022
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 basis2. 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.
Our operating margin and Adjusted Operating Margin2 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. 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. 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.
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and
talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric
that we believe is most relevant to our business. 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. 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. 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 policies 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 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.
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. 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.
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 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. Risk Factors.
1 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth
are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for
more information and reconciliations to the most directly comparable GAAP financial measures.
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.
Cognizant
28
December 31, 2023 Form 10-K
Cognizant
29
December 31, 2023 Form 10-K
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. 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. 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.
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.
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. 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. 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. 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 Results1
Revenues
Income from Operations
Operating Margin
Diluted EPS
$19,428M $19,353M
$2.97B
$2.97B
$2.92B
15.3%
15.3%
15.1%
$4.41
$4.21
$4.40
$4.55
$2.69B
13.9%
FY '22
FY '23
FY '22 FY '23 FY '22 FY '23
FY '22 FY '23 FY '22 FY '23
FY '22 FY '23 FY '22 FY '23
GAAP Adjusted1
GAAP
Adjusted1
GAAP
Adjusted1
Revenue declined $75 million
or 0.4% from 2022; a decline
of 0.3% in constant currency1
from 2022
Income from Operations
declined $279 million or 9.4%
Operating margin down 140
bps compared to 2022
Diluted EPS declined $0.20 or
4.5% from 2022
Adjusted Income from
Operations1 declined $50
million or 1.7% from 2022
Adjusted Operating Margin1
down 20 basis points from
Adjusted Diluted EPS1
increased $0.15 or 3.4% from
2022
2022
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 basis2. 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.
Our operating margin and Adjusted Operating Margin2 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. 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. 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.
As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and
talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric
that we believe is most relevant to our business. 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. 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. 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 policies 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 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.
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. 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.
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 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. Risk Factors.
1 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted EPS and constant currency revenue growth
are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for
more information and reconciliations to the most directly comparable GAAP financial measures.
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.
Cognizant
28
December 31, 2023 Form 10-K
Cognizant
29
December 31, 2023 Form 10-K
Results of Operations
Revenues - Reportable Business Segments and Geographic Markets
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.
December 31, 2023:
Revenues of $19,353 million across our business segments and geographies were as follows for the year ended
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:
(Dollars in millions, except per share data)
Revenues
Cost of revenues(a)
Selling, general and administrative expenses(a)
Restructuring charges
Depreciation and amortization expense
Income from operations and operating margin
Other income (expense), net
Income before provision for income taxes
Provision for income taxes
Income (loss) from equity method investments
Net income
Diluted EPS
Other Financial Information 3
Adjusted Income From Operations and Adjusted
Operating Margin
Adjusted Diluted EPS
% of
Revenues
100.0
65.4
16.8
1.2
2.7
13.9
14.4
11.0
15.1
2023
$ 19,353
12,664
3,252
229
519
2,689
98
2,787
(668)
7
2,126
4.21
$
$
$
$
2,918
4.55
% of
Increase / Decrease
2022
$ 19,428
12,448
3,443
—
569
2,968
48
3,016
(730)
4
2,290
4.41
$
$
$
$
2,968
4.40
Revenues
100.0
64.1
17.7
—
2.9
15.3
15.5
11.8
15.3
$
(75)
216
(191)
229
(50)
(279)
50
(229)
62
3
(164)
(0.20)
%
(0.4)
1.7
(5.5)
N/A
(8.8)
(9.4)
104.2
(7.6)
(8.5)
75.0
(7.2)
(4.5)
(50)
0.15
(1.7)
3.4
$
$
$
$
$
(a)
N/A
Exclusive of depreciation and amortization expense
Not applicable3
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 contributed 110 basis points of growth to the change in revenues.
Business Segments
Geographic Markets
CMT
$3,242M
P&R
$4,628M
FS
$5,809M
HS
$5,674M
RoW
$1,296M
CE
$1,909M
UK
$1,885M
NA
$14,263M
Increase / (Decrease)
$
%
CC %4
75
114
189
(92)
(75)
4.1
6.4
5.2
3.5
4.3
3.9
(6.6)
(0.4)
(2.6)
(0.3)
2023 as compared to 2022
Increase / (Decrease)
2023 as compared to 2022
$
%
CC %4
(Dollars in millions)
$ (263)
(4.3)
(4.2)
North America
$ (172)
(1.2)
(1.1)
(Dollars in millions)
Financial Services
Health Sciences
Products and Resources
CMT
43
62
83
0.8
1.4
2.6
0.5
1.5
3.1
United Kingdom
Continental Europe
Europe - Total
Total revenues
$
(75)
(0.4)
(0.3)
Rest of World
Total revenues
$
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. Banking 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.
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. See “Non-GAAP Financial Measures” for more
information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
4 Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP. See “Non-
GAAP Financial Measures” for more information.
Cognizant
30
December 31, 2023 Form 10-K
Cognizant
31
December 31, 2023 Form 10-K
Results of Operations
Revenues - Reportable Business Segments and Geographic Markets
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.
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:
(Dollars in millions, except per share data)
2023
Revenues
2022
Revenues
$
%
$ 19,353
100.0
$ 19,428
100.0
$
% of
Increase / Decrease
% of
65.4
16.8
1.2
2.7
13.9
14.4
11.0
15.1
12,448
3,443
—
569
2,968
48
3,016
(730)
4
2,290
4.41
2,968
4.40
$
$
$
$
64.1
17.7
—
2.9
15.3
15.5
11.8
15.3
(75)
216
(191)
229
(50)
(279)
(229)
62
3
$
$
(164)
(0.20)
(0.4)
1.7
(5.5)
N/A
(8.8)
(9.4)
(7.6)
(8.5)
75.0
(7.2)
(4.5)
50
104.2
$
$
(50)
0.15
(1.7)
3.4
Revenues
Cost of revenues(a)
Selling, general and administrative expenses(a)
Restructuring charges
Depreciation and amortization expense
Income from operations and operating margin
Other income (expense), net
Income before provision for income taxes
Provision for income taxes
Income (loss) from equity method investments
Net income
Diluted EPS
Other Financial Information 3
Adjusted Income From Operations and Adjusted
Operating Margin
Adjusted Diluted EPS
12,664
3,252
229
519
2,689
98
2,787
(668)
7
2,126
4.21
2,918
4.55
$
$
$
$
(a)
N/A
Not applicable3
Exclusive of depreciation and amortization expense
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 contributed 110 basis points of growth to the change in revenues.
Revenues of $19,353 million across our business segments and geographies were as follows for the year ended
December 31, 2023:
Business Segments
Geographic Markets
CMT
$3,242M
P&R
$4,628M
FS
$5,809M
HS
$5,674M
RoW
$1,296M
CE
$1,909M
UK
$1,885M
NA
$14,263M
2023 as compared to 2022
Increase / (Decrease)
2023 as compared to 2022
Increase / (Decrease)
(Dollars in millions)
Financial Services
Health Sciences
Products and Resources
CMT
Total revenues
$
$ (263)
43
62
83
(75)
$
%
(4.3)
0.8
1.4
2.6
(0.4)
CC %4
(4.2)
0.5
1.5
3.1
(0.3)
(Dollars in millions)
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total revenues
$
$ (172)
75
114
189
(92)
(75)
$
%
(1.2)
4.1
6.4
5.2
(6.6)
(0.4)
CC %4
(1.1)
3.5
4.3
3.9
(2.6)
(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. Banking 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.
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. See “Non-GAAP Financial Measures” for more
information and reconciliations to the most directly comparable GAAP financial measures, as applicable.
4 Constant currency revenue growth is not a measure of financial performance prepared in accordance with GAAP. See “Non-
GAAP Financial Measures” for more information.
Cognizant
30
December 31, 2023 Form 10-K
Cognizant
31
December 31, 2023 Form 10-K
Cost of Revenues (Exclusive of Depreciation and Amortization Expense)
$12,448M
$12,664M
64.1%
65.4%
2022
2023
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. The increase, as a
percentage of revenues, was due to higher compensation costs
for delivery personnel, primarily as a result of two merit
increase cycles for the majority of our employees since October
2022, partially offset by the benefit of the depreciation of the
Indian rupee against the U.S. dollar and improvement in
profitability of a large contract with a Health Sciences client in
2023.
SG&A Expenses (Exclusive of Depreciation and Amortization Expense)
immigration,
SG&A expenses consist primarily of salaries, incentive-based
compensation, stock-based compensation expense, employee
benefits,
travel, marketing, communications,
management, finance, administrative and occupancy costs. The
decrease, as a percentage of revenues, was primarily due to
the
savings generated from our NextGen program and
beneficial
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.
foreign currency exchange
impact of
$3,443M
$3,252M
17.7%
16.8%
2022
2023
ê $191M
ê
0.9% as a % of
revenues
¡ % of Revenues
Restructuring Charges
Restructuring charges consist of costs related to the NextGen program. 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.
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.
Operating Margin and Adjusted Operating Margin5 - Overall
Operating Income and
Margin
Adjusted Operating
Income and Margin
$2,968M
$2,689M
$2,968M
$2,918M
15.3%
13.9%
15.3%
15.1%
2022
2023
2022
2023
Our 2023 operating margin and Adjusted Operating Margin5
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. 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 Margin5.
5 Adjusted Income From Operations and Adjusted Operating Margin are not measurements of financial performance prepared
in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly
comparable GAAP financial measures, as applicable.
Cognizant
32
December 31, 2023 Form 10-K
Cognizant
33
December 31, 2023 Form 10-K
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. These costs are subject to foreign currency exchange rate
fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge
certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the
exchange rate between the U.S. dollar and the Indian rupee. 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.
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. 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). 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
approximately 347,700 employees as compared to 355,300
employees for the year ended December 31, 2022. 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.
Voluntary Attrition - Tech Services
25.6%
13.8%
2022
2023
Segment Operating Profit
In 2023, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating
segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of
delivery. Specifically, segment operating profit now includes an allocation of both SG&A costs related to our integrated
practices and the excess or shortfall of incentive-based compensation for commercial and delivery employees as compared to
target, which were previously included in "unallocated costs." We have reported 2023 segment operating profits using the new
allocation methodology and have recast the 2022 and 2021 results to conform to the new methodology. See Note 18 to our
audited consolidated financial statements for the recast 2021 segment operating profits.
Segment operating profit and operating margin percentage were as follows:
Financial Services
Health Sciences
Products and Resources
CMT
$1,323M
$1,156M
$1,190M
$1,352M
$1,071M
$984M
21.8%
2022
19.9%
2023
21.1%
2022
23.8%
2023
23.5%
2022
21.3%
2023
$769M
24.3%
2022
$625M
19.3%
2023
Segment operating profit
% Segment operating margin
In 2023, segment operating margins across all our segments were negatively impacted by increased compensation costs,
primarily as a result of two merit increase cycles for the majority of our employees since October 2022, partially offset by the
benefit of the depreciation of the Indian rupee against the U.S. dollar and savings generated from our NextGen program. In
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.
Cost of Revenues (Exclusive of Depreciation and Amortization Expense)
$12,448M
$12,664M
64.1%
65.4%
2022
2023
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. The increase, as a
percentage of revenues, was due to higher compensation costs
for delivery personnel, primarily as a result of two merit
increase cycles for the majority of our employees since October
2022, partially offset by the benefit of the depreciation of the
Indian rupee against the U.S. dollar and improvement in
profitability of a large contract with a Health Sciences client in
2023.
SG&A Expenses (Exclusive of Depreciation and Amortization Expense)
SG&A expenses consist primarily of salaries, incentive-based
compensation, stock-based compensation expense, employee
benefits,
immigration,
travel, marketing, communications,
management, finance, administrative and occupancy costs. 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.
Restructuring Charges
$3,443M
$3,252M
17.7%
16.8%
2022
2023
ê $191M
ê
0.9% as a % of
revenues
¡ % of Revenues
Restructuring charges consist of costs related to the NextGen program. 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
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
audited consolidated financial statements.
Depreciation and Amortization Expense
lives and savings generated from our NextGen program.
Operating Margin and Adjusted Operating Margin5 - Overall
Operating Income and
Margin
Adjusted Operating
Income and Margin
$2,968M
$2,968M
$2,918M
$2,689M
15.3%
13.9%
15.3%
15.1%
2022
2023
2022
2023
Our 2023 operating margin and Adjusted Operating Margin5
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. 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 Margin5.
5 Adjusted Income From Operations and Adjusted Operating Margin are not measurements of financial performance prepared
in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly
comparable GAAP financial measures, as applicable.
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. These costs are subject to foreign currency exchange rate
fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge
certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the
exchange rate between the U.S. dollar and the Indian rupee. 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.
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. 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). 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
approximately 347,700 employees as compared to 355,300
employees for the year ended December 31, 2022. 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.
Voluntary Attrition - Tech Services
25.6%
13.8%
2022
2023
Segment Operating Profit
In 2023, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating
segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of
delivery. Specifically, segment operating profit now includes an allocation of both SG&A costs related to our integrated
practices and the excess or shortfall of incentive-based compensation for commercial and delivery employees as compared to
target, which were previously included in "unallocated costs." We have reported 2023 segment operating profits using the new
allocation methodology and have recast the 2022 and 2021 results to conform to the new methodology. See Note 18 to our
audited consolidated financial statements for the recast 2021 segment operating profits.
Segment operating profit and operating margin percentage were as follows:
Financial Services
Health Sciences
Products and Resources
CMT
$1,323M
$1,156M
$1,190M
$1,352M
$1,071M
$984M
21.8%
2022
19.9%
2023
21.1%
2022
23.8%
2023
23.5%
2022
21.3%
2023
$769M
24.3%
2022
$625M
19.3%
2023
Segment operating profit
% Segment operating margin
In 2023, segment operating margins across all our segments were negatively impacted by increased compensation costs,
primarily as a result of two merit increase cycles for the majority of our employees since October 2022, partially offset by the
benefit of the depreciation of the Indian rupee against the U.S. dollar and savings generated from our NextGen program. In
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.
Cognizant
32
December 31, 2023 Form 10-K
Cognizant
33
December 31, 2023 Form 10-K
Portions of our disclosure include non-GAAP financial measures. These non-GAAP financial measures are not based on
any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other
companies. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements
prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to the corresponding GAAP
measures set forth below should be carefully evaluated.
Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual
items, such as NextGen charges. 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. For further detail on
the NextGen charges, see Note 4 to our audited consolidated financial statements. The income tax impact of each item excluded
from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the
item was incurred. 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.
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced
transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and
non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to
determine portions of the compensation for executive officers and for making comparisons of our operating results to those of
our competitors. We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in
conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can
provide useful supplemental information to our management and investors regarding financial and business trends relating to
our financial condition and results of operations.
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. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the
usefulness of these non-GAAP financial measures as a comparative tool. We compensate for these limitations by providing
specific information regarding the GAAP amounts excluded from non-GAAP financial measures to allow investors to evaluate
such non-GAAP financial measures.
Total segment operating profit was as follows for the year ended December 31:
Non-GAAP Financial Measures
(Dollars in millions)
Total segment operating profit
Less: unallocated costs
Income from operations
2023
% of
Revenues
2022
% of
Revenues
Increase /
(Decrease)
$
4,117
21.3 $
4,353
22.4 $
(236)
1,428
7.4
1,385
7.1
43
$
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.
Other Income (Expense), Net
Total other income (expense), net consists primarily of foreign currency exchange gains and losses, interest income and
interest expense. The following table sets forth total other income (expense), net for the years ended December 31:
(in millions)
Foreign currency exchange gains (losses)
(Losses) gains on foreign exchange forward contracts not designated as hedging
instruments
Foreign currency exchange gains (losses), net
Interest income
Interest expense
Other, net
Total other income (expense), net
2023
2022
Increase /
Decrease
$
42
$
(16)
$
58
(40)
2
126
(41)
11
98
$
23
7
59
(19)
1
48
$
(63)
(5)
67
(22)
10
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 gains on foreign exchange forward
contracts not designated as hedging instruments related to the realized and unrealized gains and losses on contracts 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 increase in interest income and interest expense was each primarily attributable to higher interest rates in the
current period.
Provision for Income Taxes
$730M
$668M
24.2%
24.0%
2022
2023
ê $62M
¡ Effective Income Tax
Rate ê 0.2%
The effective income tax rate decreased primarily driven by the
geographical mix of earnings in 2023 as compared to 2022. 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. 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. 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.
Net Income
The 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.
$2,290M
$2,126M
ê $164M
11.8%
11.0%
2022
2023
ê 0.8% as a % of revenues
¡ % of Revenues
Cognizant
34
December 31, 2023 Form 10-K
Cognizant
35
December 31, 2023 Form 10-K
Total segment operating profit was as follows for the year ended December 31:
Non-GAAP Financial Measures
Portions of our disclosure include non-GAAP financial measures. These non-GAAP financial measures are not based on
any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial
measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other
companies. In addition, these non-GAAP financial measures should be read in conjunction with our financial statements
prepared in accordance with GAAP. The reconciliations of non-GAAP financial measures to the corresponding GAAP
measures set forth below should be carefully evaluated.
Our non-GAAP financial measures Adjusted Operating Margin and Adjusted Income from Operations exclude unusual
items, such as NextGen charges. 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. For further detail on
the NextGen charges, see Note 4 to our audited consolidated financial statements. The income tax impact of each item excluded
from Adjusted Diluted EPS is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the
item was incurred. 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.
We believe providing investors with an operating view consistent with how we manage the Company provides enhanced
transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and
non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to
determine portions of the compensation for executive officers and for making comparisons of our operating results to those of
our competitors. We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in
conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can
provide useful supplemental information to our management and investors regarding financial and business trends relating to
our financial condition and results of operations.
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. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the
usefulness of these non-GAAP financial measures as a comparative tool. We compensate for these limitations by providing
specific information regarding the GAAP amounts excluded from non-GAAP financial measures to allow investors to evaluate
such non-GAAP financial measures.
2023
% of
Revenues
2022
% of
Revenues
Increase /
(Decrease)
$
4,117
21.3 $
4,353
22.4 $
(236)
1,428
7.4
1,385
7.1
43
$
2,689
13.9 $
2,968
15.3 $
(279)
(Dollars in millions)
Total segment operating profit
Less: unallocated costs
Income from operations
Other Income (Expense), Net
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 other income (expense), net consists primarily of foreign currency exchange gains and losses, interest income and
interest expense. The following table sets forth total other income (expense), net for the years ended December 31:
(in millions)
Foreign currency exchange gains (losses)
(Losses) gains on foreign exchange forward contracts not designated as hedging
Foreign currency exchange gains (losses), net
instruments
Interest income
Interest expense
Other, net
2023
2022
Increase /
Decrease
$
42
$
(16)
$
58
(40)
2
126
(41)
11
98
23
7
59
1
48
(19)
(63)
(5)
67
(22)
10
50
Total other income (expense), net
$
$
$
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 gains on foreign exchange forward
contracts not designated as hedging instruments related to the realized and unrealized gains and losses on contracts 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 increase in interest income and interest expense was each primarily attributable to higher interest rates in the
current period.
Provision for Income Taxes
$730M
$668M
24.2%
24.0%
2022
2023
The effective income tax rate decreased primarily driven by the
geographical mix of earnings in 2023 as compared to 2022. See
Note 11 to our consolidated financial statements for additional
ê $62M
¡ Effective Income Tax
Rate ê 0.2%
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. 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. 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.
Net Income
The 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.
$2,290M
$2,126M
ê $164M
11.8%
11.0%
2022
2023
ê 0.8% as a % of revenues
¡ % of Revenues
Cognizant
34
December 31, 2023 Form 10-K
Cognizant
35
December 31, 2023 Form 10-K
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:
Liquidity and Capital Resources
(Dollars in millions, except per share data)
GAAP income from operations and operating margin
NextGen charges (1)
Adjusted Income From Operations and Adjusted Operating Margin
GAAP diluted EPS
Effect of NextGen charges, pre-tax
Effect of non-operating foreign currency exchange losses (gains),
pre-tax (2)
Tax effect of above adjustments (3)
Effect of recognition of income tax benefit related to an uncertain
tax position (4)
Adjusted Diluted EPS
Net cash provided by operating activities
Purchases of property and equipment
Free cash flow
2023
% of
Revenues
2022
% of
Revenues
$
2,689
13.9 %
$
2,968
15.3 %
Cash generated from operations has historically been our primary source of liquidity to fund operations and investments to
grow our business. As of December 31, 2023, we had cash, cash equivalents and short-term investments of $2,635 million.
Additionally, as of December 31, 2023, we had available capacity under our credit facilities of approximately $2.0 billion.
—
15.3 %
The following table provides a summary of our cash flows for the years ended December 31:
$
$
$
$
229
2,918
4.21
0.45
—
(0.11)
—
4.55
2,330
(317)
1.2
15.1 %
$
$
$
$
—
2,968
4.41
—
(0.01)
0.07
(0.07)
4.40
2,568
(332)
$
2,013
$
2,236
(1)
(2)
(3)
(4)
As part of the NextGen program, during the year ended December 31, 2023, we incurred employee separation, facility
exit and other costs. See Note 4 to our audited consolidated financial statements for additional information.
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.
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
Foreign currency exchange gains and losses
$
59 $
(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.
As such, the income tax effect of non-operating foreign currency exchange gains and losses shown in the above table
may not appear proportionate to the net pre-tax foreign currency exchange gains and losses reported in our
consolidated statements of operations.
As previously reported in our 2022 Annual Report on Form 10-K, during the three months ended September 30, 2022,
we recognized an income tax benefit of $36 million related to a specific uncertain tax position that was previously
unrecognized in our prior-year consolidated financial statements. The recognition of the benefit in the third quarter of
2022 was based on management’s reassessment regarding whether this unrecognized tax benefit met the more-likely-
than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit.
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Other Cash Flow Information6
Free cash flow
Operating activities6
2023
2022
Increase /
Decrease
$
2,330 $
2,568 $
(331)
(106)
(1,609)
(1,939)
(238)
(225)
330
2,013
2,236
(223)
The decrease in cash provided by operating activities in 2023 compared to 2022 was primarily driven by an increase in
income tax payments. In 2023, we made tax payments related to the mandatory capitalization of research and experimental
expenditures for the 2022 tax year of approximately $300 million as well as the estimated tax payments for 2023 of
approximately $230 million. Cash provided by operating activities for 2023 benefited from improved collections of our trade
accounts receivable as compared to 2022.
We monitor turnover, aging and the collection of trade accounts receivable by client. Our DSO calculation includes trade
accounts receivable, net of allowance for credit losses, and contract assets, reduced by the uncollected portion of our deferred
revenue. DSO was 77 days as of December 31, 2023, 74 days as of December 31, 2022 and 69 days as of December 31, 2021.
Investing activities
Financing activities
common stock.
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.
The decrease in cash used in financing activities in 2023 compared to 2022 was primarily driven by lower repurchases of
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 are required under the Credit Agreement to make scheduled
quarterly principal payments on the Term Loan beginning in December 2023. See Note 10 to our consolidated financial
statements. 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. As of December 31, 2023, we had no
outstanding balance on our revolving credit facility.
In March 2023, our India subsidiary renewed its working capital facility at 15 billion Indian rupee ($180 million at the
December 31, 2023 exchange rate). This facility requires us to repay any balances drawn down within 90 days from the date of
disbursement. There is a 1.0% prepayment penalty applicable to payments made within 30 days after disbursement. This
working capital facility contains affirmative and negative covenants and may be renewed annually. As of December 31, 2023,
we have not borrowed funds under this facility or any of its predecessor facilities.
Cognizant
36
December 31, 2023 Form 10-K
Cognizant
37
December 31, 2023 Form 10-K
6 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial
Measures” for more information.
The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP
Liquidity and Capital Resources
measure, as applicable, for the years ended December 31:
GAAP income from operations and operating margin
$
2,689
13.9 %
$
2,968
15.3 %
Adjusted Income From Operations and Adjusted Operating Margin
2023
% of
Revenues
2022
% of
Revenues
1.2
15.1 %
—
15.3 %
(Dollars in millions, except per share data)
NextGen charges (1)
GAAP diluted EPS
Effect of NextGen charges, pre-tax
pre-tax (2)
Tax effect of above adjustments (3)
tax position (4)
Adjusted Diluted EPS
Net cash provided by operating activities
Purchases of property and equipment
Free cash flow
Effect of non-operating foreign currency exchange losses (gains),
Effect of recognition of income tax benefit related to an uncertain
$
$
$
$
229
2,918
4.21
0.45
—
(0.11)
—
4.55
2,330
(317)
$
$
$
$
—
2,968
4.41
—
(0.01)
0.07
(0.07)
4.40
2,568
(332)
$
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. 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.
(3)
Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income for the years ended
Non-GAAP income tax benefit (expense) related to:
NextGen charges
Foreign currency exchange gains and losses
$
59 $
(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.
As such, the income tax effect of non-operating foreign currency exchange gains and losses shown in the above table
may not appear proportionate to the net pre-tax foreign currency exchange gains and losses reported in our
consolidated statements of operations.
(4)
As previously reported in our 2022 Annual Report on Form 10-K, during the three months ended September 30, 2022,
we recognized an income tax benefit of $36 million related to a specific uncertain tax position that was previously
unrecognized in our prior-year consolidated financial statements. The recognition of the benefit in the third quarter of
2022 was based on management’s reassessment regarding whether this unrecognized tax benefit met the more-likely-
than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit.
Cash generated from operations has historically been our primary source of liquidity to fund operations and investments to
grow our business. As of December 31, 2023, we had cash, cash equivalents and short-term investments of $2,635 million.
Additionally, as of December 31, 2023, we had available capacity under our credit facilities of approximately $2.0 billion.
The following table provides a summary of our cash flows for the years ended December 31:
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Other Cash Flow Information6
Free cash flow
Operating activities6
2023
2022
Increase /
Decrease
$
2,330 $
(331)
(1,609)
2,568 $
(106)
(1,939)
(238)
(225)
330
2,013
2,236
(223)
The decrease in cash provided by operating activities in 2023 compared to 2022 was primarily driven by an increase in
income tax payments. In 2023, we made tax payments related to the mandatory capitalization of research and experimental
expenditures for the 2022 tax year of approximately $300 million as well as the estimated tax payments for 2023 of
approximately $230 million. Cash provided by operating activities for 2023 benefited from improved collections of our trade
accounts receivable as compared to 2022.
We monitor turnover, aging and the collection of trade accounts receivable by client. Our DSO calculation includes trade
accounts receivable, net of allowance for credit losses, and contract assets, reduced by the uncollected portion of our deferred
revenue. DSO was 77 days as of December 31, 2023, 74 days as of December 31, 2022 and 69 days as of December 31, 2021.
Investing activities
December 31:
(in millions)
2023
2022
investments in 2023 as compared to 2022 and higher payments for business combinations in 2023.
The increase in cash used in investing activities in 2023 compared to 2022 was primarily driven by lower net maturities of
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 are required under the Credit Agreement to make scheduled
quarterly principal payments on the Term Loan beginning in December 2023. See Note 10 to our consolidated financial
statements. 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. As of December 31, 2023, we had no
outstanding balance on our revolving credit facility.
In March 2023, our India subsidiary renewed its working capital facility at 15 billion Indian rupee ($180 million at the
December 31, 2023 exchange rate). This facility requires us to repay any balances drawn down within 90 days from the date of
disbursement. There is a 1.0% prepayment penalty applicable to payments made within 30 days after disbursement. This
working capital facility contains affirmative and negative covenants and may be renewed annually. As of December 31, 2023,
we have not borrowed funds under this facility or any of its predecessor facilities.
Cognizant
36
December 31, 2023 Form 10-K
Cognizant
37
December 31, 2023 Form 10-K
6 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial
Measures” for more information.
Capital Allocation Framework
$2,353M
$367M
$1,422M
$2,064M
$409M
$1,064M
$564M
$591M
2022
2023
Our capital allocation framework anticipates the deployment of
approximately 50% of our free cash flow7 for acquisitions,
25% for share repurchases and 25% for dividend payments.
We review our capital allocation on an ongoing basis,
considering our financial performance and liquidity position,
investments required to execute our strategic plans and
initiatives, acquisition opportunities, the economic outlook,
regulatory changes and other relevant factors. 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.
Acquisitions
Share repurchases
Dividend payments
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 part of our ongoing
liquidity assessments, we regularly monitor the mix of our domestic and international cash flows and cash balances. We
evaluate on an ongoing basis what portion of the non-U.S. cash, cash equivalents and short-term investments is needed locally
to execute our strategic plans and what amount is available for repatriation back to the United States.
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. Our remaining Tax
Reform Act transition tax payments are $123 million and $157 million in the years 2024 and 2025, respectively. In 2023, our
Tax Reform Act transition tax payment was $94 million. 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.
In connection with our ongoing dispute with the ITD, on January 8, 2024, the SCI ruled that, in order to proceed with our
appeal, we must deposit 30 billion Indian rupees ($355 million at the December 31, 2023 exchange rate), representing the time
deposits of CTS India under lien, on the condition that, if CTS India prevails at the High Court, the amount deposited will be
returned to CTS India, along with interest accrued, within 4 weeks of the judgment. The SCI also requested the High Court to
consider and dispose of the appeal as expeditiously as possible, preferably within 6 weeks of the January 8, 2024 ruling. We
made the required deposit in January 2024. See Note 11 to our consolidated financial statements.
The ability to expand and grow our business in accordance with current plans, make acquisitions, meet long-term capital
requirements beyond a twelve-month period and execute our capital return plan will depend on many factors, including the rate,
if any, at which cash flow increases, our ability and willingness to pay for acquisitions with capital stock and the availability of
public and private debt, including the ability to extend the maturity of or refinance our existing debt, and equity financing. We
cannot be certain that additional financing, if required, will be available on terms and conditions acceptable to us, if at all.
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our accompanying
consolidated financial statements that have been prepared in accordance with GAAP. We base our estimates on historical
experience, current trends and on various other assumptions that are believed to be relevant at the time our consolidated
financial statements are prepared. We evaluate our estimates on a continuous basis. However, the actual amounts may differ
from the estimates used in the preparation of our consolidated financial statements.
We believe the following accounting estimates are the most critical to aid in fully understanding and evaluating our
consolidated financial statements as they require the most difficult, subjective or complex judgments, resulting from the need to
make estimates about the effect of matters that are inherently uncertain. 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.
Revenue Recognition. 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 application maintenance, quality engineering and
assurance and business process services are recognized using the cost-to-cost method, if the right to invoice is not
representative of the value being delivered. The cost-to-cost method requires estimation of future costs, which is updated as the
project progresses to reflect the latest available information. 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. Determining the consolidated provision for income taxes, deferred income tax assets (and related valuation
allowance, if any) and liabilities requires significant judgment. We are required to calculate and provide for income taxes in
each of the jurisdictions where we operate. Changes in the geographic mix of income before taxes or estimated level of annual
pre-tax income can affect our overall effective income tax rate. In addition, transactions between our affiliated entities are
arranged in accordance with applicable transfer pricing laws, regulations and relevant guidelines. As a result, and due to the
interpretive nature of certain aspects of these laws and guidelines, we have pending applications for APAs before the taxing
authorities in some of our most significant jurisdictions. It could take years for the relevant taxing authorities to negotiate and
conclude these applications. The consolidated provision for income taxes may change period to period based on changes in
facts and circumstances, such as settlements of income tax audits, the expiration of the applicable statute of limitations or
finalization of our applications for APAs.
Our provision for income taxes also includes the impact of reserves established for uncertain income tax positions, as
well as the related interest, which may require us to apply judgment to complex issues and may require an extended period of
time to resolve. 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. 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. We account for business combinations using the
acquisition method which requires us to estimate the fair value of identifiable assets acquired, liabilities assumed, including any
contingent consideration, and any noncontrolling interest in the acquiree to properly allocate purchase price to the individual
assets acquired and liabilities assumed. The allocation of the purchase price utilizes estimates and assumptions in determining
the fair values of identifiable assets acquired and liabilities assumed, especially with respect to intangible assets, including the
timing and amount of forecasted revenues and cash flows, anticipated growth rates, client attrition rates and the discount rate
reflecting the risk inherent in future cash flows.
At each acquisition date, we allocate goodwill and intangible assets to our reporting units based on how we expect each
reporting unit to benefit from the respective business combination. Our seven industry-based operating segments are our
reporting units. We exercise judgment to allocate goodwill to the reporting units expected to benefit from each business
combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying
value. These events or circumstances could include a significant change in the business climate, regulatory environment,
established business plans, operating performance indicators or competition. Evaluation of goodwill for impairment requires
judgment, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units and
determination of the fair value of each reporting unit.
We estimate the fair value of our reporting units using a combination of an income approach, utilizing a discounted cash
flow analysis, and a market approach, using market multiples. Under the income approach, we estimate projected future cash
flows, the timing of such cash flows and long-term growth rates, and determine the appropriate discount rate that reflects the
risk inherent in the projected future cash flows. The discount rate used is based on a market participant weighted-average cost
of capital and may be adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related
to the reporting unit’s ability to execute on the projected future cash flows. Under the market approach, we estimate fair value
based on market multiples of revenues and earnings derived from comparable publicly-traded companies with characteristics
similar to the reporting unit. The estimates used to calculate the fair value of a reporting unit change from year to year based on
operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the
determination of fair value for each reporting unit.
Cognizant
38
December 31, 2023 Form 10-K
Cognizant
39
December 31, 2023 Form 10-K
Capital Allocation Framework
$2,353M
$367M
$1,422M
$2,064M
$409M
$1,064M
$564M
$591M
2022
2023
Our capital allocation framework anticipates the deployment of
approximately 50% of our free cash flow7 for acquisitions,
25% for share repurchases and 25% for dividend payments.
We review our capital allocation on an ongoing basis,
considering our financial performance and liquidity position,
investments required to execute our strategic plans and
initiatives, acquisition opportunities, the economic outlook,
regulatory changes and other relevant factors. As these factors
may change over time, the actual amounts expended on stock
Acquisitions
Share repurchases
Dividend payments
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 part of our ongoing
liquidity assessments, we regularly monitor the mix of our domestic and international cash flows and cash balances. We
evaluate on an ongoing basis what portion of the non-U.S. cash, cash equivalents and short-term investments is needed locally
to execute our strategic plans and what amount is available for repatriation back to the United States.
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. Our remaining Tax
Reform Act transition tax payments are $123 million and $157 million in the years 2024 and 2025, respectively. In 2023, our
Tax Reform Act transition tax payment was $94 million. 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.
In connection with our ongoing dispute with the ITD, on January 8, 2024, the SCI ruled that, in order to proceed with our
appeal, we must deposit 30 billion Indian rupees ($355 million at the December 31, 2023 exchange rate), representing the time
deposits of CTS India under lien, on the condition that, if CTS India prevails at the High Court, the amount deposited will be
returned to CTS India, along with interest accrued, within 4 weeks of the judgment. The SCI also requested the High Court to
consider and dispose of the appeal as expeditiously as possible, preferably within 6 weeks of the January 8, 2024 ruling. We
made the required deposit in January 2024. See Note 11 to our consolidated financial statements.
The ability to expand and grow our business in accordance with current plans, make acquisitions, meet long-term capital
requirements beyond a twelve-month period and execute our capital return plan will depend on many factors, including the rate,
if any, at which cash flow increases, our ability and willingness to pay for acquisitions with capital stock and the availability of
public and private debt, including the ability to extend the maturity of or refinance our existing debt, and equity financing. We
cannot be certain that additional financing, if required, will be available on terms and conditions acceptable to us, if at all.
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our accompanying
consolidated financial statements that have been prepared in accordance with GAAP. We base our estimates on historical
experience, current trends and on various other assumptions that are believed to be relevant at the time our consolidated
financial statements are prepared. We evaluate our estimates on a continuous basis. However, the actual amounts may differ
from the estimates used in the preparation of our consolidated financial statements.
We believe the following accounting estimates are the most critical to aid in fully understanding and evaluating our
consolidated financial statements as they require the most difficult, subjective or complex judgments, resulting from the need to
make estimates about the effect of matters that are inherently uncertain. 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.
Revenue Recognition. 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 application maintenance, quality engineering and
assurance and business process services are recognized using the cost-to-cost method, if the right to invoice is not
representative of the value being delivered. The cost-to-cost method requires estimation of future costs, which is updated as the
project progresses to reflect the latest available information. 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. Determining the consolidated provision for income taxes, deferred income tax assets (and related valuation
allowance, if any) and liabilities requires significant judgment. We are required to calculate and provide for income taxes in
each of the jurisdictions where we operate. Changes in the geographic mix of income before taxes or estimated level of annual
pre-tax income can affect our overall effective income tax rate. In addition, transactions between our affiliated entities are
arranged in accordance with applicable transfer pricing laws, regulations and relevant guidelines. As a result, and due to the
interpretive nature of certain aspects of these laws and guidelines, we have pending applications for APAs before the taxing
authorities in some of our most significant jurisdictions. It could take years for the relevant taxing authorities to negotiate and
conclude these applications. The consolidated provision for income taxes may change period to period based on changes in
facts and circumstances, such as settlements of income tax audits, the expiration of the applicable statute of limitations or
finalization of our applications for APAs.
Our provision for income taxes also includes the impact of reserves established for uncertain income tax positions, as
well as the related interest, which may require us to apply judgment to complex issues and may require an extended period of
time to resolve. 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. 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. We account for business combinations using the
acquisition method which requires us to estimate the fair value of identifiable assets acquired, liabilities assumed, including any
contingent consideration, and any noncontrolling interest in the acquiree to properly allocate purchase price to the individual
assets acquired and liabilities assumed. The allocation of the purchase price utilizes estimates and assumptions in determining
the fair values of identifiable assets acquired and liabilities assumed, especially with respect to intangible assets, including the
timing and amount of forecasted revenues and cash flows, anticipated growth rates, client attrition rates and the discount rate
reflecting the risk inherent in future cash flows.
At each acquisition date, we allocate goodwill and intangible assets to our reporting units based on how we expect each
reporting unit to benefit from the respective business combination. Our seven industry-based operating segments are our
reporting units. We exercise judgment to allocate goodwill to the reporting units expected to benefit from each business
combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an
event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying
value. These events or circumstances could include a significant change in the business climate, regulatory environment,
established business plans, operating performance indicators or competition. Evaluation of goodwill for impairment requires
judgment, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units and
determination of the fair value of each reporting unit.
We estimate the fair value of our reporting units using a combination of an income approach, utilizing a discounted cash
flow analysis, and a market approach, using market multiples. Under the income approach, we estimate projected future cash
flows, the timing of such cash flows and long-term growth rates, and determine the appropriate discount rate that reflects the
risk inherent in the projected future cash flows. The discount rate used is based on a market participant weighted-average cost
of capital and may be adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related
to the reporting unit’s ability to execute on the projected future cash flows. Under the market approach, we estimate fair value
based on market multiples of revenues and earnings derived from comparable publicly-traded companies with characteristics
similar to the reporting unit. The estimates used to calculate the fair value of a reporting unit change from year to year based on
operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the
determination of fair value for each reporting unit.
Cognizant
38
December 31, 2023 Form 10-K
Cognizant
39
December 31, 2023 Form 10-K
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. As of December 31, 2023, our goodwill balance was
$6,085 million.
Foreign Currency Risk
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
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. The carrying amount may not be
recoverable when the sum of undiscounted expected future cash flows is less than the carrying amount of such asset groups.
The impairment loss is determined as the amount by which the carrying amount of the asset group exceeds its fair value.
Assessing the fair value of asset groups involves significant estimates and assumptions including estimation of future cash
flows, the timing of such cash flows and discount rates reflecting the risk inherent in future cash flows.
Recently Adopted and New Accounting Pronouncements
See Note 1 to our consolidated financial statements for additional information.
We are exposed to foreign currency exchange rate risk in the ordinary course of doing business as we transact or hold a
portion of our funds in foreign currencies. Accordingly, we periodically evaluate the need for hedging strategies, including the
use of derivative financial instruments, to mitigate the effect of foreign currency exchange rate fluctuations and expect to
continue to use such instruments in the future to reduce foreign currency exposure to changes in the value of certain foreign
currencies. 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. Accordingly,
our revenues may be affected by fluctuations in the exchange rates, primarily the British pound and the Euro, as 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. These foreign currency exchange
rate fluctuations have an impact on our results of operations.
We have entered into a series of foreign exchange forward and option contracts that are designated as cash flow hedges of
certain Indian rupee denominated payments in India. These U.S. dollar / Indian rupee hedges are intended to partially offset the
impact of movement of exchange rates on future operating costs. As of December 31, 2023, the notional value and weighted
average contract rates of these contracts by year of maturity were as follows:
2024
2025
Total
Notional Value
(in millions)
Weighted Average
Contract Rate (Indian
rupee to U.S. dollar)
$
$
1,878
1,020
2,898
84.3
86.3
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. 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.
A portion of our balance sheet is exposed to foreign currency exchange rate fluctuations, which may result in non-
operating foreign currency exchange gains or losses upon remeasurement. 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. 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. At December 31, 2023, the notional value of these outstanding contracts was $1,317 million and the
net unrealized loss was $8 million. Based upon a sensitivity analysis of our foreign exchange forward contracts at December 31,
2023, which estimates the fair value of the contracts assuming certain market exchange rate fluctuations, a 10.0% change in the
foreign currency exchange rate against the U.S. dollar with all other variables held constant would have resulted in a change in
the fair value of our foreign exchange forward contracts not designated as hedges of approximately $87 million.
Interest Rate Risk
We have a Credit Agreement providing for a $650 million Term Loan and a $1,850 million unsecured revolving credit
facility, which are due to mature in October 2027. 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. Thus, 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.
Cognizant
40
December 31, 2023 Form 10-K
Cognizant
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December 31, 2023 Form 10-K
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. As of December 31, 2023, our goodwill balance was
$6,085 million.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Risk
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. The carrying amount may not be
recoverable when the sum of undiscounted expected future cash flows is less than the carrying amount of such asset groups.
The impairment loss is determined as the amount by which the carrying amount of the asset group exceeds its fair value.
Assessing the fair value of asset groups involves significant estimates and assumptions including estimation of future cash
flows, the timing of such cash flows and discount rates reflecting the risk inherent in future cash flows.
Recently Adopted and New Accounting Pronouncements
See Note 1 to our consolidated financial statements for additional information.
We are exposed to foreign currency exchange rate risk in the ordinary course of doing business as we transact or hold a
portion of our funds in foreign currencies. Accordingly, we periodically evaluate the need for hedging strategies, including the
use of derivative financial instruments, to mitigate the effect of foreign currency exchange rate fluctuations and expect to
continue to use such instruments in the future to reduce foreign currency exposure to changes in the value of certain foreign
currencies. 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. Accordingly,
our revenues may be affected by fluctuations in the exchange rates, primarily the British pound and the Euro, as 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. These foreign currency exchange
rate fluctuations have an impact on our results of operations.
We have entered into a series of foreign exchange forward and option contracts that are designated as cash flow hedges of
certain Indian rupee denominated payments in India. These U.S. dollar / Indian rupee hedges are intended to partially offset the
impact of movement of exchange rates on future operating costs. As of December 31, 2023, the notional value and weighted
average contract rates of these contracts by year of maturity were as follows:
2024
2025
Total
Notional Value
(in millions)
Weighted Average
Contract Rate (Indian
rupee to U.S. dollar)
$
$
1,878
1,020
2,898
84.3
86.3
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. 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.
A portion of our balance sheet is exposed to foreign currency exchange rate fluctuations, which may result in non-
operating foreign currency exchange gains or losses upon remeasurement. 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. 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. At December 31, 2023, the notional value of these outstanding contracts was $1,317 million and the
net unrealized loss was $8 million. Based upon a sensitivity analysis of our foreign exchange forward contracts at December 31,
2023, which estimates the fair value of the contracts assuming certain market exchange rate fluctuations, a 10.0% change in the
foreign currency exchange rate against the U.S. dollar with all other variables held constant would have resulted in a change in
the fair value of our foreign exchange forward contracts not designated as hedges of approximately $87 million.
Interest Rate Risk
We have a Credit Agreement providing for a $650 million Term Loan and a $1,850 million unsecured revolving credit
facility, which are due to mature in October 2027. 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. Thus, 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.
Cognizant
40
December 31, 2023 Form 10-K
Cognizant
41
December 31, 2023 Form 10-K
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. 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
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.
financial statements included in this annual report, has issued an attestation report on our internal control over financial
reporting, as stated in their report which is included on page F-2.
Inherent Limitations of Internal Controls
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Information provided by the sensitivity analysis of foreign currency risk and interest rate risk does not necessarily
represent the actual changes that would occur under normal market conditions.
Item 9B. Other Information
Item 8. Financial Statements and Supplementary Data
The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K. A
list of the financial statements filed herewith is found in Part IV, “Item 15. Exhibits, Financial Statements and Financial
Statement Schedule.”
K).
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
During the three months ended December 31, 2023, no director or Section 16 officer adopted or terminated any Rule
10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer and our chief financial
officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) as of December 31, 2023. Based on this evaluation, our chief
executive officer and our chief financial officer concluded that, as of December 31, 2023, our disclosure controls and
procedures were effective.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934, as amended) that occurred during the fiscal quarter ended December 31, 2023 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as
amended, and is a process designed by, or under the supervision of, our chief executive and chief financial officers and effected
by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that:
•
•
•
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of our management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial statements.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2023. In making this assessment, the Company’s management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).
Based on its evaluation, our management has concluded that, as of December 31, 2023, our internal control over financial
reporting was effective. PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the
Cognizant
42
December 31, 2023 Form 10-K
Cognizant
43
December 31, 2023 Form 10-K
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. 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
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.
financial statements included in this annual report, has issued an attestation report on our internal control over financial
reporting, as stated in their report which is included on page F-2.
Inherent Limitations of Internal Controls
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Information provided by the sensitivity analysis of foreign currency risk and interest rate risk does not necessarily
represent the actual changes that would occur under normal market conditions.
Item 9B. Other Information
Item 8. Financial Statements and Supplementary Data
The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report on Form 10-K. A
list of the financial statements filed herewith is found in Part IV, “Item 15. Exhibits, Financial Statements and Financial
During the three months ended December 31, 2023, no director or Section 16 officer adopted or terminated any Rule
10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-
K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Statement Schedule.”
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer and our chief financial
officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) as of December 31, 2023. Based on this evaluation, our chief
executive officer and our chief financial officer concluded that, as of December 31, 2023, our disclosure controls and
procedures were effective.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934, as amended) that occurred during the fiscal quarter ended December 31, 2023 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as
amended, and is a process designed by, or under the supervision of, our chief executive and chief financial officers and effected
by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that:
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of our management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial statements.
•
•
•
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2023. In making this assessment, the Company’s management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013).
Based on its evaluation, our management has concluded that, as of December 31, 2023, our internal control over financial
reporting was effective. PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the
Cognizant
42
December 31, 2023 Form 10-K
Cognizant
43
December 31, 2023 Form 10-K
Item 10. Directors, Executive Officers and Corporate Governance
PART III
PART IV
The information relating to our executive officers in response to this item is contained in part under the caption
Reference is made to the Index to Consolidated Financial Statements on Page F-1.
“Information About Our Executive Officers” in Part I of this Annual Report on Form 10-K.
We have adopted a written code of ethics, entitled “Code of Ethics,” that applies to all of our directors, executive officers
and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller,
or persons performing similar functions. We make available our code of ethics free of charge through our website which is
located at www.cognizant.com. We intend to post on our website all disclosures that are required by law or Nasdaq Stock
Market listing standards concerning any amendments to, or waivers from, any provision of our code of ethics.
The remaining information required by this item will be included under the caption "Corporate governance" in our
definitive proxy statement for the 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year ended December 31, 2023 and is incorporated herein by
reference to such proxy statement.
Item 11. Executive Compensation
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 14. Principal Accountant Fees and Services
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 15. Exhibits, Financial Statement Schedules
(a)
(1) Consolidated Financial Statements.
(2) Consolidated Financial Statement Schedule.
Reference is made to the Index to Financial Statement Schedule on Page F-1.
(3) Exhibits.
EXHIBIT INDEX
Schedules other than as listed above are omitted as not required or inapplicable or because the required information is
provided in the consolidated financial statements, including the notes thereto.
Number
Exhibit Description
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
Incorporated by Reference
Restated Certificate of Incorporation, dated
June 5, 2018
Amended and Restated Bylaws, as adopted
on September 14, 2018
Specimen Certificate for shares of Class A
common stock
Description of Capital Stock
8-K
000-24429
3.1
6/7/2018
8-K
000-24429
3.1
9/20/2018
S-4/A 333-101216
10-K
000-24429
4.2
4.2
1/30/2003
2/14/2020
10.1†
Form of Indemnification Agreement for
Directors and Officers
10-Q
000-24429 10.1
8/7/2013
3.1
3.2
4.1
4.2
10.2†
10.3†
10.4†
10.5†
10.6†
10.7†
Form of Amended and Restated Executive
Employment and Non-Disclosure, Non-
Competition, and Invention Assignment
Agreement, between the Company and each
of the following current or former Executive
Officers: Brian Humphries, Jan Siegmund,
Becky Schmitt, Robert Telesmanic, Balu
Ganesh Ayyar and John Kim
2022 Form of Executive Employment and
Non-Disclosure, Non-Competition and
Invention Assignment Agreement between
the Company and each of the following
current or former Executive Officers: Surya
Gummadi, Kathryn Diaz and Jatin Dalal
UK Form of Executive Employment and
Non-Disclosure, Non-Competition and
Invention Assignment Agreement, entered
into between the Company and the
Executive Employment and Non-Disclosure,
Non-Competition and Invention Assignment
Agreement, entered into between the
Company and Ravi Kumar Singisetti, dated
effective January 12, 2023
Letter Agreement, dated as of December 9,
2022, by and between the Company and
Brian Humphries regarding Base Pay
Denomination Adjustment
Letter Agreement, dated as of January 9,
2023, by and among Cognizant Worldwide
Limited, the Company and Brian Humphries
amendment Employment Agreement
10-K
000-24429 10.3
2/27/2018
10-Q
000-24429 10.1
7/28/2022
8-K
000-24429 10.2
1/12/2023
10-K
000-24429 10.6
2/15/2023
8-K
000-24429 10.3
1/12/2023
following Executive Officer: Robert Walker
10-Q
000-24429 10.2
7/28/2022
Cognizant
44
December 31, 2023 Form 10-K
Cognizant
45
December 31, 2023 Form 10-K
Item 10. Directors, Executive Officers and Corporate Governance
Item 15. Exhibits, Financial Statement Schedules
PART III
PART IV
The information relating to our executive officers in response to this item is contained in part under the caption
“Information About Our Executive Officers” in Part I of this Annual Report on Form 10-K.
We have adopted a written code of ethics, entitled “Code of Ethics,” that applies to all of our directors, executive officers
and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller,
or persons performing similar functions. We make available our code of ethics free of charge through our website which is
located at www.cognizant.com. We intend to post on our website all disclosures that are required by law or Nasdaq Stock
Market listing standards concerning any amendments to, or waivers from, any provision of our code of ethics.
The remaining information required by this item will be included under the caption "Corporate governance" in our
definitive proxy statement for the 2024 Annual Meeting of Stockholders, which will be filed with the SEC pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year ended December 31, 2023 and is incorporated herein by
reference to such proxy statement.
Item 11. Executive Compensation
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
Item 14. Principal Accountant Fees and Services
The information required by this item will be included in our definitive proxy statement for the 2024 Annual Meeting of
Stockholders and is incorporated herein by reference to such proxy statement.
(a)
(1) Consolidated Financial Statements.
Reference is made to the Index to Consolidated Financial Statements on Page F-1.
(2) Consolidated Financial Statement Schedule.
Reference is made to the Index to Financial Statement Schedule on Page F-1.
(3) Exhibits.
Schedules other than as listed above are omitted as not required or inapplicable or because the required information is
provided in the consolidated financial statements, including the notes thereto.
EXHIBIT INDEX
Number
3.1
3.2
4.1
4.2
10.1†
10.2†
10.3†
10.4†
10.5†
10.6†
10.7†
Exhibit Description
Restated Certificate of Incorporation, dated
June 5, 2018
Amended and Restated Bylaws, as adopted
on September 14, 2018
Specimen Certificate for shares of Class A
common stock
Description of Capital Stock
Form of Indemnification Agreement for
Directors and Officers
Form of Amended and Restated Executive
Employment and Non-Disclosure, Non-
Competition, and Invention Assignment
Agreement, between the Company and each
of the following current or former Executive
Officers: Brian Humphries, Jan Siegmund,
Becky Schmitt, Robert Telesmanic, Balu
Ganesh Ayyar and John Kim
2022 Form of Executive Employment and
Non-Disclosure, Non-Competition and
Invention Assignment Agreement between
the Company and each of the following
current or former Executive Officers: Surya
Gummadi, Kathryn Diaz and Jatin Dalal
UK Form of Executive Employment and
Non-Disclosure, Non-Competition and
Invention Assignment Agreement, entered
into between the Company and the
following Executive Officer: Robert Walker
Executive Employment and Non-Disclosure,
Non-Competition and Invention Assignment
Agreement, entered into between the
Company and Ravi Kumar Singisetti, dated
effective January 12, 2023
Letter Agreement, dated as of December 9,
2022, by and between the Company and
Brian Humphries regarding Base Pay
Denomination Adjustment
Letter Agreement, dated as of January 9,
2023, by and among Cognizant Worldwide
Limited, the Company and Brian Humphries
amendment Employment Agreement
Incorporated by Reference
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
8-K
000-24429
3.1
6/7/2018
8-K
000-24429
3.1
9/20/2018
S-4/A 333-101216
10-K
000-24429
4.2
4.2
1/30/2003
2/14/2020
10-Q
000-24429 10.1
8/7/2013
10-K
000-24429 10.3
2/27/2018
10-Q
000-24429 10.1
7/28/2022
10-Q
000-24429 10.2
7/28/2022
8-K
000-24429 10.2
1/12/2023
10-K
000-24429 10.6
2/15/2023
8-K
000-24429 10.3
1/12/2023
Cognizant
44
December 31, 2023 Form 10-K
Cognizant
45
December 31, 2023 Form 10-K
Number
10.8†
10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20†
10.21†
10.22†
10.23†
10.24†
10.25†
10.26†
10.27†
Exhibit Description
Offer Letter, by and between the Company
and Brian Humphries, acknowledged and
agreed November 30, 2018
Offer Letter, by and between the Company
and Jan Siegmund, acknowledged and
agreed July 8, 2020
Offer Letter, by and between the Company
and Becky Schmitt, acknowledged and
agreed November 26, 2019
Offer Letter, by and between the Company
and Ravi Kumar Singisetti, acknowledged
and agreed January 9, 2023
Offer Letter, by and between the Company
and Jatin Dalal, acknowledged and agreed
September 25, 2023
Non-Employee Director Compensation
Guidelines (effective as of June 6, 2023)
2004 Employee Stock Purchase Plan (as
amended and restated effective as of January
1, 2022)
Cognizant Technology Solutions
Corporation Amended and Restated 2009
Incentive Compensation Plan, effective
March 9, 2015
Form of Restricted Stock Unit Award
Agreement Non-Employee Director
Deferred Issuance
Form of Cognizant Technology Solutions
Corporation Notice of Award of Restricted
Stock Units Non-Employee Director
Deferred Issuance
Cognizant Technology Solutions
Corporation 2017 Incentive Award Plan
Form of Restricted Stock Unit Award Grant
Notice
Form of Performance-Based Restricted
Stock Unit Award Grant Notice
Form of Restricted Stock Unit Award Grant
Notice
Form of Stock Option Grant Notice and
Stock Option Agreement
Form of Restricted Stock Unit Award Grant
Notice (March 5, 2020 form)
Form of Performance-Based Restricted
Stock Unit Award Grant Notice (March 5,
2020 form)
Cognizant Technology Solutions
Corporation 2023 Incentive Award Plan
Form of Cognizant Technology Solutions
Corporation Restricted Stock Unit Award
Grant Notice for Employees, including
Executive Officers
Form of Cognizant Technology Solutions
Corporation Performance-Based Restricted
Stock Unit Award Grant Notice
Incorporated by Reference
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
Exhibit Description
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
Incorporated by Reference
10-K
000-24429 10.4
2/19/2019
8-K
000-24429 10.1
7/29/2020
10-K
000-24429 10.6
2/12/2021
8-K
000-24429 10.1
1/12/2023
8-K
000-24429 10.1
9/28/2023
10-Q
000-24429 10.9
8/3/2023
10-K
000-24429 10.7
2/16/2022
10.34
Credit Agreement, dated as of October 6,
10-Q
000-24429 10.1
5/4/2015
8-K
000-24429 10.7
7/6/2009
8-K
000-24429 10.8
7/6/2009
8-K
000-24429 10.1
6/7/2017
10-Q
000-24429 10.2
8/3/2017
10-Q
000-24429 10.3
8/3/2017
10-Q
000-24429 10.4
8/3/2017
10-Q
000-24429 10.5
8/3/2017
10-Q
000-24429 10.1
5/8/2020
10-Q
000-24429 10.2
5/8/2020
S-8
333-27244 99.1
6/6/2023
101.SCH
Inline XBRL Taxonomy Extension Schema
10-Q
000-24429 10.3
8/3/2023
10-Q
000-24429 10.4
8/3/2023
10-Q
000-24429 10.5
8/3/2023
10-Q
000-24429 10.6
8/3/2023
10-Q
000-24429 10.7
8/3/2023
10-Q
10-Q
000-24429 10.8
8/3/2023
000-24429 10.1
7/30/2020
8-K
000-24429 10.1
3/6/2023
8-K
000-24429 10.1
10/7/2022
Number
10.28†
10.29†
10.30†
10.31†
10.32†
10.33†
21.1
23.1
31.1
31.2
32.1
32.2
97.1
Form of Cognizant Technology Solutions
Corporation Restricted Stock Unit Award
Grant Notice for Non-Employee Director
(Non-Deferred)
Form of Cognizant Technology Solutions
Corporation Restricted Stock Unit Award
Grant Notice Non-Employee Director
(Deferred Settlement)
Form of Cognizant Technology Solutions
Corporation Deferred Stock Unit Award
Grant Notice Non-Employee Director (for
Deferred Equity in lieu of Cash Retainer)
Letter Agreement with each of Steven
Rohleder and Sandra Wijnberg regarding
grant of dividend equivalents on previously
issued Deferred Stock Units
Retirement, Death and Disability Policy
Cognizant Technology Solutions
Corporation Senior Executive Cash
Severance Policy
2022, among Cognizant Technology
Solutions Corporation, Cognizant
Worldwide Limited, certain financial
institutions party thereto and JPMorgan
Chase Bank, N.A., as administrative agent
List of subsidiaries of the Company
Consent of PricewaterhouseCoopers LLP
Certification Pursuant to Rule 13a-14(a) and
15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 (Chief Executive Officer)
Certification Pursuant to Rule 13a-14(a) and
15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 (Chief Financial Officer)
Certification Pursuant to 18 U.S.C.
Section 1350 (Chief Executive Officer)
Certification Pursuant to 18 U.S.C.
Section 1350 (Chief Financial Officer)
Cognizant Technology Solutions
Corporation Rule 10D-1 Compensation
Recoupment (Clawback) Policy adopted
September 6, 2023
101.INS
Inline XBRL Instance Document - the
instance document does not appear in the
Interactive Data File because its XBRL tags
are embedded within the Inline XBRL
document.
Document
101.CAL
101.DEF
Inline XBRL Taxonomy Extension
Calculation Linkbase Document
Inline XBRL Taxonomy Extension
Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label
Linkbase Document
Furnished
Furnished
Filed
Filed
Filed
Filed
Filed
Filed
Filed
Filed
Filed
Filed
Cognizant
46
December 31, 2023 Form 10-K
Cognizant
47
December 31, 2023 Form 10-K
Incorporated by Reference
Incorporated by Reference
Exhibit Description
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
10-K
000-24429 10.4
2/19/2019
8-K
000-24429 10.1
7/29/2020
10-K
000-24429 10.6
2/12/2021
Number
10.8†
Offer Letter, by and between the Company
and Brian Humphries, acknowledged and
agreed November 30, 2018
10.9†
Offer Letter, by and between the Company
and Jan Siegmund, acknowledged and
agreed July 8, 2020
10.10†
Offer Letter, by and between the Company
and Becky Schmitt, acknowledged and
agreed November 26, 2019
10.11†
Offer Letter, by and between the Company
and Ravi Kumar Singisetti, acknowledged
10.12†
Offer Letter, by and between the Company
and Jatin Dalal, acknowledged and agreed
10.14†
2004 Employee Stock Purchase Plan (as
amended and restated effective as of January
10.15†
10.16†
10.17†
Cognizant Technology Solutions
Corporation Amended and Restated 2009
Incentive Compensation Plan, effective
March 9, 2015
Form of Restricted Stock Unit Award
Agreement Non-Employee Director
Deferred Issuance
Form of Cognizant Technology Solutions
Corporation Notice of Award of Restricted
Stock Units Non-Employee Director
Deferred Issuance
10.18†
Cognizant Technology Solutions
Corporation 2017 Incentive Award Plan
10.19†
Form of Restricted Stock Unit Award Grant
and agreed January 9, 2023
8-K
000-24429 10.1
1/12/2023
September 25, 2023
8-K
000-24429 10.1
9/28/2023
10.13†
Non-Employee Director Compensation
Guidelines (effective as of June 6, 2023)
10-Q
000-24429 10.9
8/3/2023
1, 2022)
10-K
000-24429 10.7
2/16/2022
10-Q
000-24429 10.1
5/4/2015
8-K
000-24429 10.7
7/6/2009
8-K
000-24429 10.8
7/6/2009
8-K
000-24429 10.1
6/7/2017
10-Q
000-24429 10.2
8/3/2017
Notice
Notice
10.20†
Form of Performance-Based Restricted
Stock Unit Award Grant Notice
10-Q
000-24429 10.3
8/3/2017
10.21†
Form of Restricted Stock Unit Award Grant
10-Q
000-24429 10.4
8/3/2017
10.22†
Form of Stock Option Grant Notice and
Stock Option Agreement
10-Q
000-24429 10.5
8/3/2017
10.23†
Form of Restricted Stock Unit Award Grant
Notice (March 5, 2020 form)
10-Q
000-24429 10.1
5/8/2020
10.24†
10.25†
10.26†
10.27†
Form of Performance-Based Restricted
Stock Unit Award Grant Notice (March 5,
2020 form)
Cognizant Technology Solutions
Corporation 2023 Incentive Award Plan
Form of Cognizant Technology Solutions
Corporation Restricted Stock Unit Award
Grant Notice for Employees, including
Executive Officers
Form of Cognizant Technology Solutions
Corporation Performance-Based Restricted
Stock Unit Award Grant Notice
10-Q
000-24429 10.2
5/8/2020
S-8
333-27244 99.1
6/6/2023
10-Q
000-24429 10.3
8/3/2023
10-Q
000-24429 10.4
8/3/2023
Number
10.28†
10.29†
10.30†
10.31†
10.32†
10.33†
10.34
21.1
23.1
31.1
31.2
32.1
32.2
97.1
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
Exhibit Description
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
10-Q
000-24429 10.5
8/3/2023
10-Q
000-24429 10.6
8/3/2023
10-Q
000-24429 10.7
8/3/2023
10-Q
10-Q
000-24429 10.8
8/3/2023
000-24429 10.1
7/30/2020
8-K
000-24429 10.1
3/6/2023
8-K
000-24429 10.1
10/7/2022
Form of Cognizant Technology Solutions
Corporation Restricted Stock Unit Award
Grant Notice for Non-Employee Director
(Non-Deferred)
Form of Cognizant Technology Solutions
Corporation Restricted Stock Unit Award
Grant Notice Non-Employee Director
(Deferred Settlement)
Form of Cognizant Technology Solutions
Corporation Deferred Stock Unit Award
Grant Notice Non-Employee Director (for
Deferred Equity in lieu of Cash Retainer)
Letter Agreement with each of Steven
Rohleder and Sandra Wijnberg regarding
grant of dividend equivalents on previously
issued Deferred Stock Units
Retirement, Death and Disability Policy
Cognizant Technology Solutions
Corporation Senior Executive Cash
Severance Policy
Credit Agreement, dated as of October 6,
2022, among Cognizant Technology
Solutions Corporation, Cognizant
Worldwide Limited, certain financial
institutions party thereto and JPMorgan
Chase Bank, N.A., as administrative agent
List of subsidiaries of the Company
Consent of PricewaterhouseCoopers LLP
Certification Pursuant to Rule 13a-14(a) and
15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 (Chief Executive Officer)
Certification Pursuant to Rule 13a-14(a) and
15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 (Chief Financial Officer)
Certification Pursuant to 18 U.S.C.
Section 1350 (Chief Executive Officer)
Certification Pursuant to 18 U.S.C.
Section 1350 (Chief Financial Officer)
Cognizant Technology Solutions
Corporation Rule 10D-1 Compensation
Recoupment (Clawback) Policy adopted
September 6, 2023
Inline XBRL Instance Document - the
instance document does not appear in the
Interactive Data File because its XBRL tags
are embedded within the Inline XBRL
document.
Inline XBRL Taxonomy Extension Schema
Document
Inline XBRL Taxonomy Extension
Calculation Linkbase Document
Inline XBRL Taxonomy Extension
Definition Linkbase Document
Inline XBRL Taxonomy Extension Label
Linkbase Document
Filed
Filed
Filed
Filed
Furnished
Furnished
Filed
Filed
Filed
Filed
Filed
Filed
Cognizant
46
December 31, 2023 Form 10-K
Cognizant
47
December 31, 2023 Form 10-K
Number
101.PRE
104
Exhibit Description
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
Incorporated by Reference
Inline XBRL Taxonomy Extension
Presentation Linkbase Document
Cover Page Interactive Data File (formatted
as Inline XBRL and contained in Exhibit
101)
Filed
Filed
†
A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(a)(3) of Form 10-K.
Item 16. Form 10-K Summary
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
SIGNATURES
By:
/S/ RAVI KUMAR S
Ravi Kumar S,
Chief Executive Officer
(Principal Executive Officer)
Date:
February 14, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ RAVI KUMAR S
Ravi Kumar S
/s/ JATIN DALAL
Jatin Dalal
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
/s/ ROBERT TELESMANIC
Robert Telesmanic
Senior Vice President, Controller and Chief
Accounting Officer
(Principal Accounting Officer)
/s/ STEPHEN J. ROHLEDER
Chair of the Board and Director
Director
Director
Stephen J. Rohleder
/s/ ZEIN ABDALLA
Zein Abdalla
/s/ VINITA BALI
Vinita Bali
Eric Branderiz
Archana Deskus
John M. Dineen
/s/ ERIC BRANDERIZ
Director
/s/ ARCHANA DESKUS
Director
/s/ JOHN M. DINEEN
Director
/s/ LEO S. MACKAY, JR.
Director
Leo S. Mackay, Jr.
/s/ MICHAEL PATSALOS-FOX
Director
Michael Patsalos-Fox
/s/ ABRAHAM SCHOT
Abraham Schot
Director
/s/ JOSEPH M. VELLI
Director
Joseph M. Velli
/s/ SANDRA S. WIJNBERG
Director
Sandra S. Wijnberg
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
Cognizant
48
December 31, 2023 Form 10-K
Cognizant
49
December 31, 2023 Form 10-K
Number
101.PRE
Inline XBRL Taxonomy Extension
Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted
as Inline XBRL and contained in Exhibit
101)
Item 15(a)(3) of Form 10-K.
Item 16. Form 10-K Summary
None.
†
A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Filed
Filed
Exhibit Description
Form
File No.
Exhibit
Date
Filed or Furnished
Herewith
Incorporated by Reference
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
SIGNATURES
By:
/S/ RAVI KUMAR S
Ravi Kumar S,
Chief Executive Officer
(Principal Executive Officer)
Date:
February 14, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ RAVI KUMAR S
Ravi Kumar S
/s/ JATIN DALAL
Jatin Dalal
/s/ ROBERT TELESMANIC
Robert Telesmanic
/s/ STEPHEN J. ROHLEDER
Stephen J. Rohleder
/s/ ZEIN ABDALLA
Zein Abdalla
/s/ VINITA BALI
Vinita Bali
/s/ ERIC BRANDERIZ
Eric Branderiz
Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Senior Vice President, Controller and Chief
Accounting Officer
(Principal Accounting Officer)
Chair of the Board and Director
Director
Director
Director
/s/ ARCHANA DESKUS
Director
Archana Deskus
/s/ JOHN M. DINEEN
John M. Dineen
/s/ LEO S. MACKAY, JR.
Leo S. Mackay, Jr.
/s/ MICHAEL PATSALOS-FOX
Michael Patsalos-Fox
/s/ ABRAHAM SCHOT
Abraham Schot
/s/ JOSEPH M. VELLI
Joseph M. Velli
/s/ SANDRA S. WIJNBERG
Sandra S. Wijnberg
Director
Director
Director
Director
Director
Director
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
February 14, 2024
Cognizant
48
December 31, 2023 Form 10-K
Cognizant
49
December 31, 2023 Form 10-K
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238)
Consolidated Statements of Financial Position as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-9
Schedule of Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021
F-41
issued by the COSO.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Cognizant Technology Solutions Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Cognizant Technology Solutions
Corporation and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of
operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended
December 31, 2023, including the related notes and financial statement schedule listed in the accompanying index (collectively
referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013)
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Cognizant
F-1
December 31, 2023 Form 10-K
Cognizant
F-2
December 31, 2023 Form 10-K
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238)
Consolidated Statements of Financial Position as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Financial Statement Schedule:
Schedule of Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021
F-41
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-9
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Cognizant Technology Solutions Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Cognizant Technology Solutions
Corporation and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of
operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended
December 31, 2023, including the related notes and financial statement schedule listed in the accompanying index (collectively
referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial
reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Cognizant
F-1
December 31, 2023 Form 10-K
Cognizant
F-2
December 31, 2023 Form 10-K
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Expected Labor Costs to Complete for Certain Fixed-Price Contracts
As described in Notes 1 and 2 to the consolidated financial statements, fixed-price contracts comprised $8.7 billion of the
Company’s total revenues for the year ended December 31, 2023, which includes performance obligations where control is
transferred over time. For performance obligations where control is transferred over time, revenues are recognized based on the
extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards
completion requires judgment and is based on the nature of the deliverables to be provided. Management recognizes revenues
related to fixed-price contracts for application development and systems integration services, consulting or other technology
services 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. The cost-to-cost
method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information.
Revenues related to fixed-price application maintenance, quality engineering and assurance as well as business process services
are recognized based on management’s right to invoice for services performed for contracts in which the invoicing is
representative of the value being delivered. If management’s invoicing is not consistent with the value delivered, revenues are
recognized as the service is performed based on the cost-to-cost method described above.
The principal considerations for our determination that performing procedures relating to revenue recognition – expected labor
costs to complete for certain fixed-price contracts is a critical audit matter are the significant judgment by management when
developing the estimated total expected labor costs to complete fixed-price contracts and the significant auditor judgment,
subjectivity, and effort in performing procedures and evaluating audit evidence relating to management’s estimate of total
expected labor costs.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
revenue recognition process, including controls over the development of the estimated total expected labor costs to complete
fixed-price contracts. These procedures also included, among others, evaluating and testing management’s process for
developing the estimated total expected labor costs for a sample of contracts, which included evaluating the reasonableness of
the total expected labor cost assumptions used by management. Evaluating the reasonableness of the assumptions related to the
total expected labor costs involved assessing management’s ability to reasonably develop total expected labor costs by (i)
performing a comparison of expected labor cost metrics at project inception with actual cost metrics for similar completed
projects and (ii) evaluating the timely identification of circumstances that may warrant a modification to previous labor cost
estimates, including actual labor costs in excess of estimates.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 14, 2024
We have served as the Company’s auditor since 1997.
(in millions, except par values)
Current assets:
Cash and cash equivalents
Short-term investments
Trade accounts receivable, net
Other current assets
Total current assets
Property and equipment, net
Operating lease assets, net
Goodwill
Intangible assets, net
Deferred income tax assets, net
Long-term investments
Other noncurrent assets
Total assets
Current liabilities:
Accounts payable
Deferred revenue
Short-term debt
Operating lease liabilities
Accrued expenses and other current liabilities
Total current liabilities
Deferred revenue, noncurrent
Operating lease liabilities, noncurrent
Deferred income tax liabilities, net
Long-term debt
Long-term income taxes payable
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (See Note 15)
Stockholders’ equity:
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Total liabilities and stockholders’ equity
Assets
December 31,
2023
2022
$
2,621
$
Liabilities and Stockholders’ Equity
$
18,483
$
17,852
$
$
14
3,849
1,022
7,506
1,048
611
6,085
1,149
993
435
656
337
385
33
153
2,425
3,333
42
523
226
606
157
369
2,191
310
3,796
969
7,266
1,101
876
5,710
1,168
642
427
662
360
398
8
174
2,407
3,347
19
714
180
638
283
362
5,256
5,543
—
5
15
13,301
(94)
13,227
18,483
$
$
—
5
15
12,588
(299)
12,309
17,852
Preferred stock, $0.10 par value, 15 shares authorized, none issued
Class A common stock, $0.01 par value, 1,000 shares authorized, 498 and 509 shares issued
and outstanding as of December 31, 2023 and 2022, respectively
The accompanying notes are an integral part of the consolidated financial statements.
Cognizant
F-3
December 31, 2023 Form 10-K
Cognizant
F-4
December 31, 2023 Form 10-K
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition – Expected Labor Costs to Complete for Certain Fixed-Price Contracts
As described in Notes 1 and 2 to the consolidated financial statements, fixed-price contracts comprised $8.7 billion of the
Company’s total revenues for the year ended December 31, 2023, which includes performance obligations where control is
transferred over time. For performance obligations where control is transferred over time, revenues are recognized based on the
extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards
completion requires judgment and is based on the nature of the deliverables to be provided. Management recognizes revenues
related to fixed-price contracts for application development and systems integration services, consulting or other technology
services 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. The cost-to-cost
method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information.
Revenues related to fixed-price application maintenance, quality engineering and assurance as well as business process services
are recognized based on management’s right to invoice for services performed for contracts in which the invoicing is
representative of the value being delivered. If management’s invoicing is not consistent with the value delivered, revenues are
recognized as the service is performed based on the cost-to-cost method described above.
The principal considerations for our determination that performing procedures relating to revenue recognition – expected labor
costs to complete for certain fixed-price contracts is a critical audit matter are the significant judgment by management when
developing the estimated total expected labor costs to complete fixed-price contracts and the significant auditor judgment,
subjectivity, and effort in performing procedures and evaluating audit evidence relating to management’s estimate of total
expected labor costs.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
revenue recognition process, including controls over the development of the estimated total expected labor costs to complete
fixed-price contracts. These procedures also included, among others, evaluating and testing management’s process for
developing the estimated total expected labor costs for a sample of contracts, which included evaluating the reasonableness of
the total expected labor cost assumptions used by management. Evaluating the reasonableness of the assumptions related to the
total expected labor costs involved assessing management’s ability to reasonably develop total expected labor costs by (i)
performing a comparison of expected labor cost metrics at project inception with actual cost metrics for similar completed
projects and (ii) evaluating the timely identification of circumstances that may warrant a modification to previous labor cost
estimates, including actual labor costs in excess of estimates.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 14, 2024
We have served as the Company’s auditor since 1997.
Assets
(in millions, except par values)
Current assets:
Cash and cash equivalents
Short-term investments
Trade accounts receivable, net
Other current assets
Total current assets
Property and equipment, net
Operating lease assets, net
Goodwill
Intangible assets, net
Deferred income tax assets, net
Long-term investments
Other noncurrent assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Deferred revenue
Short-term debt
Operating lease liabilities
Accrued expenses and other current liabilities
Total current liabilities
Deferred revenue, noncurrent
Operating lease liabilities, noncurrent
Deferred income tax liabilities, net
Long-term debt
Long-term income taxes payable
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (See Note 15)
Stockholders’ equity:
Preferred stock, $0.10 par value, 15 shares authorized, none issued
Class A common stock, $0.01 par value, 1,000 shares authorized, 498 and 509 shares issued
and outstanding as of December 31, 2023 and 2022, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2023
2022
2,621
14
3,849
1,022
7,506
1,048
611
6,085
1,149
993
435
656
18,483
337
385
33
153
2,425
3,333
42
523
226
606
157
369
5,256
$
$
$
2,191
310
3,796
969
7,266
1,101
876
5,710
1,168
642
427
662
17,852
360
398
8
174
2,407
3,347
19
714
180
638
283
362
5,543
—
—
5
15
13,301
(94)
13,227
18,483
$
5
15
12,588
(299)
12,309
17,852
$
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
Cognizant
F-3
December 31, 2023 Form 10-K
Cognizant
F-4
December 31, 2023 Form 10-K
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Change in Accumulated other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Unrealized gains and losses on cash flow hedges
Other comprehensive income (loss)
Comprehensive income
The accompanying notes are an integral part of the consolidated financial statements.
Year Ended December 31,
2023
2022
2021
$
2,126 $
2,290 $
2,137
144
61
205
(228)
(108)
(336)
(75)
2
(73)
$
2,331 $
1,954 $
2,064
(in millions, except per share data)
Revenues
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization expense shown
Year Ended December 31,
2023
2022
2021
$
19,353 $
19,428 $
18,507
(in millions)
Net income
separately below)
Selling, general and administrative expenses
Restructuring charges
Depreciation and amortization expense
Income from operations
Other income (expense), net:
Interest income
Interest expense
Foreign currency exchange gains (losses), net
Other, net
Total other income (expense), net
Income before provision for income taxes
Provision for income taxes
Income (loss) from equity method investments
Net income
Basic earnings per share
Diluted earnings per share
Weighted average number of common shares outstanding—Basic
Dilutive effect of shares issuable under stock-based compensation plans
Weighted average number of common shares outstanding—Diluted
12,664
3,252
229
519
2,689
12,448
3,443
—
569
2,968
126
(41)
2
11
98
59
(19)
7
1
48
2,787
3,016
(668)
(730)
7
4
11,604
3,503
—
574
2,826
30
(9)
(20)
—
1
2,827
(693)
3
$
$
$
2,126 $
2,290 $
2,137
4.21 $
4.21 $
4.42 $
4.41 $
505
—
505
518
1
519
4.06
4.05
527
1
528
The accompanying notes are an integral part of the consolidated financial statements.
Cognizant
F-5
December 31, 2023 Form 10-K
Cognizant
F-6
December 31, 2023 Form 10-K
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
Net income
Change in Accumulated other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Unrealized gains and losses on cash flow hedges
Other comprehensive income (loss)
Comprehensive income
Year Ended December 31,
2023
2022
2021
$
2,126 $
2,290 $
2,137
144
61
205
(228)
(108)
(336)
(75)
2
(73)
$
2,331 $
1,954 $
2,064
The accompanying notes are an integral part of the consolidated financial statements.
Cost of revenues (exclusive of depreciation and amortization expense shown
(in millions, except per share data)
Revenues
Operating expenses:
separately below)
Selling, general and administrative expenses
Restructuring charges
Depreciation and amortization expense
Income from operations
Other income (expense), net:
Interest income
Interest expense
Other, net
Foreign currency exchange gains (losses), net
Total other income (expense), net
Income before provision for income taxes
Provision for income taxes
Income (loss) from equity method investments
Net income
Basic earnings per share
Diluted earnings per share
Year Ended December 31,
2023
2022
2021
$
19,353 $
19,428 $
18,507
12,664
3,252
229
519
2,689
12,448
3,443
—
569
2,968
126
(41)
(19)
2,787
3,016
(668)
(730)
59
7
1
48
4
518
1
519
2
11
98
7
505
—
505
11,604
3,503
—
574
2,826
30
(9)
(20)
—
1
2,827
(693)
3
4.06
4.05
527
1
528
$
$
$
2,126 $
2,290 $
2,137
4.21 $
4.21 $
4.42 $
4.41 $
Weighted average number of common shares outstanding—Basic
Dilutive effect of shares issuable under stock-based compensation plans
Weighted average number of common shares outstanding—Diluted
The accompanying notes are an integral part of the consolidated financial statements.
Cognizant
F-5
December 31, 2023 Form 10-K
Cognizant
F-6
December 31, 2023 Form 10-K
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, except per share data)
Balance, December 31, 2020
Net income
Other comprehensive income (loss)
Common stock issued, stock-based
compensation plans
Stock-based compensation expense
Repurchases of common stock
(10)
Dividends declared, $0.96 per share
Balance, December 31, 2021
Net income
Other comprehensive income (loss)
Common stock issued, stock-based
compensation plans
Stock-based compensation expense
—
525
—
—
4
—
Repurchases of common stock
(20)
Dividends declared, $1.08 per share
Balance, December 31, 2022
Net income
Other comprehensive income (loss)
Common stock issued, stock-based
compensation plans
Stock-based compensation expense
Repurchases of common stock
Dividends declared, $1.16 per share
Balance, December 31, 2023
Class A Common Stock
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
530 $
5 $
32 $
10,689 $
110 $
10,836
—
—
5
—
—
509
—
—
4
—
(15)
—
—
—
—
—
—
—
5
—
—
—
—
—
—
5
—
—
—
—
—
—
—
—
130
246
(381)
—
27
—
—
86
261
2,137
—
—
—
(394)
(510)
11,922
2,290
—
—
—
(359)
(1,059)
—
15
—
—
71
176
(247)
—
(565)
12,588
2,126
—
—
—
(823)
(590)
—
(73)
2,137
(73)
—
—
—
—
37
—
130
246
(775)
(510)
11,991
2,290
(336)
(336)
—
—
—
—
86
261
(1,418)
(565)
(299)
12,309
—
205
—
—
—
—
2,126
205
71
176
(1,070)
(590)
498 $
5 $
15 $
13,301 $
(94) $
13,227
The accompanying notes are an integral part of the consolidated financial statements.
Cognizant
F-7
December 31, 2023 Form 10-K
Cognizant
F-8
December 31, 2023 Form 10-K
Adjustments to reconcile net income to net cash provided by operating activities:
Cash flows from operating activities:
(in millions)
Net income
Depreciation and amortization
Deferred income taxes
Stock-based compensation expense
Other
Changes in assets and liabilities:
Trade accounts receivable
Other current and noncurrent assets
Accounts payable
Deferred revenue, current and noncurrent
Other current and noncurrent liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Purchases of available-for-sale investment securities
Proceeds from maturity of available-for-sale investment securities
Purchases of held-to-maturity investment securities
Proceeds from maturity of held-to-maturity investment securities
Purchases of other investments
Proceeds from maturity or sale of other investments
Proceeds from sales of businesses
Payments for business combinations, net of cash acquired
Net cash (used in) investing activities
Cash flows from financing activities:
Issuance of common stock under stock-based compensation plans
Repurchases of common stock
Repayment of term loan borrowings and finance lease and earnout obligations
Proceeds from debt refinancing
Debt issuance costs
Dividends paid
Net cash (used in) financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash
equivalents
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash and cash equivalents, end of year
Supplemental information:
Cash paid for income taxes during the year
Cash interest paid during the year
Year Ended December 31,
2023
2022
2021
$ 2,126
$ 2,290
$ 2,137
574
27
246
(1)
(407)
348
(35)
19
(413)
2,495
(279)
(430)
120
(203)
180
1,078
—
(970)
(2,164)
130
(771)
(53)
—
—
(509)
555
(339)
176
1
(43)
123
(23)
(4)
(242)
2,330
(317)
(59)
285
(3)
24
527
—
(409)
(331)
569
(273)
261
45
(238)
343
(11)
(26)
(392)
2,568
(332)
(1,227)
1,315
(44)
54
1,013
28
(367)
(106)
(379)
(546)
(1,660)
71
86
(1,064)
(1,422)
(25)
—
—
(591)
(686)
650
(3)
(564)
(1,609)
(1,939)
(1,203)
33
423
(21)
502
(16)
(888)
2,294
1,792
2,680
$ 2,717
$ 2,294
$ 1,792
$ 1,245
$
40
$
$
813
15
$
$
625
7
The accompanying notes are an integral part of the consolidated financial statements.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, except per share data)
Balance, December 31, 2020
Net income
Other comprehensive income (loss)
Common stock issued, stock-based
compensation plans
Stock-based compensation expense
Repurchases of common stock
Dividends declared, $0.96 per share
Balance, December 31, 2021
Net income
Other comprehensive income (loss)
Common stock issued, stock-based
compensation plans
Stock-based compensation expense
Repurchases of common stock
Dividends declared, $1.08 per share
Balance, December 31, 2022
Net income
Other comprehensive income (loss)
Common stock issued, stock-based
compensation plans
Stock-based compensation expense
Dividends declared, $1.16 per share
Balance, December 31, 2023
(10)
(381)
—
—
5
—
—
525
—
—
4
—
—
509
—
—
4
—
—
—
—
—
—
—
—
5
—
—
—
—
—
—
5
—
—
—
—
—
—
—
—
130
246
—
27
—
—
86
261
—
15
—
—
2,137
—
—
—
(394)
(510)
11,922
2,290
—
—
—
—
—
—
(565)
12,588
2,126
71
176
(247)
—
(823)
(590)
—
(73)
2,137
(73)
(336)
(336)
(299)
12,309
130
246
(775)
(510)
11,991
2,290
86
261
(1,418)
(565)
2,126
205
71
176
(1,070)
(590)
—
—
—
—
37
—
—
—
—
—
—
205
—
—
—
—
(20)
(359)
(1,059)
Repurchases of common stock
(15)
498 $
5 $
15 $
13,301 $
(94) $
13,227
The accompanying notes are an integral part of the consolidated financial statements.
Class A Common Stock
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
530 $
5 $
32 $
10,689 $
110 $
10,836
(in millions)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes
Stock-based compensation expense
Other
Changes in assets and liabilities:
Trade accounts receivable
Other current and noncurrent assets
Accounts payable
Deferred revenue, current and noncurrent
Other current and noncurrent liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchases of property and equipment
Purchases of available-for-sale investment securities
Proceeds from maturity of available-for-sale investment securities
Purchases of held-to-maturity investment securities
Proceeds from maturity of held-to-maturity investment securities
Purchases of other investments
Proceeds from maturity or sale of other investments
Proceeds from sales of businesses
Payments for business combinations, net of cash acquired
Net cash (used in) investing activities
Cash flows from financing activities:
Issuance of common stock under stock-based compensation plans
Repurchases of common stock
Repayment of term loan borrowings and finance lease and earnout obligations
Proceeds from debt refinancing
Debt issuance costs
Dividends paid
Net cash (used in) financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash
equivalents
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash and cash equivalents, end of year
Supplemental information:
Cash paid for income taxes during the year
Cash interest paid during the year
Year Ended December 31,
2023
2022
2021
$ 2,126
$ 2,290
$ 2,137
555
(339)
176
1
(43)
123
(23)
(4)
(242)
2,330
(317)
(59)
285
(3)
24
569
(273)
261
45
(238)
343
(11)
(26)
(392)
2,568
(332)
(1,227)
1,315
(44)
54
574
27
246
(1)
(407)
348
(35)
19
(413)
2,495
(279)
(430)
120
(203)
180
(379)
(546)
(1,660)
527
—
(409)
(331)
1,013
28
(367)
(106)
71
86
(1,064)
(1,422)
(25)
—
—
(591)
(1,609)
(686)
650
(3)
(564)
(1,939)
1,078
—
(970)
(2,164)
130
(771)
(53)
—
—
(509)
(1,203)
33
423
2,294
$ 2,717
(21)
502
1,792
$ 2,294
(16)
(888)
2,680
$ 1,792
$ 1,245
$
40
$
$
813
15
$
$
625
7
Cognizant
F-7
December 31, 2023 Form 10-K
Cognizant
F-8
December 31, 2023 Form 10-K
The accompanying notes are an integral part of the consolidated financial statements.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except share data)
Note 1 — Business Description and Summary of Significant Accounting Policies
The terms “Cognizant,” “we,” “our,” “us” and “the Company” refer to Cognizant Technology Solutions Corporation and
deemed uncollectible.
its subsidiaries unless the context indicates otherwise.
Description of Business. We are 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. 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. 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.
Basis of Presentation, Principles of Consolidation and Use of Estimates. The consolidated financial statements are
presented in accordance with GAAP and reflect the consolidated financial position, results of operations, comprehensive
income and cash flows of our consolidated subsidiaries for all periods presented. All intercompany balances and transactions
have been eliminated in consolidation.
The preparation of financial statements requires management to make estimates and assumptions that affect the reported
amounts in the consolidated financial statements and accompanying disclosures. We evaluate our estimates on a continuous
basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under
the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated
financial statements.
Cash and Cash Equivalents and Investments. Cash and cash equivalents consist of all cash balances, including money
market funds, time deposits, certificates of deposits and commercial paper that have a maturity, at the date of purchase, of 90
days or less.
We determine the appropriate classification of our investments in marketable securities at the date of purchase and
reevaluate such designation at each balance sheet date. We classify and account for our marketable debt securities as either
available-for-sale or held-to-maturity. After consideration of our risk versus reward objectives, as well as our liquidity
requirements, we may sell our available-for-sale securities prior to their stated maturities. We classify these marketable
securities with maturities at the date of purchase beyond 90 days as short-term investments based on their highly liquid nature
and because such marketable securities represent an investment of cash that is available for current operations. Available-for-
sale securities are reported at fair value with changes in unrealized gains and losses recorded as a separate component of
"Accumulated other comprehensive income (loss)" on the consolidated statements of financial position until realized. We
determine the cost of the securities sold based on the specific identification method. Our held-to-maturity investment securities
are financial instruments that we have the intent and ability to hold to maturity and we classify these securities with maturities
less than one year as short-term investments. Any held-to-maturity investment securities with maturities beyond one year from
the balance sheet date are classified as long-term investments. Held-to-maturity securities are reported at amortized cost.
Interest and amortization of premiums and discounts for debt securities are included in interest income.
For available-for-sale debt securities, if we do not intend to sell the security or it is not more likely than not that we will be
required to sell the security before recovery of our amortized cost, we evaluate qualitative criteria, such as the financial health
of and specific prospects for the issuer, to determine whether we do not expect to recover the amortized cost basis of the
security. We also evaluate quantitative criteria including determining whether there has been an adverse change in expected
future cash flows. If we do not expect to recover the entire amortized cost basis of the security, we consider the security to
contain an expected credit loss, and we record the difference between the security’s amortized cost basis and its recoverable
amount in earnings as an allowance for credit loss and the difference between the security’s recoverable amount and fair value
in other comprehensive income. If we intend to sell the security or it is more likely than not we will be required to sell the
security before recovery of its amortized cost basis, the security is considered impaired, and we recognize the entire difference
between the security’s amortized cost basis and its fair value in earnings.
On initial recognition and on an ongoing basis, we evaluate our held-to-maturity investment securities for expected credit
losses collectively when they share similar risk characteristics or individually, when the risk characteristics are different. The
allowance for expected credit losses is determined using our historical loss experience. We monitor the credit ratings of the
securities in our portfolio to evaluate the need for any changes to the allowance. An increase or a decrease in the allowance for
expected credit losses is recorded through income as a credit loss expense or a reversal thereof. The allowance for expected
credit losses is presented as a deduction from the amortized cost. A held-to-maturity investment security is written off when
Financial Assets and Liabilities. Cash and certain cash equivalents, time deposits, trade receivables, accounts payable and
other accrued liabilities are short-term in nature and, accordingly, their carrying values approximate fair value.
Property and Equipment. Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is
calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized on a
straight-line basis over the shorter of the term of the lease or the estimated useful life of the asset. Deposits paid towards
acquisition of long-lived assets and the cost of assets not put in use by the balance sheet date are disclosed under the caption
"Capital work-in-progress" in Note 6.
Leases. Our lease asset classes primarily consist of operating leases for office space, data centers and IT equipment. At
inception of a contract, we determine whether a contract contains a lease, and if a lease is identified, whether it is an operating
or finance lease. In determining whether a contract contains a lease we consider whether (1) we have the right to obtain
substantially all of the economic benefits from the use of the asset throughout the term of the contract, (2) we have the right to
direct how and for what purpose the asset is used throughout the term of the contract and (3) we have the right to operate the
asset throughout the term of the contract without the lessor having the right to change the terms of the contract. Some of our
lease agreements contain both lease and non-lease components that we account for as a single lease component for all of our
lease asset classes.
Our ROU lease assets represent our right to use an underlying asset for the lease term and may include any advance lease
payments made and any initial direct costs and exclude lease incentives. Our lease liabilities represent our obligation to make
lease payments arising from the terms of the lease. ROU lease assets and lease liabilities are recognized at the commencement
of the lease and are calculated using the present value of lease payments over the lease term. Typically, our lease agreements do
not provide sufficient detail to determine the rate implicit in the lease. Therefore, we use our estimated country-specific
incremental borrowing rate based on information available at the commencement date of the lease to calculate the present value
of the lease payments. In estimating our country-specific incremental borrowing rates, we consider market rates of comparable
collateralized borrowings for similar terms. Our lease terms may include the option to extend or terminate the lease before the
end of the contractual lease term. Our ROU lease assets and lease liabilities include these options when it is reasonably certain
that they will be exercised.
A portion of our real estate lease costs is subject to annual changes in the CPI. Changes in CPI subsequent to the lease
commencement are treated as variable lease payments and are recognized in the period in which the obligation for those
payments is incurred. Other variable lease costs primarily relate to adjustments for common area maintenance, utilities, property
tax and lease concessions. These variable costs are recognized in the period in which the obligation is incurred.
We elect not to recognize ROU assets and lease liabilities for short-term leases with a term equal to or less than 12
months. We recognize the lease payments in our income statement on a straight-line basis over the lease term and variable lease
payments in the period in which the obligation for those payments is incurred.
Both ROU assets and finance lease assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the related asset group may not be recoverable.
Internal Use Software. We capitalize certain costs that are incurred to purchase, develop and implement internal-use
software during the application development phase, which primarily include coding, testing and certain data conversion
activities. Capitalized costs are amortized on a straight-line basis over the useful life of the software. Costs incurred in
performing planning and post-implementation activities are expensed as incurred.
Cloud Computing Arrangements. We defer certain implementation costs that are incurred when implementing cloud
computing service or software-as-a-service arrangements, which primarily include efforts associated with configuration and
development activities. Once the service is ready for use, deferred costs are expensed over the term of the arrangement and
recognized in income from operations.
Cognizant
F-9
December 31, 2023 Form 10-K
Cognizant
F-10
December 31, 2023 Form 10-K
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except share data)
Note 1 — Business Description and Summary of Significant Accounting Policies
The terms “Cognizant,” “we,” “our,” “us” and “the Company” refer to Cognizant Technology Solutions Corporation and
its subsidiaries unless the context indicates otherwise.
Description of Business. We are 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. 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. 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.
Basis of Presentation, Principles of Consolidation and Use of Estimates. The consolidated financial statements are
presented in accordance with GAAP and reflect the consolidated financial position, results of operations, comprehensive
income and cash flows of our consolidated subsidiaries for all periods presented. All intercompany balances and transactions
have been eliminated in consolidation.
The preparation of financial statements requires management to make estimates and assumptions that affect the reported
amounts in the consolidated financial statements and accompanying disclosures. We evaluate our estimates on a continuous
basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under
the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated
financial statements.
days or less.
Cash and Cash Equivalents and Investments. Cash and cash equivalents consist of all cash balances, including money
market funds, time deposits, certificates of deposits and commercial paper that have a maturity, at the date of purchase, of 90
We determine the appropriate classification of our investments in marketable securities at the date of purchase and
reevaluate such designation at each balance sheet date. We classify and account for our marketable debt securities as either
available-for-sale or held-to-maturity. After consideration of our risk versus reward objectives, as well as our liquidity
requirements, we may sell our available-for-sale securities prior to their stated maturities. We classify these marketable
securities with maturities at the date of purchase beyond 90 days as short-term investments based on their highly liquid nature
and because such marketable securities represent an investment of cash that is available for current operations. Available-for-
sale securities are reported at fair value with changes in unrealized gains and losses recorded as a separate component of
"Accumulated other comprehensive income (loss)" on the consolidated statements of financial position until realized. We
determine the cost of the securities sold based on the specific identification method. Our held-to-maturity investment securities
are financial instruments that we have the intent and ability to hold to maturity and we classify these securities with maturities
less than one year as short-term investments. Any held-to-maturity investment securities with maturities beyond one year from
the balance sheet date are classified as long-term investments. Held-to-maturity securities are reported at amortized cost.
Interest and amortization of premiums and discounts for debt securities are included in interest income.
For available-for-sale debt securities, if we do not intend to sell the security or it is not more likely than not that we will be
required to sell the security before recovery of our amortized cost, we evaluate qualitative criteria, such as the financial health
of and specific prospects for the issuer, to determine whether we do not expect to recover the amortized cost basis of the
security. We also evaluate quantitative criteria including determining whether there has been an adverse change in expected
future cash flows. If we do not expect to recover the entire amortized cost basis of the security, we consider the security to
contain an expected credit loss, and we record the difference between the security’s amortized cost basis and its recoverable
amount in earnings as an allowance for credit loss and the difference between the security’s recoverable amount and fair value
in other comprehensive income. If we intend to sell the security or it is more likely than not we will be required to sell the
security before recovery of its amortized cost basis, the security is considered impaired, and we recognize the entire difference
between the security’s amortized cost basis and its fair value in earnings.
On initial recognition and on an ongoing basis, we evaluate our held-to-maturity investment securities for expected credit
losses collectively when they share similar risk characteristics or individually, when the risk characteristics are different. The
allowance for expected credit losses is determined using our historical loss experience. We monitor the credit ratings of the
securities in our portfolio to evaluate the need for any changes to the allowance. An increase or a decrease in the allowance for
expected credit losses is recorded through income as a credit loss expense or a reversal thereof. The allowance for expected
credit losses is presented as a deduction from the amortized cost. A held-to-maturity investment security is written off when
deemed uncollectible.
Financial Assets and Liabilities. Cash and certain cash equivalents, time deposits, trade receivables, accounts payable and
other accrued liabilities are short-term in nature and, accordingly, their carrying values approximate fair value.
Property and Equipment. Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is
calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized on a
straight-line basis over the shorter of the term of the lease or the estimated useful life of the asset. Deposits paid towards
acquisition of long-lived assets and the cost of assets not put in use by the balance sheet date are disclosed under the caption
"Capital work-in-progress" in Note 6.
Leases. Our lease asset classes primarily consist of operating leases for office space, data centers and IT equipment. At
inception of a contract, we determine whether a contract contains a lease, and if a lease is identified, whether it is an operating
or finance lease. In determining whether a contract contains a lease we consider whether (1) we have the right to obtain
substantially all of the economic benefits from the use of the asset throughout the term of the contract, (2) we have the right to
direct how and for what purpose the asset is used throughout the term of the contract and (3) we have the right to operate the
asset throughout the term of the contract without the lessor having the right to change the terms of the contract. Some of our
lease agreements contain both lease and non-lease components that we account for as a single lease component for all of our
lease asset classes.
Our ROU lease assets represent our right to use an underlying asset for the lease term and may include any advance lease
payments made and any initial direct costs and exclude lease incentives. Our lease liabilities represent our obligation to make
lease payments arising from the terms of the lease. ROU lease assets and lease liabilities are recognized at the commencement
of the lease and are calculated using the present value of lease payments over the lease term. Typically, our lease agreements do
not provide sufficient detail to determine the rate implicit in the lease. Therefore, we use our estimated country-specific
incremental borrowing rate based on information available at the commencement date of the lease to calculate the present value
of the lease payments. In estimating our country-specific incremental borrowing rates, we consider market rates of comparable
collateralized borrowings for similar terms. Our lease terms may include the option to extend or terminate the lease before the
end of the contractual lease term. Our ROU lease assets and lease liabilities include these options when it is reasonably certain
that they will be exercised.
A portion of our real estate lease costs is subject to annual changes in the CPI. Changes in CPI subsequent to the lease
commencement are treated as variable lease payments and are recognized in the period in which the obligation for those
payments is incurred. Other variable lease costs primarily relate to adjustments for common area maintenance, utilities, property
tax and lease concessions. These variable costs are recognized in the period in which the obligation is incurred.
We elect not to recognize ROU assets and lease liabilities for short-term leases with a term equal to or less than 12
months. We recognize the lease payments in our income statement on a straight-line basis over the lease term and variable lease
payments in the period in which the obligation for those payments is incurred.
Both ROU assets and finance lease assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the related asset group may not be recoverable.
Internal Use Software. We capitalize certain costs that are incurred to purchase, develop and implement internal-use
software during the application development phase, which primarily include coding, testing and certain data conversion
activities. Capitalized costs are amortized on a straight-line basis over the useful life of the software. Costs incurred in
performing planning and post-implementation activities are expensed as incurred.
Cloud Computing Arrangements. We defer certain implementation costs that are incurred when implementing cloud
computing service or software-as-a-service arrangements, which primarily include efforts associated with configuration and
development activities. Once the service is ready for use, deferred costs are expensed over the term of the arrangement and
recognized in income from operations.
Cognizant
F-9
December 31, 2023 Form 10-K
Cognizant
F-10
December 31, 2023 Form 10-K
Software to be Sold, Leased or Marketed. We capitalize costs incurred after technological feasibility is reached but before
software is available for general release to clients, which primarily include coding and testing activities. Once the product is
ready for general release, capitalized costs are amortized over the useful life of the software.
Business Combinations. We account for business combinations using the acquisition method, which requires the
identification of the acquirer, the determination of the acquisition date and the allocation of the purchase price paid by the
acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including any contingent
consideration and any noncontrolling interest in the acquiree at their acquisition date fair values. Goodwill represents the excess
of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets.
Identifiable intangible assets with finite lives are amortized over their expected useful lives. Acquisition-related costs are
expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our
consolidated financial statements from the acquisition date.
Equity Method Investments. Equity investments that give us the ability to exercise significant influence, but not control,
over an investee are accounted for using the equity method of accounting and recorded in the caption "Long-term investments"
on our consolidated statements of financial position. Equity method investments are initially recorded at cost. We periodically
review the carrying value of our equity method investments to determine if there has been an other-than-temporary decline in
the carrying value. The investment balance is increased to reflect contributions and our share of earnings and decreased to
reflect our share of losses, distributions and other-than-temporary impairments. Our proportionate share of the net income or
loss of the investee is recorded in the caption "Income (loss) from equity method investments" on our consolidated statements
of operations.
Long-lived Assets and Finite-lived Intangible Assets. We review long-lived assets and certain 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. The carrying amount may not be recoverable when the sum of undiscounted expected future cash flows is less than
the carrying amount of such asset groups. The impairment loss is determined as the amount by which the carrying amount of
the asset group exceeds its fair value. Intangible assets consist primarily of customer relationships and developed technology,
which are being amortized on a straight-line basis over their estimated useful lives.
Goodwill and Indefinite-lived Intangible Assets. At each acquisition date, we allocate goodwill and intangible assets to our
reporting units based on how we expect each reporting unit to benefit from the respective business combination. Our seven
industry-based operating segments are our reporting units. We evaluate goodwill and indefinite-lived intangible assets for
impairment at least annually, or as circumstances warrant. Goodwill is evaluated at the reporting unit level by comparing the
fair value of the reporting unit with its carrying amount including goodwill. An impairment of goodwill exists if the carrying
amount of the reporting unit exceeds its fair value. The impairment loss is the amount by which the carrying amount exceeds
the reporting unit’s fair value, limited to the total amount of goodwill allocated to that reporting unit. For indefinite-lived
intangible assets, if our qualitative assessment indicates that it is more-likely-than-not that an indefinite-lived intangible asset is
impaired, we test the assets for impairment by comparing the fair value of such assets to their carrying value. If an impairment
is indicated, a write down to the fair value of indefinite-lived intangible asset is recorded.
Stock Repurchase Program. Under the Board of Directors authorized stock repurchase program, the Company is
authorized to repurchase its Class A common stock through open market purchases, including under a 10b5-1 Plan, in
accordance with applicable federal securities laws. We account for the repurchased shares as constructively retired. Shares are
returned to the status of authorized and unissued shares at the time of repurchase. To reflect share repurchases in the
consolidated statements of financial position, we (1) reduce common stock for the par value of the shares, (2) reduce additional
paid-in capital for the amount in excess of par during the period in which the shares are repurchased and (3) record any residual
amount in excess of available additional paid-in capital as a reduction to retained earnings.
Revenue Recognition. We recognize revenues as we transfer control of deliverables (products, solutions and services) to
our clients in an amount reflecting the consideration to which we expect to be entitled. To recognize revenues, we apply the
following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract,
(3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5)
recognize revenues when a performance obligation is satisfied. We account for a contract when it has approval and commitment
from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and
collectibility of consideration is probable. We apply judgment in determining the customer’s ability and intention to pay based
on a variety of factors including the customer’s historical payment experience.
For performance obligations where control is transferred over time, revenues are recognized based on the extent of
progress towards completion of the performance obligation. The selection of the method to measure progress towards
completion requires judgment and is based primarily on the nature of the deliverables to be provided.
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 application maintenance, quality engineering and assurance as well as business
process services are recognized based on our right to invoice for services performed for contracts in which the invoicing is
representative of the value being delivered. If our invoicing is not consistent with the value delivered, revenues are recognized
as the service is performed based on the cost-to-cost method described above. The cost-to-cost method requires estimation of
future costs, which is updated as the project progresses to reflect the latest available information. 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 and any anticipated losses on contracts are recognized immediately,
where appropriate.
Revenues related to fixed-price hosting and infrastructure and security services are recognized based on our right to
invoice for services performed for contracts in which the invoicing is representative of the value being delivered. If our
invoicing is not consistent with the value delivered, revenues are recognized on a straight-line basis unless revenues are earned
and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described
above provides the most faithful depiction of performance towards satisfaction of our performance obligations; for example, the
cost-to-cost method is used when the value of services provided to the customer is best represented by the costs expended to
deliver those services.
Revenues related to our time-and-materials, transaction-based or volume-based contracts are recognized over the period
the services are provided either using an output method such as labor hours, or a method that is otherwise consistent with the
way in which value is delivered to the customer.
Revenues related to our non-hosted software license arrangements that do not require significant modification or
customization of the underlying software are recognized when the software is delivered as control is transferred at a point in
time. For software license arrangements that require significant functionality enhancements or modification of the software,
revenues for the software license and related services are recognized as the services are performed in accordance with the
methods applicable to application development and systems integration services described above. In software hosting
arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the
feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a
service. Sales and usage-based fees promised in exchange for licenses of intellectual property are not recognized as revenue
until the uncertainty related to the variable amounts is resolved. Revenues related to software maintenance and support are
generally recognized on a straight-line basis over the contract period.
Incentive revenues, volume discounts, or any other form of variable consideration is estimated using either the sum of
probability weighted amounts in a range of possible consideration amounts (expected value) or the single most likely amount in
a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of
consideration to which we may be entitled. We include in the transaction price variable consideration only to the extent it is
probable that a significant reversal of revenues recognized will not occur when the uncertainty associated with the variable
consideration is resolved. Our estimates of variable consideration and determination of whether and when to include estimated
amounts in the transaction price may involve judgment and are based largely on an assessment of our anticipated performance
and all information that is reasonably available to us.
Revenues also include the reimbursement of out-of-pocket expenses. Our warranties generally provide a customer with
assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications
and are therefore not considered an additional performance obligation in the contract.
We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any
combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to
determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these
criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with
multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative
standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to
the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus
margin or, in limited circumstances, the residual value approach. We typically establish a standalone selling price range for our
deliverables, which is reassessed on a periodic basis or when facts and circumstances change.
Cognizant
F-11
December 31, 2023 Form 10-K
Cognizant
F-12
December 31, 2023 Form 10-K
Software to be Sold, Leased or Marketed. We capitalize costs incurred after technological feasibility is reached but before
software is available for general release to clients, which primarily include coding and testing activities. Once the product is
ready for general release, capitalized costs are amortized over the useful life of the software.
Business Combinations. We account for business combinations using the acquisition method, which requires the
identification of the acquirer, the determination of the acquisition date and the allocation of the purchase price paid by the
acquirer to the identifiable tangible and intangible assets acquired, the liabilities assumed, including any contingent
consideration and any noncontrolling interest in the acquiree at their acquisition date fair values. Goodwill represents the excess
of the purchase price over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets.
Identifiable intangible assets with finite lives are amortized over their expected useful lives. Acquisition-related costs are
expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in our
consolidated financial statements from the acquisition date.
Equity Method Investments. Equity investments that give us the ability to exercise significant influence, but not control,
over an investee are accounted for using the equity method of accounting and recorded in the caption "Long-term investments"
on our consolidated statements of financial position. Equity method investments are initially recorded at cost. We periodically
review the carrying value of our equity method investments to determine if there has been an other-than-temporary decline in
the carrying value. The investment balance is increased to reflect contributions and our share of earnings and decreased to
reflect our share of losses, distributions and other-than-temporary impairments. Our proportionate share of the net income or
loss of the investee is recorded in the caption "Income (loss) from equity method investments" on our consolidated statements
of operations.
Long-lived Assets and Finite-lived Intangible Assets. We review long-lived assets and certain 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. The carrying amount may not be recoverable when the sum of undiscounted expected future cash flows is less than
the carrying amount of such asset groups. The impairment loss is determined as the amount by which the carrying amount of
the asset group exceeds its fair value. Intangible assets consist primarily of customer relationships and developed technology,
which are being amortized on a straight-line basis over their estimated useful lives.
Goodwill and Indefinite-lived Intangible Assets. At each acquisition date, we allocate goodwill and intangible assets to our
reporting units based on how we expect each reporting unit to benefit from the respective business combination. Our seven
industry-based operating segments are our reporting units. We evaluate goodwill and indefinite-lived intangible assets for
impairment at least annually, or as circumstances warrant. Goodwill is evaluated at the reporting unit level by comparing the
fair value of the reporting unit with its carrying amount including goodwill. An impairment of goodwill exists if the carrying
amount of the reporting unit exceeds its fair value. The impairment loss is the amount by which the carrying amount exceeds
the reporting unit’s fair value, limited to the total amount of goodwill allocated to that reporting unit. For indefinite-lived
intangible assets, if our qualitative assessment indicates that it is more-likely-than-not that an indefinite-lived intangible asset is
impaired, we test the assets for impairment by comparing the fair value of such assets to their carrying value. If an impairment
is indicated, a write down to the fair value of indefinite-lived intangible asset is recorded.
Stock Repurchase Program. Under the Board of Directors authorized stock repurchase program, the Company is
authorized to repurchase its Class A common stock through open market purchases, including under a 10b5-1 Plan, in
accordance with applicable federal securities laws. We account for the repurchased shares as constructively retired. Shares are
returned to the status of authorized and unissued shares at the time of repurchase. To reflect share repurchases in the
consolidated statements of financial position, we (1) reduce common stock for the par value of the shares, (2) reduce additional
paid-in capital for the amount in excess of par during the period in which the shares are repurchased and (3) record any residual
amount in excess of available additional paid-in capital as a reduction to retained earnings.
Revenue Recognition. We recognize revenues as we transfer control of deliverables (products, solutions and services) to
our clients in an amount reflecting the consideration to which we expect to be entitled. To recognize revenues, we apply the
following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract,
(3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5)
recognize revenues when a performance obligation is satisfied. We account for a contract when it has approval and commitment
from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and
collectibility of consideration is probable. We apply judgment in determining the customer’s ability and intention to pay based
on a variety of factors including the customer’s historical payment experience.
For performance obligations where control is transferred over time, revenues are recognized based on the extent of
progress towards completion of the performance obligation. The selection of the method to measure progress towards
completion requires judgment and is based primarily on the nature of the deliverables to be provided.
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 application maintenance, quality engineering and assurance as well as business
process services are recognized based on our right to invoice for services performed for contracts in which the invoicing is
representative of the value being delivered. If our invoicing is not consistent with the value delivered, revenues are recognized
as the service is performed based on the cost-to-cost method described above. The cost-to-cost method requires estimation of
future costs, which is updated as the project progresses to reflect the latest available information. 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 and any anticipated losses on contracts are recognized immediately,
where appropriate.
Revenues related to fixed-price hosting and infrastructure and security services are recognized based on our right to
invoice for services performed for contracts in which the invoicing is representative of the value being delivered. If our
invoicing is not consistent with the value delivered, revenues are recognized on a straight-line basis unless revenues are earned
and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described
above provides the most faithful depiction of performance towards satisfaction of our performance obligations; for example, the
cost-to-cost method is used when the value of services provided to the customer is best represented by the costs expended to
deliver those services.
Revenues related to our time-and-materials, transaction-based or volume-based contracts are recognized over the period
the services are provided either using an output method such as labor hours, or a method that is otherwise consistent with the
way in which value is delivered to the customer.
Revenues related to our non-hosted software license arrangements that do not require significant modification or
customization of the underlying software are recognized when the software is delivered as control is transferred at a point in
time. For software license arrangements that require significant functionality enhancements or modification of the software,
revenues for the software license and related services are recognized as the services are performed in accordance with the
methods applicable to application development and systems integration services described above. In software hosting
arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the
feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a
service. Sales and usage-based fees promised in exchange for licenses of intellectual property are not recognized as revenue
until the uncertainty related to the variable amounts is resolved. Revenues related to software maintenance and support are
generally recognized on a straight-line basis over the contract period.
Incentive revenues, volume discounts, or any other form of variable consideration is estimated using either the sum of
probability weighted amounts in a range of possible consideration amounts (expected value) or the single most likely amount in
a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of
consideration to which we may be entitled. We include in the transaction price variable consideration only to the extent it is
probable that a significant reversal of revenues recognized will not occur when the uncertainty associated with the variable
consideration is resolved. Our estimates of variable consideration and determination of whether and when to include estimated
amounts in the transaction price may involve judgment and are based largely on an assessment of our anticipated performance
and all information that is reasonably available to us.
Revenues also include the reimbursement of out-of-pocket expenses. Our warranties generally provide a customer with
assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications
and are therefore not considered an additional performance obligation in the contract.
We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any
combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to
determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these
criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with
multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative
standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to
the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus
margin or, in limited circumstances, the residual value approach. We typically establish a standalone selling price range for our
deliverables, which is reassessed on a periodic basis or when facts and circumstances change.
Cognizant
F-11
December 31, 2023 Form 10-K
Cognizant
F-12
December 31, 2023 Form 10-K
We assess the timing of the transfer of goods or services to the customer as compared to the timing of payments to
determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a
significant financing component when the difference between payment and transfer of deliverables is a year or less. If the
difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component
is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of
purchasing our services, not to receive or provide financing from or to customers. We do not consider set up or transition fees
paid upfront by our customers to represent a financing component, as such fees are required to encourage customer
commitment to the project and protect us from early termination of the contract.
Our contracts may be modified to add, remove or change existing performance obligations. The accounting for
modifications to our contracts involves assessing whether the services added to an existing contract are distinct and whether the
pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis,
while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at
the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the
standalone selling price. Services added to our application development and systems integration service contracts are typically
not distinct, while services added to our other contracts, including application maintenance, quality engineering and assurance
as well as business process services contracts, are typically distinct.
From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases,
we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). In
doing so, we evaluate whether we control the good or service before it is transferred to the customer. If we control the good or
service before it is transferred to the customer, we are the principal; if not, we are the agent. Determining whether we control
the good or service before it is transferred to the customer requires significant judgment.
Trade Accounts Receivable, Contract Assets and Contract Liabilities. We classify our right to consideration in exchange
for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e., only
the passage of time is required before payment is due). For example, we recognize a receivable for revenues related to our time
and materials and transaction or volume-based contracts when earned regardless of whether amounts have been billed. We
present such receivables in "Trade accounts receivable, net" in our consolidated statements of financial position at their net
estimated realizable value. A contract asset is a right to consideration that is conditional upon factors other than the passage of
time. Contract assets are presented in "Other current assets" or "Other noncurrent assets" in our consolidated statements of
financial position, based on the expected timing of billing, and primarily relate to unbilled amounts on fixed-price contracts
utilizing the cost-to-cost method of revenue recognition. Our contract liabilities, or deferred revenue, consist of advance
payments from clients and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent
based on the timing of when we expect to recognize the revenues.
Our contract assets and contract liabilities are reported on a net basis by contract at the end of each reporting period. The
difference between the opening and closing balances of our contract assets and contract liabilities primarily results from the
timing difference between our performance obligations and the client’s payment. We receive payments from clients based on
the terms established in our contracts, which vary from contract to contract.
Allowance for Credit Losses. We calculate expected credit losses for our trade accounts receivable and contract assets.
Expected credit losses include losses expected based on known credit issues with specific customers as well as a general
expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable
economic forecasts that affect collectibility. We update our allowance for credit losses on a quarterly basis with changes in the
allowance recognized in income from operations.
Costs to Fulfill. Recurring operating costs for contracts with customers are recognized as incurred. Certain eligible,
nonrecurring costs (i.e., set-up or transition costs) are capitalized when such costs (1) relate directly to the contract, (2) generate
or enhance resources of the Company that will be used in satisfying the performance obligation in the future, and (3) are
expected to be recovered. These costs are expensed ratably over the estimated life of the customer relationship, including
expected contract renewals. In determining the estimated life of the customer relationship, we evaluate the average contract
term on a portfolio basis by nature of the services to be provided, and apply judgment in evaluating the rate of technological
and industry change. Capitalized amounts are monitored regularly for impairment. Impairment losses are recorded when
projected remaining consideration that has not already been recognized as revenue less costs related to the services being
provided are not sufficient to recover the carrying amount of the capitalized costs to fulfill. Costs to fulfill are recorded in
"Other noncurrent assets" in our consolidated statements of financial position and the amortization expense of costs to fulfill is
included in "Cost of revenues" in our consolidated statements of operations.
Stock-Based Compensation. Stock-based compensation expense for awards of equity instruments to employees and non-
employee directors is determined based on the grant date fair value of those awards. We recognize these compensation costs net
of an estimated forfeiture rate over the requisite service period of the award. Forfeitures are estimated on the date of grant and
revised if actual or expected forfeiture activity differs materially from original estimates. Stock-based compensation expense
relating to RSUs and PSUs is recognized as shares vest over the requisite service period. If the minimum performance targets
are not met, no compensation cost is recognized and any recognized compensation cost is reversed, except for awards subject to
a market condition. The fair value of RSUs and PSUs is determined based on the number of stock units granted and the quoted
price of our stock at the date of grant. The fair value of PSUs granted subject to a market condition is determined using a Monte
Carlo valuation model.
Foreign Currency. The assets and liabilities of our foreign subsidiaries whose functional currency is not the U.S. dollar
are translated into U.S. dollars at current exchange rates while revenues and expenses are translated at average monthly
exchange rates. The resulting translation adjustments are recorded in the caption "Accumulated other comprehensive income
(loss)" on the consolidated statements of financial position.
Foreign currency transactions and balances are those that are denominated in a currency other than the entity’s functional
currency. An entity's functional currency is the currency of the primary economic environment in which it operates. The U.S.
dollar is the functional currency for some of our foreign subsidiaries. For these subsidiaries, transactions and balances
denominated in the local currency are foreign currency transactions. Foreign currency transactions and balances related to non-
monetary assets and liabilities are remeasured to the functional currency of the entity at historical exchange rates while
monetary assets and liabilities are remeasured to the functional currency of the entity at current exchange rates. Foreign
currency exchange gains or losses from remeasurement are included in the caption "Foreign currency exchange gain (losses),
net" on our consolidated statements of operations together with gains or losses on our undesignated foreign currency hedges.
Derivative Financial Instruments. Derivative financial instruments are recorded on our consolidated statements of
financial position as either an asset or liability measured at its fair value as of the reporting date. Our derivative financial
instruments consist primarily of foreign exchange forward and option contracts. For derivative financial instruments to qualify
for hedge accounting, the following criteria must be met: (1) the hedging instrument must be designated as a hedge; (2) the
hedged exposure must be specifically identifiable and must expose us to risk; and (3) it must be expected that a change in fair
value of the hedging instrument and an opposite change in the fair value of the hedged exposure will have a high degree of
correlation. Changes in our derivatives’ fair values are recognized in net income unless specific hedge accounting and
documentation criteria are met (i.e., the instruments are designated and accounted for as hedges). We record the effective
portion of the unrealized gains and losses on our derivative financial instruments that are designated as cash flow hedges in the
caption "Accumulated other comprehensive income (loss)" in the consolidated statements of financial position. Any
ineffectiveness or excluded portion of a designated cash flow hedge is recognized in net income. Upon occurrence of the
hedged transaction, the gains and losses on the derivative are recognized in net income.
Income Taxes. We provide for income taxes utilizing the asset and liability method of accounting. Under this method,
deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect taxable income. If it is determined that it is more likely
than not that future tax benefits associated with a deferred income tax asset will not be realized, a valuation allowance is
provided. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in the provision for
income taxes in the period that includes the enactment date.
Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as
well as any related penalties and interest. 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. 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.
Earnings Per Share. Basic EPS is computed by dividing earnings available to common stockholders by the weighted-
average number of common shares outstanding for the period. Diluted EPS includes all potential dilutive common stock in the
weighted average shares outstanding. We excluded less than 1 million of anti-dilutive shares in each of 2023, 2022 and 2021
from our diluted EPS calculation. We include PSUs in the dilutive common shares when they become contingently issuable per
the authoritative guidance and exclude them when they are not contingently issuable.
Restructuring Charges. Restructuring charges principally consist of severance and related separation costs, facility exit
costs and other related third-party costs necessary to execute the restructuring program. The Company accrues for severance
and other related separation costs when it is probable that termination benefits will be paid and the amount is reasonably
Cognizant
F-13
December 31, 2023 Form 10-K
Cognizant
F-14
December 31, 2023 Form 10-K
We assess the timing of the transfer of goods or services to the customer as compared to the timing of payments to
determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a
significant financing component when the difference between payment and transfer of deliverables is a year or less. If the
difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component
is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of
purchasing our services, not to receive or provide financing from or to customers. We do not consider set up or transition fees
paid upfront by our customers to represent a financing component, as such fees are required to encourage customer
commitment to the project and protect us from early termination of the contract.
Our contracts may be modified to add, remove or change existing performance obligations. The accounting for
modifications to our contracts involves assessing whether the services added to an existing contract are distinct and whether the
pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis,
while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at
the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the
standalone selling price. Services added to our application development and systems integration service contracts are typically
not distinct, while services added to our other contracts, including application maintenance, quality engineering and assurance
as well as business process services contracts, are typically distinct.
From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases,
we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). In
doing so, we evaluate whether we control the good or service before it is transferred to the customer. If we control the good or
service before it is transferred to the customer, we are the principal; if not, we are the agent. Determining whether we control
the good or service before it is transferred to the customer requires significant judgment.
Trade Accounts Receivable, Contract Assets and Contract Liabilities. We classify our right to consideration in exchange
for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e., only
the passage of time is required before payment is due). For example, we recognize a receivable for revenues related to our time
and materials and transaction or volume-based contracts when earned regardless of whether amounts have been billed. We
present such receivables in "Trade accounts receivable, net" in our consolidated statements of financial position at their net
estimated realizable value. A contract asset is a right to consideration that is conditional upon factors other than the passage of
time. Contract assets are presented in "Other current assets" or "Other noncurrent assets" in our consolidated statements of
financial position, based on the expected timing of billing, and primarily relate to unbilled amounts on fixed-price contracts
utilizing the cost-to-cost method of revenue recognition. Our contract liabilities, or deferred revenue, consist of advance
payments from clients and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent
based on the timing of when we expect to recognize the revenues.
Our contract assets and contract liabilities are reported on a net basis by contract at the end of each reporting period. The
difference between the opening and closing balances of our contract assets and contract liabilities primarily results from the
timing difference between our performance obligations and the client’s payment. We receive payments from clients based on
the terms established in our contracts, which vary from contract to contract.
Allowance for Credit Losses. We calculate expected credit losses for our trade accounts receivable and contract assets.
Expected credit losses include losses expected based on known credit issues with specific customers as well as a general
expected credit loss allowance based on relevant information, including historical loss rates, current conditions, and reasonable
economic forecasts that affect collectibility. We update our allowance for credit losses on a quarterly basis with changes in the
allowance recognized in income from operations.
Costs to Fulfill. Recurring operating costs for contracts with customers are recognized as incurred. Certain eligible,
nonrecurring costs (i.e., set-up or transition costs) are capitalized when such costs (1) relate directly to the contract, (2) generate
or enhance resources of the Company that will be used in satisfying the performance obligation in the future, and (3) are
expected to be recovered. These costs are expensed ratably over the estimated life of the customer relationship, including
expected contract renewals. In determining the estimated life of the customer relationship, we evaluate the average contract
term on a portfolio basis by nature of the services to be provided, and apply judgment in evaluating the rate of technological
and industry change. Capitalized amounts are monitored regularly for impairment. Impairment losses are recorded when
projected remaining consideration that has not already been recognized as revenue less costs related to the services being
provided are not sufficient to recover the carrying amount of the capitalized costs to fulfill. Costs to fulfill are recorded in
"Other noncurrent assets" in our consolidated statements of financial position and the amortization expense of costs to fulfill is
included in "Cost of revenues" in our consolidated statements of operations.
Stock-Based Compensation. Stock-based compensation expense for awards of equity instruments to employees and non-
employee directors is determined based on the grant date fair value of those awards. We recognize these compensation costs net
of an estimated forfeiture rate over the requisite service period of the award. Forfeitures are estimated on the date of grant and
revised if actual or expected forfeiture activity differs materially from original estimates. Stock-based compensation expense
relating to RSUs and PSUs is recognized as shares vest over the requisite service period. If the minimum performance targets
are not met, no compensation cost is recognized and any recognized compensation cost is reversed, except for awards subject to
a market condition. The fair value of RSUs and PSUs is determined based on the number of stock units granted and the quoted
price of our stock at the date of grant. The fair value of PSUs granted subject to a market condition is determined using a Monte
Carlo valuation model.
Foreign Currency. The assets and liabilities of our foreign subsidiaries whose functional currency is not the U.S. dollar
are translated into U.S. dollars at current exchange rates while revenues and expenses are translated at average monthly
exchange rates. The resulting translation adjustments are recorded in the caption "Accumulated other comprehensive income
(loss)" on the consolidated statements of financial position.
Foreign currency transactions and balances are those that are denominated in a currency other than the entity’s functional
currency. An entity's functional currency is the currency of the primary economic environment in which it operates. The U.S.
dollar is the functional currency for some of our foreign subsidiaries. For these subsidiaries, transactions and balances
denominated in the local currency are foreign currency transactions. Foreign currency transactions and balances related to non-
monetary assets and liabilities are remeasured to the functional currency of the entity at historical exchange rates while
monetary assets and liabilities are remeasured to the functional currency of the entity at current exchange rates. Foreign
currency exchange gains or losses from remeasurement are included in the caption "Foreign currency exchange gain (losses),
net" on our consolidated statements of operations together with gains or losses on our undesignated foreign currency hedges.
Derivative Financial Instruments. Derivative financial instruments are recorded on our consolidated statements of
financial position as either an asset or liability measured at its fair value as of the reporting date. Our derivative financial
instruments consist primarily of foreign exchange forward and option contracts. For derivative financial instruments to qualify
for hedge accounting, the following criteria must be met: (1) the hedging instrument must be designated as a hedge; (2) the
hedged exposure must be specifically identifiable and must expose us to risk; and (3) it must be expected that a change in fair
value of the hedging instrument and an opposite change in the fair value of the hedged exposure will have a high degree of
correlation. Changes in our derivatives’ fair values are recognized in net income unless specific hedge accounting and
documentation criteria are met (i.e., the instruments are designated and accounted for as hedges). We record the effective
portion of the unrealized gains and losses on our derivative financial instruments that are designated as cash flow hedges in the
caption "Accumulated other comprehensive income (loss)" in the consolidated statements of financial position. Any
ineffectiveness or excluded portion of a designated cash flow hedge is recognized in net income. Upon occurrence of the
hedged transaction, the gains and losses on the derivative are recognized in net income.
Income Taxes. We provide for income taxes utilizing the asset and liability method of accounting. Under this method,
deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each balance sheet date, based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect taxable income. If it is determined that it is more likely
than not that future tax benefits associated with a deferred income tax asset will not be realized, a valuation allowance is
provided. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in the provision for
income taxes in the period that includes the enactment date.
Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as
well as any related penalties and interest. 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. 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.
Earnings Per Share. Basic EPS is computed by dividing earnings available to common stockholders by the weighted-
average number of common shares outstanding for the period. Diluted EPS includes all potential dilutive common stock in the
weighted average shares outstanding. We excluded less than 1 million of anti-dilutive shares in each of 2023, 2022 and 2021
from our diluted EPS calculation. We include PSUs in the dilutive common shares when they become contingently issuable per
the authoritative guidance and exclude them when they are not contingently issuable.
Restructuring Charges. Restructuring charges principally consist of severance and related separation costs, facility exit
costs and other related third-party costs necessary to execute the restructuring program. The Company accrues for severance
and other related separation costs when it is probable that termination benefits will be paid and the amount is reasonably
Cognizant
F-13
December 31, 2023 Form 10-K
Cognizant
F-14
December 31, 2023 Form 10-K
estimable. Recognition of employee severance and other separation costs is also dependent on requirements established by
severance policy, statutory laws, or historical experience. Facility exit costs generally reflect the accelerated lease expense for
right-of-use assets, expected lease termination costs, and asset impairments in connection with closure of certain sites, net of
gains on exit-related disposals.
Restructuring costs are recorded in “Restructuring charges” in the consolidated statements of operations. The restructuring
liability related to accrued employee separation costs is included in "Accrued expenses and other current liabilities" in the
consolidated statements of financial position. At the end of each reporting period, the Company evaluates the remaining accrued
balances to ensure these balances are properly stated.
New Accounting Pronouncements
Description
Impact
standard
requires enhanced
The new
segment
disclosures but does not change the definition of a
segment for the guidance for determining a reportable
segment. The amendments require disclosure of
significant segment expenses regularly provided to the
CODM included within segment operating profit or
loss and a description of how the CODM utilizes
segment operating profit or loss to assess segment
performance and allocating resources.
The new
standard also allows companies to disclose multiple
measures of segment profit or loss if those measures
are used to allocate resources.
The new standard requires enhanced income tax
disclosures primarily related to the rate reconciliation
and income taxes paid information.
is
The Company
currently
evaluating the impact of the new
standard
related
disclosures.
on
its
is
The Company
currently
evaluating the impact of the new
standard
related
disclosures.
on
its
Date Issued
and Topic
November 2023
Segment
Reporting
(Topic 280):
Improvements
to Reportable
Segment
Disclosures
Effective Date
Annual period
starting in 2024
and interim
periods starting
in 2025
Retrospective
basis
December 2023
Annual period
starting in 2025
Income Taxes
(Topic 740):
Improvements
to Income Tax
Disclosures
Prospective
basis although
retrospective
application is
permitted
Note 2 — Revenues
Disaggregation of Revenues
The tables below present disaggregated revenues from contracts with clients by client location, service line and contract
type for each of our reportable business segments. We believe this disaggregation best depicts how the nature, amount, timing
and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors. Our consulting and
technology services include consulting, application development, systems integration, quality engineering and assurance
services as well as software solutions and related services while our outsourcing services include application maintenance,
infrastructure and security as well as business process services. Revenues are attributed to geographic regions based upon client
location, which is the client's billing address. Substantially all revenues in our North America region relate to clients in the
United States.
Consulting and technology services
4,207 $
3,226 $
3,017 $
1,775 $
1,865
2,405
1,549
1,384
6,072 $
5,631 $
4,566 $
3,159 $
Transaction or volume-based
Total
3,516 $
2,010 $
1,856 $
1,797 $
2,265
291
2,471
1,150
2,357
353
1,206
156
6,072 $
5,631 $
4,566 $
3,159 $
19,428
Cognizant
F-15
December 31, 2023 Form 10-K
Cognizant
F-16
December 31, 2023 Form 10-K
Consulting and technology services
3,965 $
3,238 $
3,010 $
1,751 $
1,844
2,436
1,618
1,491
5,809 $
5,674 $
4,628 $
3,242 $
Transaction or volume-based
Total
(in millions)
Revenues
Geography:
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total
Service line:
Outsourcing services
Total
Type of contract:
Time and materials
Fixed-price
(in millions)
Revenues
Geography:
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total
Service line:
Outsourcing services
Total
Type of contract:
Time and materials
Fixed-price
$
$
$
$
$
$
$
$
$
$
FS
HS
P&R
CMT
Total
Year Ended December 31, 2023
$
4,091 $
4,865 $
3,102 $
2,205 $
14,263
613
605
1,218
500
167
533
700
109
534
612
1,146
380
571
159
730
307
5,809 $
5,674 $
4,628 $
3,242 $
19,353
3,215 $
2,004 $
1,837 $
1,832 $
2,369
225
2,600
1,070
2,435
356
1,260
150
5,809 $
5,674 $
4,628 $
3,242 $
19,353
FS
HS
P&R
CMT
Total
Year Ended December 31, 2022
$
4,312 $
4,853 $
3,078 $
2,192 $
14,435
599
590
1,189
571
171
483
654
124
521
585
1,106
382
519
137
656
311
6,072 $
5,631 $
4,566 $
3,159 $
19,428
1,885
1,909
3,794
1,296
11,964
7,389
19,353
8,888
8,664
1,801
1,810
1,795
3,605
1,388
12,225
7,203
19,428
9,179
8,299
1,950
estimable. Recognition of employee severance and other separation costs is also dependent on requirements established by
severance policy, statutory laws, or historical experience. Facility exit costs generally reflect the accelerated lease expense for
right-of-use assets, expected lease termination costs, and asset impairments in connection with closure of certain sites, net of
gains on exit-related disposals.
Restructuring costs are recorded in “Restructuring charges” in the consolidated statements of operations. The restructuring
liability related to accrued employee separation costs is included in "Accrued expenses and other current liabilities" in the
consolidated statements of financial position. At the end of each reporting period, the Company evaluates the remaining accrued
balances to ensure these balances are properly stated.
New Accounting Pronouncements
Date Issued
and Topic
November 2023
Segment
Reporting
(Topic 280):
Improvements
to Reportable
Segment
Disclosures
Effective Date
Annual period
starting in 2024
and interim
periods starting
in 2025
Retrospective
basis
Description
Impact
The new
standard
requires enhanced
segment
The Company
is
currently
disclosures but does not change the definition of a
evaluating the impact of the new
segment for the guidance for determining a reportable
standard
on
its
related
segment. The amendments require disclosure of
disclosures.
significant segment expenses regularly provided to the
CODM included within segment operating profit or
loss and a description of how the CODM utilizes
segment operating profit or loss to assess segment
performance and allocating resources.
The new
standard also allows companies to disclose multiple
measures of segment profit or loss if those measures
are used to allocate resources.
December 2023
Annual period
starting in 2025
The new standard requires enhanced income tax
The Company
is
currently
disclosures primarily related to the rate reconciliation
evaluating the impact of the new
and income taxes paid information.
standard
on
its
related
disclosures.
Income Taxes
(Topic 740):
Improvements
to Income Tax
Disclosures
Prospective
basis although
retrospective
application is
permitted
Note 2 — Revenues
Disaggregation of Revenues
The tables below present disaggregated revenues from contracts with clients by client location, service line and contract
type for each of our reportable business segments. We believe this disaggregation best depicts how the nature, amount, timing
and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors. Our consulting and
technology services include consulting, application development, systems integration, quality engineering and assurance
services as well as software solutions and related services while our outsourcing services include application maintenance,
infrastructure and security as well as business process services. Revenues are attributed to geographic regions based upon client
location, which is the client's billing address. Substantially all revenues in our North America region relate to clients in the
United States.
(in millions)
Revenues
Geography:
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total
Service line:
Consulting and technology services
Outsourcing services
Total
Type of contract:
Time and materials
Fixed-price
Transaction or volume-based
Total
(in millions)
Revenues
Geography:
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total
Service line:
Consulting and technology services
Outsourcing services
Total
Type of contract:
Time and materials
Fixed-price
Transaction or volume-based
Total
$
$
$
$
$
$
$
$
$
$
$
$
FS
HS
P&R
CMT
Total
Year Ended December 31, 2023
4,091 $
613
605
1,218
500
5,809 $
4,865 $
167
533
700
109
5,674 $
3,102 $
534
612
1,146
380
4,628 $
2,205 $
571
159
730
307
3,242 $
14,263
1,885
1,909
3,794
1,296
19,353
3,965 $
1,844
5,809 $
3,238 $
2,436
5,674 $
3,010 $
1,618
4,628 $
1,751 $
1,491
3,242 $
11,964
7,389
19,353
3,215 $
2,369
225
5,809 $
2,004 $
2,600
1,070
5,674 $
1,837 $
2,435
356
4,628 $
1,832 $
1,260
150
3,242 $
8,888
8,664
1,801
19,353
FS
HS
P&R
CMT
Total
Year Ended December 31, 2022
4,312 $
599
590
1,189
571
6,072 $
4,853 $
171
483
654
124
5,631 $
3,078 $
521
585
1,106
382
4,566 $
2,192 $
519
137
656
311
3,159 $
14,435
1,810
1,795
3,605
1,388
19,428
4,207 $
1,865
6,072 $
3,226 $
2,405
5,631 $
3,017 $
1,549
4,566 $
1,775 $
1,384
3,159 $
12,225
7,203
19,428
3,516 $
2,265
291
6,072 $
2,010 $
2,471
1,150
5,631 $
1,856 $
2,357
353
4,566 $
1,797 $
1,206
156
3,159 $
9,179
8,299
1,950
19,428
Cognizant
F-15
December 31, 2023 Form 10-K
Cognizant
F-16
December 31, 2023 Form 10-K
(in millions)
Revenues
Geography:
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total
Service line:
Consulting and technology services
Outsourcing services
Total
Type of contract:
Time and materials
Fixed-price
Transaction or volume-based
Total
Costs to Fulfill
$
$
$
$
$
$
FS
HS
P&R
CMT
Total
Year Ended December 31, 2021
Contract liabilities, or deferred revenue, consist of advance payments and billings in excess of revenues recognized. The
table below shows significant movements in the deferred revenue balances (current and noncurrent):
4,204 $
547
745
1,292
555
6,051 $
4,571 $
168
477
645
121
5,337 $
2,937 $
471
539
1,010
329
4,276 $
1,924 $
456
158
614
305
2,843 $
13,636
1,642
1,919
3,561
1,310
18,507
4,079 $
1,972
6,051 $
3,090 $
2,247
5,337 $
2,725 $
1,551
4,276 $
1,693 $
1,150
2,843 $
11,587
6,920
18,507
in previous periods were immaterial.
Remaining Performance Obligations
3,613 $
2,063
375
6,051 $
2,063 $
2,157
1,117
5,337 $
1,785 $
2,085
406
4,276 $
1,679 $
1,032
132
2,843 $
9,140
7,337
2,030
18,507
criteria:
Customers,"
The following table shows significant movements in the capitalized costs to fulfill:
(in millions)
Beginning balance
Costs capitalized
Amortization expense
Impairment charges (1)
Ending balance
2023
2022
265 $
67
(87)
—
245 $
394
39
(109)
(59)
265
$
$
(1) The impairment charges in 2022 are related to costs to fulfill a large volume-based contract with a Health Sciences client.
Costs to obtain contracts were immaterial for the periods disclosed.
Contract Balances
A contract asset is a right to consideration that is conditional upon factors other than the passage of time. The table below
shows significant movements in contract assets (current and noncurrent):
(in millions)
Beginning balance
Revenues recognized during the period but not billed
Amounts reclassified to trade accounts receivable
Amounts acquired in business combinations
Effect of foreign currency exchange movements
Ending balance
2023
2022
326 $
308
(327)
9
—
316 $
310
308
(285)
—
(7)
326
$
$
(in millions)
Beginning balance
Amounts billed but not recognized as revenues
Revenues recognized related to the beginning balance of deferred revenue
Amounts acquired in business combinations
Effect of foreign currency exchange movements
Ending balance
2023
2022
$
$
417 $
406
(409)
13
—
427 $
443
397
(416)
—
(7)
417
Revenues recognized during the year ended December 31, 2023 for performance obligations satisfied or partially satisfied
As of December 31, 2023, the aggregate amount of transaction price allocated to remaining performance obligations, was
$4,007 million, of which approximately 55% is expected to be recognized as revenues within 2 years and 85% is expected to be
recognized as revenues within 5 years. Disclosure is not required for performance obligations that meet any of the following
(1) contracts with a duration of one year or less as determined under ASC Topic 606 "Revenue from Contracts with
(2) contracts for which we recognize revenues based on the right to invoice for services performed,
(3) variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied
promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with
ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met, or
(4) variable consideration in the form of a sales-based or usage based royalty promised in exchange for a license of
intellectual property.
Many of our performance obligations meet one or more of these exemptions and therefore are not included in the
remaining performance obligation amount disclosed above.
Trade Accounts Receivable and Allowance for Credit Losses
The following table presents the activity in the allowance for credit losses for the trade accounts receivable:
(in millions)
Beginning balance
Credit loss expense (1)
Write-offs charged against the allowance
Ending balance
2023
2022
2021
$
$
43 $
12
(23)
32 $
50 $
9
(16)
43 $
57
6
(13)
50
(1)
Reported in "Selling, general and administrative expenses" in our audited consolidated statements of operations.
Cognizant
F-17
December 31, 2023 Form 10-K
Cognizant
F-18
December 31, 2023 Form 10-K
FS
HS
P&R
CMT
Total
Year Ended December 31, 2021
Contract liabilities, or deferred revenue, consist of advance payments and billings in excess of revenues recognized. The
table below shows significant movements in the deferred revenue balances (current and noncurrent):
(in millions)
Beginning balance
Amounts billed but not recognized as revenues
Revenues recognized related to the beginning balance of deferred revenue
Amounts acquired in business combinations
Effect of foreign currency exchange movements
Ending balance
2023
2022
417 $
406
(409)
13
—
427 $
443
397
(416)
—
(7)
417
$
$
Revenues recognized during the year ended December 31, 2023 for performance obligations satisfied or partially satisfied
in previous periods were immaterial.
Remaining Performance Obligations
As of December 31, 2023, the aggregate amount of transaction price allocated to remaining performance obligations, was
$4,007 million, of which approximately 55% is expected to be recognized as revenues within 2 years and 85% is expected to be
recognized as revenues within 5 years. Disclosure is not required for performance obligations that meet any of the following
criteria:
(1) contracts with a duration of one year or less as determined under ASC Topic 606 "Revenue from Contracts with
6,051 $
5,337 $
4,276 $
2,843 $
18,507
Customers,"
(2) contracts for which we recognize revenues based on the right to invoice for services performed,
(3) variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied
promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with
ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met, or
(4) variable consideration in the form of a sales-based or usage based royalty promised in exchange for a license of
intellectual property.
Many of our performance obligations meet one or more of these exemptions and therefore are not included in the
remaining performance obligation amount disclosed above.
Trade Accounts Receivable and Allowance for Credit Losses
The following table presents the activity in the allowance for credit losses for the trade accounts receivable:
(in millions)
Beginning balance
Credit loss expense (1)
Write-offs charged against the allowance
Ending balance
2023
2022
2021
$
$
43 $
12
(23)
32 $
50 $
9
(16)
43 $
57
6
(13)
50
(1)
Reported in "Selling, general and administrative expenses" in our audited consolidated statements of operations.
$
4,204 $
4,571 $
2,937 $
1,924 $
13,636
547
745
1,292
555
168
477
645
121
471
539
1,010
329
456
158
614
305
6,051 $
5,337 $
4,276 $
2,843 $
18,507
(in millions)
Revenues
Geography:
North America
United Kingdom
Continental Europe
Europe - Total
Rest of World
Total
Service line:
Outsourcing services
Total
Type of contract:
Time and materials
Fixed-price
Transaction or volume-based
Total
Costs to Fulfill
(in millions)
Beginning balance
Costs capitalized
Amortization expense
Impairment charges (1)
Ending balance
$
$
$
$
$
Consulting and technology services
4,079 $
3,090 $
2,725 $
1,693 $
1,972
2,247
1,551
1,150
6,051 $
5,337 $
4,276 $
2,843 $
3,613 $
2,063 $
1,785 $
1,679 $
2,063
375
2,157
1,117
2,085
406
1,032
132
The following table shows significant movements in the capitalized costs to fulfill:
2023
2022
(1) The impairment charges in 2022 are related to costs to fulfill a large volume-based contract with a Health Sciences client.
Costs to obtain contracts were immaterial for the periods disclosed.
Contract Balances
A contract asset is a right to consideration that is conditional upon factors other than the passage of time. The table below
shows significant movements in contract assets (current and noncurrent):
2023
2022
(in millions)
Beginning balance
Revenues recognized during the period but not billed
Amounts reclassified to trade accounts receivable
Amounts acquired in business combinations
Effect of foreign currency exchange movements
Ending balance
$
$
$
$
265 $
67
(87)
—
245 $
326 $
308
(327)
9
—
316 $
1,642
1,919
3,561
1,310
11,587
6,920
18,507
9,140
7,337
2,030
394
39
(109)
(59)
265
310
308
(285)
—
(7)
326
Cognizant
F-17
December 31, 2023 Form 10-K
Cognizant
F-18
December 31, 2023 Form 10-K
Note 3 — Business Combinations
Acquisitions completed during each of the three years ended December 31, 2023, 2022 and 2021 were not individually or
in the aggregate material to our operations. Accordingly, pro forma results have not been presented. We have allocated the
purchase price related to these transactions to tangible and intangible assets acquired and liabilities assumed, including
goodwill, based on their estimated fair values. The primary items that generated goodwill are the value of the acquired
assembled workforces and synergies between the acquired companies and us, neither of which qualify as an identifiable
intangible asset.
2023
In 2023, we acquired 100% ownership in each of the following:
•
certain net assets of OneSource Virtual, the professional and application management services business of
OneSource Virtual, Inc. and OneSource Virtual (UK) Ltd., a leading provider of Workday services, solutions and
products, acquired to complement our existing finance and human resources advisory implementation services
related to Workday (acquired January 1, 2023), and
• Mobica, an IoT software engineering services provider, acquired to expand our IoT embedded software engineering
capabilities (acquired March 10, 2023).
The allocations of purchase price to the fair value of the aggregate assets acquired and liabilities assumed were as
follows:
(in millions)
Cash
Trade accounts receivable
Other current assets
Property and equipment and other assets
Non-deductible goodwill
Tax-deductible goodwill
Customer relationship assets
Current liabilities
Noncurrent liabilities
Purchase price
OneSource
Virtual
Mobica
Total
Weighted Average
Useful Life
$
— $
20 $
—
4
1
18
88
11
10
8
6
202
—
120
(18)
(1)
(9)
(32)
20
10
12
7
220
88
131
(27)
(33)
$
103 $
325 $
428
For the year ended December 31, 2022, revenues from acquisitions completed in 2022, since the dates of acquisition,
10.9 years
• Linium, a cloud transformation consultancy group specializing in the ServiceNow platform and solutions for smart
digital enterprise workflows, acquired to broaden our enterprise service management capabilities (acquired January
In 2021, we acquired 100% ownership in each of the following:
Goodwill from our acquisition of OneSource Virtual is expected to benefit all of our reportable segments and has been
allocated as such. Goodwill from our acquisition of Mobica has been allocated to our Financial Services, Products and
Resources and Communications, Media and Technology segments. For the year ended December 31, 2023, revenues from
acquisitions completed in 2023, since the dates of acquisition, were $130 million. On December 30, 2022, $103 million was
placed in an escrow account in advance of the closing date of our acquisition of certain net assets of OneSource Virtual on
January 1, 2023. This balance was deemed to be restricted cash as of December 31, 2022 and was presented in "Other
noncurrent assets" in our consolidated statement of financial position and as restricted cash in our consolidated statement of
cash flows for the year ended December 31, 2022.
2022
In 2022, we acquired 100% ownership in each of the following:
• AustinCSI, a digital transformation consultancy specializing in enterprise cloud and data analytics advisory
services, acquired to complement our technology and industry expertise (acquired December 15, 2022); and
• Utegration, a full service consulting and solutions provider specializing in SAP technology and SAP-certified
products for the energy and utilities sectors, acquired to expand and strengthen our industry expertise in our SAP
practice (acquired December 19, 2022).
The allocations of purchase price to the fair value of the assets acquired and liabilities assumed were as follows:
Property and equipment and other assets
(dollars in millions)
Cash
Trade accounts receivable
Non-deductible goodwill
Tax-deductible goodwill
Customer relationship assets
Other intangible assets
Current liabilities
Noncurrent liabilities
Purchase price
were immaterial.
2021
AustinCSI Utegration
Total
Useful Life
Weighted Average
$
— $
5 $
9
4
—
83
69
—
5
28
10
23
181
151
2
19
6
23
98
82
2
(3)
(1)
(18)
(21)
(3)
(4)
$
161 $
214 $ 375
12.7 years
6.7 years
31, 2021);
2021);
• Magenic, a provider of agile software and cloud development, DevOps, experience design and advisory services
across a range of industries, acquired to enhance our global software engineering expertise (acquired February 1,
• Servian, an Australia-based enterprise transformation consultancy specializing in data analytics, AI, digital
services, experience design and cloud, acquired to enhance our digital portfolio and market presence in Australia
and New Zealand (acquired April 1, 2021);
• ESG Mobility, a digital automotive engineering research and development provider for connected, autonomous and
electric vehicles, acquired to expand our digital engineering expertise, particularly in connected vehicles (acquired
June 1, 2021);
(acquired July 30, 2021);
• TQS, a global industrial data and intelligence company, acquired to accelerate our growth in IoT, data and analytics
• Hunter, a provider of digital engineering and project management services, acquired to extend our talent network in
key markets, expanding our digital engineering resources in the United States (acquired August 16, 2021); and
• Devbridge, a software consultancy and product development company, acquired to expand our software product
engineering capabilities and global delivery footprint (acquired December 9, 2021).
Cognizant
F-19
December 31, 2023 Form 10-K
Cognizant
F-20
December 31, 2023 Form 10-K
Note 3 — Business Combinations
Acquisitions completed during each of the three years ended December 31, 2023, 2022 and 2021 were not individually or
in the aggregate material to our operations. Accordingly, pro forma results have not been presented. We have allocated the
purchase price related to these transactions to tangible and intangible assets acquired and liabilities assumed, including
goodwill, based on their estimated fair values. The primary items that generated goodwill are the value of the acquired
assembled workforces and synergies between the acquired companies and us, neither of which qualify as an identifiable
intangible asset.
2023
In 2023, we acquired 100% ownership in each of the following:
•
certain net assets of OneSource Virtual, the professional and application management services business of
OneSource Virtual, Inc. and OneSource Virtual (UK) Ltd., a leading provider of Workday services, solutions and
products, acquired to complement our existing finance and human resources advisory implementation services
related to Workday (acquired January 1, 2023), and
• Mobica, an IoT software engineering services provider, acquired to expand our IoT embedded software engineering
capabilities (acquired March 10, 2023).
The allocations of purchase price to the fair value of the aggregate assets acquired and liabilities assumed were as
follows:
(in millions)
Cash
Trade accounts receivable
Other current assets
Property and equipment and other assets
Non-deductible goodwill
Tax-deductible goodwill
Customer relationship assets
Current liabilities
Noncurrent liabilities
Purchase price
OneSource
Virtual
Mobica
Total
Weighted Average
Useful Life
$
— $
20 $
—
4
1
18
88
11
10
8
6
202
—
120
20
10
12
7
220
88
131
(27)
(33)
10.9 years
(18)
(1)
(9)
(32)
$
103 $
325 $
428
Goodwill from our acquisition of OneSource Virtual is expected to benefit all of our reportable segments and has been
allocated as such. Goodwill from our acquisition of Mobica has been allocated to our Financial Services, Products and
Resources and Communications, Media and Technology segments. For the year ended December 31, 2023, revenues from
acquisitions completed in 2023, since the dates of acquisition, were $130 million. On December 30, 2022, $103 million was
placed in an escrow account in advance of the closing date of our acquisition of certain net assets of OneSource Virtual on
January 1, 2023. This balance was deemed to be restricted cash as of December 31, 2022 and was presented in "Other
noncurrent assets" in our consolidated statement of financial position and as restricted cash in our consolidated statement of
cash flows for the year ended December 31, 2022.
2022
In 2022, we acquired 100% ownership in each of the following:
• AustinCSI, a digital transformation consultancy specializing in enterprise cloud and data analytics advisory
services, acquired to complement our technology and industry expertise (acquired December 15, 2022); and
• Utegration, a full service consulting and solutions provider specializing in SAP technology and SAP-certified
products for the energy and utilities sectors, acquired to expand and strengthen our industry expertise in our SAP
practice (acquired December 19, 2022).
The allocations of purchase price to the fair value of the assets acquired and liabilities assumed were as follows:
(dollars in millions)
Cash
Trade accounts receivable
Property and equipment and other assets
Non-deductible goodwill
Tax-deductible goodwill
Customer relationship assets
Other intangible assets
Current liabilities
Noncurrent liabilities
Purchase price
AustinCSI Utegration
Total
Weighted Average
Useful Life
$
— $
5 $
9
4
—
83
69
—
19
6
23
98
82
2
5
28
10
23
181
151
2
(3)
(1)
(18)
(21)
(3)
(4)
$
161 $
214 $ 375
12.7 years
6.7 years
For the year ended December 31, 2022, revenues from acquisitions completed in 2022, since the dates of acquisition,
were immaterial.
2021
In 2021, we acquired 100% ownership in each of the following:
• Linium, a cloud transformation consultancy group specializing in the ServiceNow platform and solutions for smart
digital enterprise workflows, acquired to broaden our enterprise service management capabilities (acquired January
31, 2021);
• Magenic, a provider of agile software and cloud development, DevOps, experience design and advisory services
across a range of industries, acquired to enhance our global software engineering expertise (acquired February 1,
2021);
• Servian, an Australia-based enterprise transformation consultancy specializing in data analytics, AI, digital
services, experience design and cloud, acquired to enhance our digital portfolio and market presence in Australia
and New Zealand (acquired April 1, 2021);
• ESG Mobility, a digital automotive engineering research and development provider for connected, autonomous and
electric vehicles, acquired to expand our digital engineering expertise, particularly in connected vehicles (acquired
June 1, 2021);
• TQS, a global industrial data and intelligence company, acquired to accelerate our growth in IoT, data and analytics
(acquired July 30, 2021);
• Hunter, a provider of digital engineering and project management services, acquired to extend our talent network in
key markets, expanding our digital engineering resources in the United States (acquired August 16, 2021); and
• Devbridge, a software consultancy and product development company, acquired to expand our software product
engineering capabilities and global delivery footprint (acquired December 9, 2021).
Cognizant
F-19
December 31, 2023 Form 10-K
Cognizant
F-20
December 31, 2023 Form 10-K
Note 5 — Investments
(in millions)
Short-term investments:
Equity investment security
Available-for-sale investment securities
Held-to-maturity investment securities
Time deposits
Total short-term investments
Long-term investments:
Other investments
Restricted time deposits(1)
Total long-term investments
Equity Investment Security
2023
2022
$
$
$
$
11
—
3
—
14
80
355
435
$
$
$
$
10
225
24
51
310
70
357
427
The allocations of purchase price to the fair value of the assets acquired and liabilities assumed were as follows:
Devbridge
Servian Magenic
ESG
Mobility
Linium
Other
Total
Weighted Average
Useful Life
Our investments were as follows as of December 31:
(dollars in millions)
Cash
Trade accounts receivable
Property and equipment and other assets
Operating lease assets, net
Non-deductible goodwill
Tax-deductible goodwill
Customer relationship assets
Other intangible assets
Current liabilities
Noncurrent liabilities
Purchase price, inclusive of
contingent consideration
$
7 $
4 $
13 $
28 $ — $
2 $
12
5
11
41
15
6
5
184
140
—
72
—
77
2
17
4
10
10
137
90
30
8
27
26
24
77
5
1
—
—
57
24
12
4
1
18
10
32
1
—
—
—
54
91
28
54
279
368
372
3
9.8 years
3.8 years
(11)
(12)
(29)
(22)
(2)
(7)
(83)
(9)
(29)
(7)
(66) —
(6)
(117)
$
268 $ 252 $ 246 $ 132 $
85 $
66 $ 1,049
For the year ended December 31, 2021, revenues from acquisitions completed in 2021, since the dates of acquisition,
of December 31, 2022 the balance consisted solely of restricted investments. See Note 11.
(1)
As of December 31, 2023 the balance of restricted time deposits contains $96 million of restricted cash equivalents. As
were $301 million.
Note 4 — Restructuring Charges
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. We
expect the NextGen program to be completed by the end of 2024.
ended December 31, 2023, 2022 and 2021.
Available-for-Sale Investment Securities
The total costs related to our NextGen program are reported in "Restructuring charges" in our audited consolidated
statements of operations. We do not allocate these charges to individual segments in internal management reports used by the
CODM. Accordingly, such expenses are separately disclosed in our segment reporting as “unallocated costs”. See Note 18.
(in millions)
Employee separation costs
Facility exit costs (1)
Third party and other costs (2)
Total restructuring charges
Year Ended
December 31, 2023
$
$
115
108
6
229
(1)
(2)
For the year ended December 31, 2023, facility exit costs include lease restructuring of $71 million, related accelerated
depreciation of $36 million and impairment of long-lived assets of $1 million.
Third party and other costs include certain non-facility related asset impairments, as well as legal and other
professional services fees directly related to the NextGen program.
hierarchy.
We expect to record total costs of approximately $300 million in connection with the NextGen program, inclusive of the
$229 million of costs incurred for the year ended December 31, 2023.
Changes in our accrued employee separation costs included in "Accrued expenses and other current liabilities" in our
consolidated statements of financial position are presented in the table below for the year ended December 31:
Our equity investment security is a U.S. dollar denominated investment in a fixed income mutual fund. During 2022, we
sold $15 million of our investment in the fund. Realized and unrealized gains and losses were immaterial for each of the years
As of December 31, 2023, we had no available-for-sale investment securities. As of December 31, 2022, the amortized
cost and fair value of the available-for-sale investments were each $225 million. Our available-for-sale investment securities
consisted of highly rated U.S. dollar denominated investments in certificates of deposit and commercial paper maturing within
one year. Unrealized losses were immaterial as of December 31, 2022. There were no realized gains or losses related to the
available-for-sale investment securities during each of the years ended December 31, 2023, 2022 and 2021. There were no sales
of available-for-sale investment securities during each of the years ended December 31, 2023, 2022 and 2021.
Held-to-Maturity Investment Securities
Our held-to-maturity investment securities consist of Indian rupee denominated investments primarily in commercial
paper and international corporate bonds. Our investment guidelines are to purchase securities that are investment grade at the
time of acquisition. The basis for the measurement of fair value of our held-to-maturity investments is Level 2 in the fair value
The amortized cost and fair value of commercial paper securities as of December 31, 2023 and 2022 were each $3 million
and $12 million, respectively. As of December 31, 2023, there were no corporate debt securities. As of December 31, 2022 the
amortized cost and fair value of corporate debt securities was $12 million.
As of December 31, 2023, our portfolio of $3 million included a single commercial paper security in an unrealized loss
position. The total unrealized loss was less than $1 million and the security had not been in an unrealized loss position for
longer than 12 months. As of December 31, 2022, $12 million of corporate debt securities and $12 million of commercial paper
were in an unrealized loss position. The total unrealized loss was less than $1 million and none of the securities had been in an
(in millions)
Beginning balance
Employee separation costs accrued
Payments made
Ending balance
There were no restructuring charges during 2022 or 2021.
2023
unrealized loss position for longer than 12 months.
$
$
—
115
(73)
42
Other Investments
The securities in our portfolio are highly rated and short-term in nature. As of December 31, 2023, the commercial paper
security was rated A-1+ by CRISIL, an Indian subsidiary of S&P Global.
As of December 31, 2023 and 2022, we had equity method investments of $74 million and $68 million, respectively,
primarily related to an investment in the technology sector. As of December 31, 2023 and 2022, we had equity securities
without a readily determinable fair value of $6 million and $2 million, respectively.
Cognizant
F-21
December 31, 2023 Form 10-K
Cognizant
F-22
December 31, 2023 Form 10-K
Devbridge
Servian Magenic
Mobility
Linium
Other
Total
Useful Life
ESG
Weighted Average
$
7 $
4 $
13 $
28 $ — $
2 $
(dollars in millions)
Cash
Trade accounts receivable
Property and equipment and other assets
Operating lease assets, net
Non-deductible goodwill
Tax-deductible goodwill
Customer relationship assets
Other intangible assets
Current liabilities
Noncurrent liabilities
Purchase price, inclusive of
contingent consideration
12
5
11
41
72
—
15
6
5
184
77
2
140
—
17
4
10
10
137
90
30
8
27
26
24
77
—
—
5
1
57
24
12
4
1
18
10
32
1
—
—
—
54
91
28
54
279
368
372
3
(11)
(12)
(29)
(22)
(2)
(7)
(83)
(9)
(29)
(7)
(66) —
(6)
(117)
$
268 $ 252 $ 246 $ 132 $
85 $
66 $ 1,049
9.8 years
3.8 years
were $301 million.
Note 4 — Restructuring Charges
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. We
expect the NextGen program to be completed by the end of 2024.
The total costs related to our NextGen program are reported in "Restructuring charges" in our audited consolidated
statements of operations. We do not allocate these charges to individual segments in internal management reports used by the
CODM. Accordingly, such expenses are separately disclosed in our segment reporting as “unallocated costs”. See Note 18.
(in millions)
Employee separation costs
Facility exit costs (1)
Third party and other costs (2)
Total restructuring charges
(1)
(2)
For the year ended December 31, 2023, facility exit costs include lease restructuring of $71 million, related accelerated
depreciation of $36 million and impairment of long-lived assets of $1 million.
Third party and other costs include certain non-facility related asset impairments, as well as legal and other
professional services fees directly related to the NextGen program.
We expect to record total costs of approximately $300 million in connection with the NextGen program, inclusive of the
$229 million of costs incurred for the year ended December 31, 2023.
Changes in our accrued employee separation costs included in "Accrued expenses and other current liabilities" in our
consolidated statements of financial position are presented in the table below for the year ended December 31:
(in millions)
Beginning balance
Payments made
Ending balance
Employee separation costs accrued
There were no restructuring charges during 2022 or 2021.
Year Ended
December 31, 2023
$
$
115
108
6
229
2023
—
115
(73)
42
$
$
The allocations of purchase price to the fair value of the assets acquired and liabilities assumed were as follows:
Note 5 — Investments
Our investments were as follows as of December 31:
(in millions)
Short-term investments:
Equity investment security
Available-for-sale investment securities
Held-to-maturity investment securities
Time deposits
Total short-term investments
Long-term investments:
Other investments
Restricted time deposits(1)
Total long-term investments
2023
2022
$
$
$
$
11
—
3
—
14
80
355
435
$
$
$
$
10
225
24
51
310
70
357
427
For the year ended December 31, 2021, revenues from acquisitions completed in 2021, since the dates of acquisition,
(1)
As of December 31, 2023 the balance of restricted time deposits contains $96 million of restricted cash equivalents. As
of December 31, 2022 the balance consisted solely of restricted investments. See Note 11.
Equity Investment Security
Our equity investment security is a U.S. dollar denominated investment in a fixed income mutual fund. During 2022, we
sold $15 million of our investment in the fund. Realized and unrealized gains and losses were immaterial for each of the years
ended December 31, 2023, 2022 and 2021.
Available-for-Sale Investment Securities
As of December 31, 2023, we had no available-for-sale investment securities. As of December 31, 2022, the amortized
cost and fair value of the available-for-sale investments were each $225 million. Our available-for-sale investment securities
consisted of highly rated U.S. dollar denominated investments in certificates of deposit and commercial paper maturing within
one year. Unrealized losses were immaterial as of December 31, 2022. There were no realized gains or losses related to the
available-for-sale investment securities during each of the years ended December 31, 2023, 2022 and 2021. There were no sales
of available-for-sale investment securities during each of the years ended December 31, 2023, 2022 and 2021.
Held-to-Maturity Investment Securities
Our held-to-maturity investment securities consist of Indian rupee denominated investments primarily in commercial
paper and international corporate bonds. Our investment guidelines are to purchase securities that are investment grade at the
time of acquisition. The basis for the measurement of fair value of our held-to-maturity investments is Level 2 in the fair value
hierarchy.
The amortized cost and fair value of commercial paper securities as of December 31, 2023 and 2022 were each $3 million
and $12 million, respectively. As of December 31, 2023, there were no corporate debt securities. As of December 31, 2022 the
amortized cost and fair value of corporate debt securities was $12 million.
As of December 31, 2023, our portfolio of $3 million included a single commercial paper security in an unrealized loss
position. The total unrealized loss was less than $1 million and the security had not been in an unrealized loss position for
longer than 12 months. As of December 31, 2022, $12 million of corporate debt securities and $12 million of commercial paper
were in an unrealized loss position. The total unrealized loss was less than $1 million and none of the securities had been in an
unrealized loss position for longer than 12 months.
The securities in our portfolio are highly rated and short-term in nature. As of December 31, 2023, the commercial paper
security was rated A-1+ by CRISIL, an Indian subsidiary of S&P Global.
Other Investments
As of December 31, 2023 and 2022, we had equity method investments of $74 million and $68 million, respectively,
primarily related to an investment in the technology sector. As of December 31, 2023 and 2022, we had equity securities
without a readily determinable fair value of $6 million and $2 million, respectively.
Cognizant
F-21
December 31, 2023 Form 10-K
Cognizant
F-22
December 31, 2023 Form 10-K
Note 6 — Property and Equipment, net
Property and equipment were as follows as of December 31:
Estimated Useful Life
2023
2022
immaterial.
Buildings
Computer equipment
Computer software
Furniture and equipment
Land
Capital work-in-progress
Leasehold improvements
Sub-total
Accumulated depreciation and amortization
Property and equipment, net
(in years)
30
3 – 5
3 – 8
5 – 9
Shorter of the lease term or
the life of the asset
(in millions)
769
$
794
1,007
733
7
88
422
3,820
(2,772)
1,048
$
771
729
1,033
768
7
111
398
3,817
(2,716)
1,101
$
$
Depreciation and amortization expense related to property and equipment was $390 million, $385 million and $392
million for the years ended December 31, 2023, 2022 and 2021, respectively. For the year ended December 31, 2023,
$36 million of our depreciation and amortization expense was reported in "Restructuring charges".
The gross amount of property and equipment recorded under finance leases was $25 million and $17 million as of
December 31, 2023 and 2022, respectively. Accumulated amortization for our ROU finance lease assets was $13 million and
$9 million as of December 31, 2023 and 2022, respectively. Amortization expense related to our ROU finance lease assets was
$4 million, $4 million and $7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The gross amount of property and equipment recorded for software to be sold, leased or marketed reported in the caption
"Computer software" above was $279 million and $241 million as of December 31, 2023 and 2022, respectively. Accumulated
amortization for software to be sold, leased or marketed was $177 million and $143 million as of December 31, 2023 and 2022,
respectively. Amortization expense for software to be sold, leased or marketed recorded as property and equipment was $37
million, $37 million and $33 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Note 7 — Leases
The following table provides information on the components of our operating and finance leases included in our
consolidated statement of financial position as of December 31:
Location on Statement of Financial Position
2023
2022
Leases
Assets
ROU operating lease assets
ROU finance lease assets
Operating lease assets, net
Property and equipment, net
Total
Liabilities
Current
Operating lease
Finance lease
Noncurrent
Operating lease
Finance lease
Operating lease liabilities
Accrued expenses and other current liabilities
Operating lease liabilities, noncurrent
Other noncurrent liabilities
Total
$
$
$
$
(in millions)
611 $
12
623 $
153 $
8
523
16
700 $
876
8
884
174
5
714
8
901
For the years ended December 31, 2023, 2022 and 2021, our operating lease costs were $304 million, $256 million and
$293 million, respectively, including variable lease costs of $21 million, $17 million and $10 million, respectively. Our short-
term lease rental expense was $15 million, $21 million and $22 million for the years ended December 31, 2023, 2022 and 2021,
respectively. Lease interest expense related to our finance leases for years ended December 31, 2023, 2022 and 2021 was
The following table provides information on the weighted average remaining lease term and weighted average discount
rate for our operating leases as of December 31:
2023
2022
5.6 years
5.4 %
6.2 years
5.4 %
Operating Lease Term and Discount Rate
Weighted average remaining lease term
Weighted average discount rate
December 31:
(in millions)
The following table provides supplemental cash flow and non-cash information related to our operating leases as of
Cash paid for amounts included in the measurement of operating lease liabilities
$
240 $
241 $
ROU assets obtained in exchange for operating lease liabilities
Reduction of ROU assets and lease liabilities as a result of our NextGen program
86
(110)
164
—
274
100
—
2023
2022
2021
Cash paid for amounts included in the measurement of finance lease liabilities and ROU assets obtained in exchange for
finance lease liabilities were each immaterial for each of the years ended December 31, 2023, 2022 and 2021.
The following table provides the schedule of maturities of our operating lease liabilities and a reconciliation of the
undiscounted cash flows to the operating lease liabilities recognized in the statement of financial position as of December 31:
(in millions)
2024
2025
2026
2027
2028
Thereafter
Interest
Total operating lease payments
Total operating lease liabilities
$
2023
$
183
155
128
104
72
138
780
(104)
676
As of December 31, 2023, we had $21 million of additional obligations related to operating leases whose lease term had
yet to commence and which are therefore not included in our statement of financial position. These leases are primarily related
to real estate and will commence in 2024 with lease terms of 5 to 10 years.
Note 8 — Goodwill and Intangible Assets, net
Changes in goodwill by our reportable business segments were as follows for the years ended December 31, 2023 and
2022:
Segment
Financial Services
Health Sciences
Products and Resources
Communications, Media and Technology
Total goodwill
January 1,
2023
Goodwill
Additions and
Adjustments
Foreign Currency
Translation
Adjustments
December 31,
2023
$
$
1,073
2,819
1,062
756
$
5,710
$
(in millions)
19
15
137
148
319
$
$
17
6
18
15
56
$
1,109
2,840
1,217
919
$
6,085
Cognizant
F-23
December 31, 2023 Form 10-K
Cognizant
F-24
December 31, 2023 Form 10-K
Note 6 — Property and Equipment, net
Property and equipment were as follows as of December 31:
Buildings
Computer equipment
Computer software
Furniture and equipment
Land
Capital work-in-progress
Leasehold improvements
Sub-total
Accumulated depreciation and amortization
Property and equipment, net
Estimated Useful Life
2023
2022
$
(in millions)
$
(in years)
30
3 – 5
3 – 8
5 – 9
769
794
1,007
733
7
88
422
3,820
(2,772)
771
729
1,033
768
7
111
398
3,817
(2,716)
$
1,048
$
1,101
Shorter of the lease term or
the life of the asset
Depreciation and amortization expense related to property and equipment was $390 million, $385 million and $392
million for the years ended December 31, 2023, 2022 and 2021, respectively. For the year ended December 31, 2023,
$36 million of our depreciation and amortization expense was reported in "Restructuring charges".
The gross amount of property and equipment recorded under finance leases was $25 million and $17 million as of
December 31, 2023 and 2022, respectively. Accumulated amortization for our ROU finance lease assets was $13 million and
$9 million as of December 31, 2023 and 2022, respectively. Amortization expense related to our ROU finance lease assets was
$4 million, $4 million and $7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The gross amount of property and equipment recorded for software to be sold, leased or marketed reported in the caption
"Computer software" above was $279 million and $241 million as of December 31, 2023 and 2022, respectively. Accumulated
amortization for software to be sold, leased or marketed was $177 million and $143 million as of December 31, 2023 and 2022,
respectively. Amortization expense for software to be sold, leased or marketed recorded as property and equipment was $37
million, $37 million and $33 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Note 7 — Leases
Leases
Assets
Liabilities
Current
Operating lease
Finance lease
Noncurrent
Operating lease
Finance lease
The following table provides information on the components of our operating and finance leases included in our
consolidated statement of financial position as of December 31:
Location on Statement of Financial Position
2023
2022
ROU operating lease assets
Operating lease assets, net
ROU finance lease assets
Property and equipment, net
Total
$
$
$
$
(in millions)
611 $
12
623 $
153 $
8
523
16
700 $
876
8
884
174
5
714
8
901
Operating lease liabilities
Accrued expenses and other current liabilities
Operating lease liabilities, noncurrent
Other noncurrent liabilities
Total
For the years ended December 31, 2023, 2022 and 2021, our operating lease costs were $304 million, $256 million and
$293 million, respectively, including variable lease costs of $21 million, $17 million and $10 million, respectively. Our short-
term lease rental expense was $15 million, $21 million and $22 million for the years ended December 31, 2023, 2022 and 2021,
respectively. Lease interest expense related to our finance leases for years ended December 31, 2023, 2022 and 2021 was
immaterial.
The following table provides information on the weighted average remaining lease term and weighted average discount
rate for our operating leases as of December 31:
Operating Lease Term and Discount Rate
Weighted average remaining lease term
Weighted average discount rate
2023
2022
5.6 years
5.4 %
6.2 years
5.4 %
The following table provides supplemental cash flow and non-cash information related to our operating leases as of
December 31:
(in millions)
2023
2022
2021
Cash paid for amounts included in the measurement of operating lease liabilities
$
240 $
241 $
ROU assets obtained in exchange for operating lease liabilities
Reduction of ROU assets and lease liabilities as a result of our NextGen program
86
(110)
164
—
274
100
—
Cash paid for amounts included in the measurement of finance lease liabilities and ROU assets obtained in exchange for
finance lease liabilities were each immaterial for each of the years ended December 31, 2023, 2022 and 2021.
The following table provides the schedule of maturities of our operating lease liabilities and a reconciliation of the
undiscounted cash flows to the operating lease liabilities recognized in the statement of financial position as of December 31:
2023
$
(in millions)
2024
2025
2026
2027
2028
Thereafter
Total operating lease payments
Interest
Total operating lease liabilities
$
183
155
128
104
72
138
780
(104)
676
As of December 31, 2023, we had $21 million of additional obligations related to operating leases whose lease term had
yet to commence and which are therefore not included in our statement of financial position. These leases are primarily related
to real estate and will commence in 2024 with lease terms of 5 to 10 years.
Note 8 — Goodwill and Intangible Assets, net
Changes in goodwill by our reportable business segments were as follows for the years ended December 31, 2023 and
2022:
Segment
Financial Services
Health Sciences
Products and Resources
Communications, Media and Technology
Total goodwill
January 1,
2023
Goodwill
Additions and
Adjustments
Foreign Currency
Translation
Adjustments
December 31,
2023
$
$
1,073
2,819
1,062
756
$
5,710
$
(in millions)
19
15
137
148
319
$
$
17
6
18
15
56
$
1,109
2,840
1,217
919
$
6,085
Cognizant
F-23
December 31, 2023 Form 10-K
Cognizant
F-24
December 31, 2023 Form 10-K
Segment
Financial Services
Health Sciences
Products and Resources
Communications, Media and Technology
Total goodwill
January 1,
2022
Goodwill
Additions and
Adjustments
Foreign Currency
Translation
Adjustments
December 31,
2022
$
$
1,109
2,831
967
713
5,620
$
$
(in millions)
$
5
2
127
59
193
$
(41)
(14)
(32)
(16)
(103)
$
$
1,073
2,819
1,062
756
5,710
Based on our most recent goodwill impairment assessment performed as of October 31, 2023, we concluded that the
goodwill in each of our reporting units was not at risk of impairment. We have not recognized any impairment losses on our
goodwill.
Components of intangible assets were as follows as of December 31:
2023
2022
Gross Carrying
Amount
$
Accumulated
Amortization
$
Net Carrying
Amount
Gross Carrying
Amount
Net Carrying
Amount
(in millions)
Customer relationships
Developed technology
Indefinite lived trademarks
Finite lived trademarks
and other
Total intangible assets
$
1,957
385
72
82
2,495
(902) $
(376)
—
(67)
(1,346) $
$
1,054
9
72
15
1,149
$
$
1,803
383
72
81
2,339
Accumulated
Amortization
$
(738) $
(369)
—
(64)
(1,171) $
$
1,065
14
72
17
1,168
Other than certain trademarks with indefinite lives, our intangible assets have finite lives and, as such, are subject to
amortization. Amortization of intangible assets totaled $165 million, $184 million and $182 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
The following table provides the estimated amortization expense related to our existing intangible assets for the next five
years.
(in millions)
2024
2025
2026
2027
2028
Estimated Amortization
$
162
159
155
144
121
Note 9 — Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were as follows as of December 31:
(in millions)
Compensation and benefits
Customer volume and other incentives
Income taxes
Professional fees
Other
Total accrued expenses and other current liabilities
2023
2022
1,511
241
27
146
500
2,425
$
$
1,446
222
217
165
357
2,407
$
$
Cognizant
F-25
December 31, 2023 Form 10-K
Cognizant
F-26
December 31, 2023 Form 10-K
Note 10 — Debt
In 2022, we entered into the Credit Agreement providing for the $650 million Term Loan and a $1,850 million unsecured
revolving credit facility, which are each due to mature in October 2027. We are required under the Credit Agreement to make
scheduled quarterly principal payments on the Term Loan.
The Credit Agreement requires interest to be paid, at our option, at either the Term Benchmark, Adjusted Daily Simple
RFR or the ABR Rate (each as defined in the Credit Agreement), plus, in each case, an Applicable Margin (as defined in the
Credit Agreement). Initially, the Applicable Margin is 0.875% with respect to Term Benchmark loans and RFR loans and
0.00% with respect to ABR loans. Subsequently, the Applicable Margin with respect to Term Benchmark loans and RFR loans
will be determined quarterly and may range from 0.75% to 1.125%, depending on our public debt ratings or, if we have not
received public debt ratings, from 0.875% to 1.125%, depending on our Leverage Ratio, which is the ratio of indebtedness for
borrowed money to Consolidated EBITDA, as defined in the Credit Agreement. Since issuance of the Term Loan, the Term
Loan has been a Term Benchmark loan.
The Credit Agreement contains customary affirmative and negative covenants as well as a financial covenant. The
financial covenant is tested at the end of each fiscal quarter and requires us to maintain a Leverage Ratio not in excess of
3.50:1.00, or for a period of up to four quarters following certain material acquisitions, 3.75:1.00. We were in compliance with
all debt covenants and representations of the Credit Agreement as of December 31, 2023.
In March 2023, our India subsidiary renewed its working capital facility at 15 billion Indian rupees ($180 million at the
December 31, 2023 exchange rate). The facility requires us to repay any balances within 90 days from the date of disbursement.
There is a 1.0% prepayment penalty applicable to payments made within 30 days of disbursement. This working capital facility
contains affirmative and negative covenants and may be renewed annually. As of December 31, 2023, we have not borrowed
funds under this facility or any of its predecessor facilities.
As of December 31, 2023 and 2022, we had $33 million and $8 million of short-term debt related to current maturities of
our Term Loan, with a weighted average interest rate of 6.3% and 5.2%, respectively.
The following summarizes our long-term debt balances as of December 31:
Current maturities
Unamortized deferred financing costs
Long-term debt, net of current maturities
The following represents the schedule of maturities of our Term Loan:
2023
2022
642 $
(33)
(3)
606 $
650
(8)
(4)
638
$
$
Short-term Debt
Long-term Debt
(in millions)
Term Loan
Less:
Year
Amounts (in millions)
2024
2025
2026
2027
Total
$
33
33
33
543
642
Segment
Financial Services
Health Sciences
Products and Resources
Communications, Media and Technology
Total goodwill
January 1,
2022
Goodwill
Additions and
Adjustments
Foreign Currency
Translation
Adjustments
December 31,
2022
$
$
1,109
2,831
967
713
$
5,620
$
(in millions)
5
2
127
59
193
$
$
$
(41)
(14)
(32)
(16)
1,073
2,819
1,062
756
(103)
$
5,710
Based on our most recent goodwill impairment assessment performed as of October 31, 2023, we concluded that the
goodwill in each of our reporting units was not at risk of impairment. We have not recognized any impairment losses on our
goodwill.
Components of intangible assets were as follows as of December 31:
2023
2022
(in millions)
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Customer relationships
$
1,957
$
(902) $
1,054
$
1,803
$
(738) $
1,065
Developed technology
Indefinite lived trademarks
Finite lived trademarks
and other
385
72
82
(376)
—
(67)
9
72
15
383
72
81
(369)
—
(64)
14
72
17
Total intangible assets
$
2,495
$
(1,346) $
1,149
$
2,339
$
(1,171) $
1,168
Other than certain trademarks with indefinite lives, our intangible assets have finite lives and, as such, are subject to
amortization. Amortization of intangible assets totaled $165 million, $184 million and $182 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
The following table provides the estimated amortization expense related to our existing intangible assets for the next five
years.
(in millions)
Estimated Amortization
$
2024
2025
2026
2027
2028
162
159
155
144
121
Note 9 — Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were as follows as of December 31:
(in millions)
Compensation and benefits
Customer volume and other incentives
Income taxes
Professional fees
Other
2023
2022
$
1,511
$
1,446
241
27
146
500
222
217
165
357
Total accrued expenses and other current liabilities
$
2,425
$
2,407
Note 10 — Debt
In 2022, we entered into the Credit Agreement providing for the $650 million Term Loan and a $1,850 million unsecured
revolving credit facility, which are each due to mature in October 2027. We are required under the Credit Agreement to make
scheduled quarterly principal payments on the Term Loan.
The Credit Agreement requires interest to be paid, at our option, at either the Term Benchmark, Adjusted Daily Simple
RFR or the ABR Rate (each as defined in the Credit Agreement), plus, in each case, an Applicable Margin (as defined in the
Credit Agreement). Initially, the Applicable Margin is 0.875% with respect to Term Benchmark loans and RFR loans and
0.00% with respect to ABR loans. Subsequently, the Applicable Margin with respect to Term Benchmark loans and RFR loans
will be determined quarterly and may range from 0.75% to 1.125%, depending on our public debt ratings or, if we have not
received public debt ratings, from 0.875% to 1.125%, depending on our Leverage Ratio, which is the ratio of indebtedness for
borrowed money to Consolidated EBITDA, as defined in the Credit Agreement. Since issuance of the Term Loan, the Term
Loan has been a Term Benchmark loan.
The Credit Agreement contains customary affirmative and negative covenants as well as a financial covenant. The
financial covenant is tested at the end of each fiscal quarter and requires us to maintain a Leverage Ratio not in excess of
3.50:1.00, or for a period of up to four quarters following certain material acquisitions, 3.75:1.00. We were in compliance with
all debt covenants and representations of the Credit Agreement as of December 31, 2023.
In March 2023, our India subsidiary renewed its working capital facility at 15 billion Indian rupees ($180 million at the
December 31, 2023 exchange rate). The facility requires us to repay any balances within 90 days from the date of disbursement.
There is a 1.0% prepayment penalty applicable to payments made within 30 days of disbursement. This working capital facility
contains affirmative and negative covenants and may be renewed annually. As of December 31, 2023, we have not borrowed
funds under this facility or any of its predecessor facilities.
Short-term Debt
As of December 31, 2023 and 2022, we had $33 million and $8 million of short-term debt related to current maturities of
our Term Loan, with a weighted average interest rate of 6.3% and 5.2%, respectively.
Long-term Debt
The following summarizes our long-term debt balances as of December 31:
(in millions)
Term Loan
Less:
Current maturities
Unamortized deferred financing costs
Long-term debt, net of current maturities
2023
2022
642 $
(33)
(3)
606 $
650
(8)
(4)
638
$
$
The following represents the schedule of maturities of our Term Loan:
Year
Amounts (in millions)
2024
2025
2026
2027
Total
$
33
33
33
543
642
Cognizant
F-25
December 31, 2023 Form 10-K
Cognizant
F-26
December 31, 2023 Form 10-K
Note 11 — Income Taxes
The reconciliation between the U.S. federal statutory rate and our effective income tax rate were as follows for the years
Income before provision for income taxes shown below is based on the geographic location to which such income was
attributed for years ended December 31:
(in millions)
United States
Foreign
Income before provision for income taxes
2023
2022
2021
$
$
813
1,974
2,787
$
$
975
2,041
3,016
$
$
818
2,009
2,827
The provision for income taxes consisted of the following components for the years ended December 31:
(in millions)
Current:
Federal and state
Foreign
Total current provision
Deferred:
Federal and state
Foreign
Total deferred (benefit) provision
Total provision for income taxes
2023
2022
2021
$
$
522
485
1,007
(354)
15
(339)
668
$
$
492
511
1,003
(240)
(33)
(273)
730
$
$
210
456
666
(50)
77
27
693
We are involved in two separate ongoing disputes with the ITD in connection with previously disclosed share repurchase
transactions undertaken by CTS India in 2013 and 2016 to repurchase shares from its shareholders (non-Indian Cognizant
entities) valued at $523 million and $2.8 billion, respectively.
The 2016 transaction was undertaken pursuant to a plan approved by the High Court in Chennai, India, and resulted in the
payment of $135 million in Indian income taxes - an amount we believe includes all the applicable taxes owed for this
transaction under Indian law. In March 2018, the ITD asserted that it is owed an additional 33 billion Indian rupees ($397
million at the December 31, 2023 exchange rate) on the 2016 transaction. We deposited 5 billion Indian rupees, representing
15% of the disputed tax amount related to the 2016 transaction, with the ITD. As of both December 31, 2023 and 2022, the
deposit with the ITD was $60 million, presented in "Other noncurrent assets." Additionally, certain time deposits of CTS India
were placed under lien in favor of the ITD, representing the remainder of the disputed tax amount. As of December 31, 2023
and 2022, the balance of deposits under lien was 30 billion Indian rupees, including previously earned interest, or $355 million
and $357 million, respectively, as presented in "Long-term investments." As of December 31, 2023, $96 million of the $355
million deposits under lien were held in time deposits with a maturity of less than 30 days qualifying as cash equivalent
instruments and thus are presented as restricted cash equivalents on the consolidated statement of cash flows for the year ended
December 31, 2023.
In April 2020, we received a formal assessment from the ITD on the 2016 transaction, which was consistent with the
ITD's previous assertions. Our appeal was ruled on unfavorably by the CITA in March 2022 and by the ITAT in September
2023. We filed an appeal against the order of the ITAT with the High Court. On January 8, 2024, the SCI ruled that, in order to
proceed with the appeal, we must deposit 30 billion Indian rupees ($355 million at the December 31, 2023 exchange rate),
representing the time deposits of CTS India under lien, on the condition that, if CTS India prevails at the High Court, the
amount deposited will be returned to CTS India, along with interest accrued, within 4 weeks of the judgment. The SCI also
requested the High Court to consider and dispose of the appeal as expeditiously as possible, preferably within 6 weeks of the
January 8, 2024 ruling. We made the required deposit in January 2024.
The dispute in relation to the 2013 share repurchase transaction is also in litigation. At this time, the ITD has not made
specific demands with regards to the 2013 transaction.
We continue to believe we have paid all applicable taxes owed on both the 2016 and the 2013 transactions and we
continue to defend our positions with respect to both matters. Accordingly, we have not recorded any reserves for these matters
as of December 31, 2023.
Tax expense, at U.S. federal statutory rate
$
585
21.0
$
633
21.0
$
594
2023
%
2022
%
2021
ended December 31:
(Dollars in millions)
State and local income taxes, net of federal
benefit
Non-taxable income for Indian tax purposes
Rate differential on foreign earnings
Recognition of benefits related to uncertain tax
Credits and other incentives
positions
Other
55
—
95
(33)
(37)
3
2.0
—
3.4
(1.2)
(1.3)
0.1
63
(6)
98
(43)
(17)
2
2.1
(0.2)
3.2
(1.4)
(0.6)
0.1
50
(36)
137
(14)
(42)
4
Total provision for income taxes
$
668
24.0
$
730
24.2
$
693
Our Indian subsidiaries are primarily export-oriented and, through March 31, 2022, benefited from certain income tax
holiday benefits granted by the government of India for export activities conducted within SEZs. In December 2019, India
enacted the India Tax Law, which enables Indian companies to elect to be taxed at a lower income tax rate of 25.17%, as
compared to the otherwise applicable income tax rate of 34.94%. Once a company elects into the lower income tax rate, a
company may not benefit from any income tax holidays associated with SEZs and certain other tax incentives and
carryforwards, and may not reverse its election. We elected into the new tax regime starting with the India fiscal year beginning
on April 1, 2022, and as a result, there was no impact from income tax holidays on our income tax provision or net income for
the year ended December 31, 2023. For the years ended December 31, 2022 and 2021, the effect of the income tax holidays
granted by the Indian government was to reduce the overall income tax provision and increase net income by $6 million and
$36 million, respectively, and increase diluted EPS by $0.01 and $0.07, respectively.
During 2023, we reached an agreement with the IRS, which settled tax years 2017 and 2018, as well as a settlement
related to U.S. state income taxes, each of which decreased our effective income tax rate for 2023.
The significant components of deferred income tax assets and liabilities recorded on the consolidated statements of
financial position were as follows as of December 31:
%
21.0
1.8
(1.3)
4.8
(0.5)
(1.5)
0.2
24.5
46
37
159
16
498
756
(41)
715
194
48
11
253
462
2023
2022
$
$
52
126
172
16
672
1,038
(53)
985
184
31
3
218
767
$
$
Revenue recognition (including intercompany revenue)
(in millions)
Deferred income tax assets:
Net operating losses
Compensation and benefits
Credit carryforwards
Expenses not currently deductible
Less: valuation allowance
Deferred income tax assets, net
Deferred income tax liabilities:
Depreciation and amortization
Deferred costs
Other
Deferred income tax liabilities
Net deferred income tax assets
At December 31, 2023, we had foreign and U.S. net operating loss carryforwards of approximately $128 million and $103
million, respectively. We have recorded valuation allowances on certain net operating loss carryforwards.
Cognizant
F-27
December 31, 2023 Form 10-K
Cognizant
F-28
December 31, 2023 Form 10-K
Note 11 — Income Taxes
attributed for years ended December 31:
(in millions)
United States
Foreign
Income before provision for income taxes
(in millions)
Current:
Federal and state
Foreign
Total current provision
Deferred:
Federal and state
Foreign
Total deferred (benefit) provision
Total provision for income taxes
Income before provision for income taxes shown below is based on the geographic location to which such income was
The provision for income taxes consisted of the following components for the years ended December 31:
$
$
$
2023
2022
2021
813
1,974
2,787
975
2,041
3,016
818
2,009
2,827
$
$
$
$
$
$
2023
2022
2021
522
485
1,007
(354)
15
(339)
492
511
1,003
(240)
(33)
(273)
$
668
$
730
$
210
456
666
(50)
77
27
693
We are involved in two separate ongoing disputes with the ITD in connection with previously disclosed share repurchase
transactions undertaken by CTS India in 2013 and 2016 to repurchase shares from its shareholders (non-Indian Cognizant
entities) valued at $523 million and $2.8 billion, respectively.
The 2016 transaction was undertaken pursuant to a plan approved by the High Court in Chennai, India, and resulted in the
payment of $135 million in Indian income taxes - an amount we believe includes all the applicable taxes owed for this
transaction under Indian law. In March 2018, the ITD asserted that it is owed an additional 33 billion Indian rupees ($397
million at the December 31, 2023 exchange rate) on the 2016 transaction. We deposited 5 billion Indian rupees, representing
15% of the disputed tax amount related to the 2016 transaction, with the ITD. As of both December 31, 2023 and 2022, the
deposit with the ITD was $60 million, presented in "Other noncurrent assets." Additionally, certain time deposits of CTS India
were placed under lien in favor of the ITD, representing the remainder of the disputed tax amount. As of December 31, 2023
and 2022, the balance of deposits under lien was 30 billion Indian rupees, including previously earned interest, or $355 million
and $357 million, respectively, as presented in "Long-term investments." As of December 31, 2023, $96 million of the $355
million deposits under lien were held in time deposits with a maturity of less than 30 days qualifying as cash equivalent
instruments and thus are presented as restricted cash equivalents on the consolidated statement of cash flows for the year ended
December 31, 2023.
In April 2020, we received a formal assessment from the ITD on the 2016 transaction, which was consistent with the
ITD's previous assertions. Our appeal was ruled on unfavorably by the CITA in March 2022 and by the ITAT in September
2023. We filed an appeal against the order of the ITAT with the High Court. On January 8, 2024, the SCI ruled that, in order to
proceed with the appeal, we must deposit 30 billion Indian rupees ($355 million at the December 31, 2023 exchange rate),
representing the time deposits of CTS India under lien, on the condition that, if CTS India prevails at the High Court, the
amount deposited will be returned to CTS India, along with interest accrued, within 4 weeks of the judgment. The SCI also
requested the High Court to consider and dispose of the appeal as expeditiously as possible, preferably within 6 weeks of the
January 8, 2024 ruling. We made the required deposit in January 2024.
The dispute in relation to the 2013 share repurchase transaction is also in litigation. At this time, the ITD has not made
specific demands with regards to the 2013 transaction.
We continue to believe we have paid all applicable taxes owed on both the 2016 and the 2013 transactions and we
continue to defend our positions with respect to both matters. Accordingly, we have not recorded any reserves for these matters
as of December 31, 2023.
The reconciliation between the U.S. federal statutory rate and our effective income tax rate were as follows for the years
ended December 31:
(Dollars in millions)
Tax expense, at U.S. federal statutory rate
State and local income taxes, net of federal
benefit
Non-taxable income for Indian tax purposes
Rate differential on foreign earnings
Recognition of benefits related to uncertain tax
positions
Credits and other incentives
Other
2023
%
2022
%
2021
$
585
21.0
$
633
21.0
$
594
55
—
95
(33)
(37)
3
2.0
—
3.4
(1.2)
(1.3)
0.1
63
(6)
98
(43)
(17)
2
2.1
(0.2)
3.2
(1.4)
(0.6)
0.1
50
(36)
137
(14)
(42)
4
Total provision for income taxes
$
668
24.0
$
730
24.2
$
693
%
21.0
1.8
(1.3)
4.8
(0.5)
(1.5)
0.2
24.5
Our Indian subsidiaries are primarily export-oriented and, through March 31, 2022, benefited from certain income tax
holiday benefits granted by the government of India for export activities conducted within SEZs. In December 2019, India
enacted the India Tax Law, which enables Indian companies to elect to be taxed at a lower income tax rate of 25.17%, as
compared to the otherwise applicable income tax rate of 34.94%. Once a company elects into the lower income tax rate, a
company may not benefit from any income tax holidays associated with SEZs and certain other tax incentives and
carryforwards, and may not reverse its election. We elected into the new tax regime starting with the India fiscal year beginning
on April 1, 2022, and as a result, there was no impact from income tax holidays on our income tax provision or net income for
the year ended December 31, 2023. For the years ended December 31, 2022 and 2021, the effect of the income tax holidays
granted by the Indian government was to reduce the overall income tax provision and increase net income by $6 million and
$36 million, respectively, and increase diluted EPS by $0.01 and $0.07, respectively.
During 2023, we reached an agreement with the IRS, which settled tax years 2017 and 2018, as well as a settlement
related to U.S. state income taxes, each of which decreased our effective income tax rate for 2023.
The significant components of deferred income tax assets and liabilities recorded on the consolidated statements of
financial position were as follows as of December 31:
(in millions)
Deferred income tax assets:
Net operating losses
Revenue recognition (including intercompany revenue)
Compensation and benefits
Credit carryforwards
Expenses not currently deductible
Less: valuation allowance
Deferred income tax assets, net
Deferred income tax liabilities:
Depreciation and amortization
Deferred costs
Other
Deferred income tax liabilities
Net deferred income tax assets
2023
2022
$
$
52
126
172
16
672
1,038
(53)
985
184
31
3
218
767
$
$
46
37
159
16
498
756
(41)
715
194
48
11
253
462
At December 31, 2023, we had foreign and U.S. net operating loss carryforwards of approximately $128 million and $103
million, respectively. We have recorded valuation allowances on certain net operating loss carryforwards.
Cognizant
F-27
December 31, 2023 Form 10-K
Cognizant
F-28
December 31, 2023 Form 10-K
Provisions enacted in the Tax Reform Act in December 2017 related to the capitalization of research and experimental
expenditures became effective on January 1, 2022. These provisions require us to capitalize research and experimental
expenditures and amortize them for tax purposes over five or fifteen years, depending on where the research is conducted.
Previously these expenses could be deducted in the year incurred. The implementation of these provisions increased our
deferred tax asset in the United States on a year-over-year basis by approximately $206 million and $300 million in 2023 and
2022, respectively.
We conduct business globally and file income tax returns in the United States, including federal and state, as well as
various foreign jurisdictions. Tax years that remain subject to examination by the IRS are 2019 and onward, and years that
remain subject to examination by state authorities vary by state. Years under examination by foreign tax authorities are 2003
and onward. In addition, transactions between our affiliated entities are arranged in accordance with applicable transfer pricing
laws, regulations and relevant guidelines. As a result, and due to the interpretive nature of certain aspects of these laws and
guidelines, we have pending applications for APAs before the taxing authorities in some of our most significant jurisdictions.
We record incremental tax expense, based upon the more-likely-than-not standard, for any uncertain tax positions. In
addition, when applicable, we adjust the previously recorded income tax expense to reflect examination results when the
position is effectively settled or otherwise resolved. Our ongoing evaluations of the more-likely-than-not outcomes of the
examinations and related tax positions require judgment and can result in adjustments that increase or decrease our effective
income tax rate, as well as impact our operating results. The specific timing of when the resolution of each tax position will be
reached is uncertain.
Changes in unrecognized income tax benefits were as follows for the years ended December 31:
(in millions)
Balance, beginning of year
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Additions for tax positions of acquired subsidiaries
Reductions for tax positions due to lapse of statutes of limitations
Reductions for tax positions related to prior years
Settlements
Foreign currency exchange movement
Balance, end of year
2023
2022
2021
$
$
269
32
22
—
(15)
(33)
(14)
—
260
$
$
194
53
65
—
(43)
—
—
—
269
$
$
193
34
16
12
(17)
—
(43)
(1)
194
In the third quarter of 2022, we recognized an income tax benefit of $36 million related to a specific uncertain tax position
that was previously unrecognized in our prior year consolidated financial statements. The recognition of the benefit in the third
quarter of 2022 was based on management’s reassessment regarding whether this unrecognized tax benefit met the more-likely-
than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit. In 2021, we reached an
agreement with the IRS, which settled tax years 2012 through 2016. As a result of this settlement, in the first quarter of 2021,
we recorded a $14 million discrete benefit to the provision for income taxes.
The unrecognized income tax benefits would affect our effective income tax rate, if recognized. While the Company
believes uncertain tax positions may be settled or resolved within the next twelve months, it is difficult to estimate the income
tax impact of these potential resolutions at this time. We recognize accrued interest and any penalties associated with uncertain
tax positions as part of our provision for income taxes. The total amount of accrued net interest and penalties at both
December 31, 2023 and 2022 was $33 million, and related to U.S. and foreign tax matters. The total amount of net interest and
penalties recorded in the provision for income taxes in each of 2023, 2022 and 2021 was immaterial.
Note 12 — Derivative Financial Instruments
In the normal course of business, we use foreign exchange forward and option contracts to manage foreign currency
exchange rate risk. Derivatives may give rise to credit risk from the possible non-performance by counterparties. Credit risk is
limited to the fair value of those contracts that are favorable to us. We have limited our credit risk by limiting the amount of
credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial
institutions with which we do business. In addition, all the assets and liabilities related to the foreign exchange derivative
contracts set forth in the below table are subject to master netting arrangements, such as the International Swaps and
Derivatives Association Master Agreement, with each individual counterparty. These master netting arrangements generally
provide for net settlement of all outstanding contracts with the counterparty in the case of an event of default or a termination
event. We have presented all the assets and liabilities related to the foreign exchange derivative contracts, as applicable, on a
gross basis, with no offsets, in our consolidated statements of financial position. There is no financial collateral (including cash
collateral) posted or received by us related to the foreign exchange derivative contracts.
The following table provides information on the location and fair values of derivative financial instruments included in
our consolidated statements of financial position as of December 31:
(in millions)
2023
2022
Location on Statement of
Financial Position
Assets
Liabilities
Assets
Liabilities
Designation of Derivatives
Foreign exchange forward and option
contracts – Designated as cash flow
hedging instruments
Other current assets
$
$
$
$
Other noncurrent assets
Accrued expenses and
other current liabilities
Other noncurrent liabilities
Total
Total
Other current assets
Accrued expenses and
other current liabilities
14
5
—
—
19
1
—
1
20
—
—
5
1
6
9
9
—
1
1
—
—
2
4
—
4
6
$
$
15
$
$
—
—
53
17
70
—
5
5
75
Foreign exchange forward contracts -
Not designated as hedging instruments
Total
Cash Flow Hedges
We have entered into a series of foreign exchange derivative contracts that are designated as cash flow hedges of Indian
rupee denominated payments in India. These contracts are intended to partially offset the impact of movement of the Indian
rupee against the U.S. dollar on future operating costs and are scheduled to mature each month during 2024 and 2025. The
changes in fair value of these contracts are initially reported in "Accumulated other comprehensive income (loss)" in our
consolidated statements of financial position and are subsequently reclassified to earnings within "Cost of revenues" and
"Selling, general and administrative expenses" in our consolidated statements of operations in the same period that the
forecasted Indian rupee denominated payments are recorded in earnings. As of December 31, 2023, we estimate that $6 million,
net of tax, of the net gains related to derivatives designated as cash flow hedges reported in the caption "Accumulated other
comprehensive income (loss)" in our consolidated statements of financial position is expected to be reclassified into earnings
within the next 12 months.
The notional value of our outstanding contracts by year of maturity was as follows as of December 31:
(in millions)
2023
2024
2025
Total notional value of contracts outstanding (1)
2023
2022
$
$
—
$
1,878
1,020
2,898
$
1,865
1,010
—
2,875
(1)
Includes $45 million notional value of option contracts as of December 31, 2023, with the remaining notional value
related to forward contracts. There were no option contracts outstanding as of December 31, 2022.
Cognizant
F-29
December 31, 2023 Form 10-K
Cognizant
F-30
December 31, 2023 Form 10-K
Provisions enacted in the Tax Reform Act in December 2017 related to the capitalization of research and experimental
expenditures became effective on January 1, 2022. These provisions require us to capitalize research and experimental
expenditures and amortize them for tax purposes over five or fifteen years, depending on where the research is conducted.
Previously these expenses could be deducted in the year incurred. The implementation of these provisions increased our
deferred tax asset in the United States on a year-over-year basis by approximately $206 million and $300 million in 2023 and
2022, respectively.
We conduct business globally and file income tax returns in the United States, including federal and state, as well as
various foreign jurisdictions. Tax years that remain subject to examination by the IRS are 2019 and onward, and years that
remain subject to examination by state authorities vary by state. Years under examination by foreign tax authorities are 2003
and onward. In addition, transactions between our affiliated entities are arranged in accordance with applicable transfer pricing
laws, regulations and relevant guidelines. As a result, and due to the interpretive nature of certain aspects of these laws and
guidelines, we have pending applications for APAs before the taxing authorities in some of our most significant jurisdictions.
We record incremental tax expense, based upon the more-likely-than-not standard, for any uncertain tax positions. In
addition, when applicable, we adjust the previously recorded income tax expense to reflect examination results when the
position is effectively settled or otherwise resolved. Our ongoing evaluations of the more-likely-than-not outcomes of the
examinations and related tax positions require judgment and can result in adjustments that increase or decrease our effective
income tax rate, as well as impact our operating results. The specific timing of when the resolution of each tax position will be
Changes in unrecognized income tax benefits were as follows for the years ended December 31:
reached is uncertain.
(in millions)
Balance, beginning of year
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Additions for tax positions of acquired subsidiaries
Reductions for tax positions due to lapse of statutes of limitations
Reductions for tax positions related to prior years
Settlements
Foreign currency exchange movement
Balance, end of year
2023
2022
2021
$
269
$
194
$
193
32
22
—
(15)
(33)
(14)
—
260
(43)
53
65
—
—
—
—
34
16
12
(17)
—
(43)
(1)
$
$
269
$
194
In the third quarter of 2022, we recognized an income tax benefit of $36 million related to a specific uncertain tax position
that was previously unrecognized in our prior year consolidated financial statements. The recognition of the benefit in the third
quarter of 2022 was based on management’s reassessment regarding whether this unrecognized tax benefit met the more-likely-
than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit. In 2021, we reached an
agreement with the IRS, which settled tax years 2012 through 2016. As a result of this settlement, in the first quarter of 2021,
we recorded a $14 million discrete benefit to the provision for income taxes.
The unrecognized income tax benefits would affect our effective income tax rate, if recognized. While the Company
believes uncertain tax positions may be settled or resolved within the next twelve months, it is difficult to estimate the income
tax impact of these potential resolutions at this time. We recognize accrued interest and any penalties associated with uncertain
tax positions as part of our provision for income taxes. The total amount of accrued net interest and penalties at both
December 31, 2023 and 2022 was $33 million, and related to U.S. and foreign tax matters. The total amount of net interest and
penalties recorded in the provision for income taxes in each of 2023, 2022 and 2021 was immaterial.
Note 12 — Derivative Financial Instruments
In the normal course of business, we use foreign exchange forward and option contracts to manage foreign currency
exchange rate risk. Derivatives may give rise to credit risk from the possible non-performance by counterparties. Credit risk is
limited to the fair value of those contracts that are favorable to us. We have limited our credit risk by limiting the amount of
credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial
institutions with which we do business. In addition, all the assets and liabilities related to the foreign exchange derivative
contracts set forth in the below table are subject to master netting arrangements, such as the International Swaps and
Derivatives Association Master Agreement, with each individual counterparty. These master netting arrangements generally
provide for net settlement of all outstanding contracts with the counterparty in the case of an event of default or a termination
event. We have presented all the assets and liabilities related to the foreign exchange derivative contracts, as applicable, on a
gross basis, with no offsets, in our consolidated statements of financial position. There is no financial collateral (including cash
collateral) posted or received by us related to the foreign exchange derivative contracts.
The following table provides information on the location and fair values of derivative financial instruments included in
our consolidated statements of financial position as of December 31:
(in millions)
2023
2022
Designation of Derivatives
Foreign exchange forward and option
contracts – Designated as cash flow
hedging instruments
Foreign exchange forward contracts -
Not designated as hedging instruments
Total
Cash Flow Hedges
Location on Statement of
Financial Position
Assets
Liabilities
Assets
Liabilities
Other current assets
Other noncurrent assets
Accrued expenses and
other current liabilities
Other noncurrent liabilities
Total
Other current assets
Accrued expenses and
other current liabilities
Total
$
$
14
5
—
—
19
1
—
1
20
$
$
—
—
5
1
6
—
9
9
$
15
$
1
1
—
—
2
4
—
4
6
$
$
—
—
53
17
70
—
5
5
75
We have entered into a series of foreign exchange derivative contracts that are designated as cash flow hedges of Indian
rupee denominated payments in India. These contracts are intended to partially offset the impact of movement of the Indian
rupee against the U.S. dollar on future operating costs and are scheduled to mature each month during 2024 and 2025. The
changes in fair value of these contracts are initially reported in "Accumulated other comprehensive income (loss)" in our
consolidated statements of financial position and are subsequently reclassified to earnings within "Cost of revenues" and
"Selling, general and administrative expenses" in our consolidated statements of operations in the same period that the
forecasted Indian rupee denominated payments are recorded in earnings. As of December 31, 2023, we estimate that $6 million,
net of tax, of the net gains related to derivatives designated as cash flow hedges reported in the caption "Accumulated other
comprehensive income (loss)" in our consolidated statements of financial position is expected to be reclassified into earnings
within the next 12 months.
The notional value of our outstanding contracts by year of maturity was as follows as of December 31:
(in millions)
2023
2024
2025
Total notional value of contracts outstanding (1)
2023
2022
$
$
—
1,878
1,020
2,898
$
$
1,865
1,010
—
2,875
(1)
Includes $45 million notional value of option contracts as of December 31, 2023, with the remaining notional value
related to forward contracts. There were no option contracts outstanding as of December 31, 2022.
Cognizant
F-29
December 31, 2023 Form 10-K
Cognizant
F-30
December 31, 2023 Form 10-K
The following table provides information on the location and amounts of pre-tax losses and gains on our cash flow
hedges for the year ended December 31:
Note 13 — Fair Value Measurements
(in millions)
Change in
Derivative Gains and Losses
Recognized
in Accumulated Other
Comprehensive Income (Loss)
(effective portion)
2023
2022
Location of Net (Losses)
Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
Net (Losses) Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
2023
2022
Foreign exchange forward and
option contracts – Designated as
cash flow hedging instruments
$
55
$
(153) Cost of revenues
SG&A expenses
Total
$
$
(23)
$
(13)
(3)
(26)
$
(1)
(14)
The activity related to the change in net unrealized gains and losses on the cash flow hedges included in "Accumulated
other comprehensive income (loss)" in our consolidated statements of stockholders' equity is presented in Note 14.
Other Derivatives
We use foreign exchange forward contracts to provide an economic hedge against balance sheet exposures to certain
monetary assets and liabilities denominated in currencies other than the functional currency of our foreign subsidiaries. We
entered into foreign exchange forward contracts that are scheduled to mature in the first quarter of 2024. Realized gains or
losses and changes in the estimated fair value of these derivative financial instruments are recorded in the caption "Foreign
currency exchange gains (losses), net" in our consolidated statements of operations.
Additional information related to our outstanding foreign exchange forward contracts not designated as hedging
instruments was as follows as of December 31:
(in millions)
2023
2022
Contracts outstanding
Notional
Fair Value
Notional
Fair Value
$
1,317
$
(8)
$
1,433
$
(1)
The following table provides information on the location and amounts of realized and unrealized pre-tax gains and losses
on our other derivative financial instruments for the year ended December 31:
(in millions)
Location of Net (Losses) Gains
on Derivative Instruments
Amount of Net (Losses) Gains
on Derivative Instruments
2023
2022
Foreign exchange forward contracts - Not designated as hedging
instruments
Foreign currency exchange
gains (losses), net
$
(40) $
23
The related cash flow impacts of all of the derivative activities are reflected as cash flows from operating activities.
We measure our cash equivalents, certain investments, contingent consideration liabilities and foreign exchange forward
and option contracts at fair value. Fair value is the exit price, or the amount that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants as of the measurement date. The fair value hierarchy is
based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable.
Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data
obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market
assumptions.
The fair value hierarchy consists of the following three levels:
• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.
• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and
market-corroborated inputs which are derived principally from or corroborated by observable market data.
• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are
The following table summarizes the financial assets and (liabilities) measured at fair value on a recurring basis as of
unobservable.
December 31, 2023:
(in millions)
Cash equivalents:
Money market funds
Time deposits
Short-term investments:
Equity investment security
Other current assets
Foreign exchange forward contracts
Long-term investments:
Restricted time deposits (1)
Other noncurrent assets
Foreign exchange forward contracts
Accrued expenses and other current liabilities:
Foreign exchange forward contracts
Contingent consideration liabilities
Other noncurrent liabilities
Foreign exchange forward contracts
(1) See Note 11.
Level 1
Level 2
Level 3
Total
$
$
327
—
$
—
834
$
—
—
—
—
—
—
—
(30)
—
327
834
11
15
355
5
(14)
(30)
(1)
11
—
—
—
—
—
—
—
15
355
5
(14)
—
(1)
Cognizant
F-31
December 31, 2023 Form 10-K
Cognizant
F-32
December 31, 2023 Form 10-K
The following table provides information on the location and amounts of pre-tax losses and gains on our cash flow
Note 13 — Fair Value Measurements
hedges for the year ended December 31:
We measure our cash equivalents, certain investments, contingent consideration liabilities and foreign exchange forward
and option contracts at fair value. Fair value is the exit price, or the amount that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants as of the measurement date. The fair value hierarchy is
based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable.
Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data
obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market
assumptions.
The fair value hierarchy consists of the following three levels:
• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.
• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and
market-corroborated inputs which are derived principally from or corroborated by observable market data.
• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are
The activity related to the change in net unrealized gains and losses on the cash flow hedges included in "Accumulated
other comprehensive income (loss)" in our consolidated statements of stockholders' equity is presented in Note 14.
unobservable.
The following table summarizes the financial assets and (liabilities) measured at fair value on a recurring basis as of
December 31, 2023:
(in millions)
Cash equivalents:
Money market funds
Time deposits
Short-term investments:
Equity investment security
Other current assets
Foreign exchange forward contracts
Long-term investments:
Restricted time deposits (1)
Other noncurrent assets
Foreign exchange forward contracts
Accrued expenses and other current liabilities:
Foreign exchange forward contracts
Contingent consideration liabilities
Other noncurrent liabilities
Foreign exchange forward contracts
(1) See Note 11.
Level 1
Level 2
Level 3
Total
$
$
327
—
$
—
834
11
—
—
—
—
—
—
—
15
355
5
(14)
—
(1)
$
—
—
—
—
—
—
—
(30)
—
327
834
11
15
355
5
(14)
(30)
(1)
(in millions)
Foreign exchange forward and
option contracts – Designated as
cash flow hedging instruments
Derivative Gains and Losses
Change in
Recognized
in Accumulated Other
Comprehensive Income (Loss)
(effective portion)
2023
2022
Location of Net (Losses)
Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
Net (Losses) Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
2023
2022
$
55
$
(153) Cost of revenues
(23)
$
(13)
SG&A expenses
Total
(3)
(26)
$
(1)
(14)
$
$
Other Derivatives
We use foreign exchange forward contracts to provide an economic hedge against balance sheet exposures to certain
monetary assets and liabilities denominated in currencies other than the functional currency of our foreign subsidiaries. We
entered into foreign exchange forward contracts that are scheduled to mature in the first quarter of 2024. Realized gains or
losses and changes in the estimated fair value of these derivative financial instruments are recorded in the caption "Foreign
currency exchange gains (losses), net" in our consolidated statements of operations.
Additional information related to our outstanding foreign exchange forward contracts not designated as hedging
instruments was as follows as of December 31:
(in millions)
2023
2022
Contracts outstanding
Notional
Fair Value
Notional
Fair Value
$
1,317
$
(8)
$
1,433
$
(1)
The following table provides information on the location and amounts of realized and unrealized pre-tax gains and losses
on our other derivative financial instruments for the year ended December 31:
Foreign exchange forward contracts - Not designated as hedging
Foreign currency exchange
Location of Net (Losses) Gains
on Derivative Instruments
Amount of Net (Losses) Gains
on Derivative Instruments
2023
2022
gains (losses), net
$
(40) $
23
(in millions)
instruments
The related cash flow impacts of all of the derivative activities are reflected as cash flows from operating activities.
Cognizant
F-31
December 31, 2023 Form 10-K
Cognizant
F-32
December 31, 2023 Form 10-K
The following table summarizes the financial assets and (liabilities) measured at fair value on a recurring basis as of
Level 1
Level 2
Level 3
Total
Changes in "Accumulated other comprehensive income (loss)" by component were as follows for the year ended
December 31, 2022:
(in millions)
Cash equivalents:
Money market funds
Time deposits
Commercial paper
Short-term investments:
Time deposits
Equity investment security
Available-for-sale investment securities:
Certificates of deposit and commercial paper
Other current assets:
Foreign exchange forward contracts
Long-term investments
Restricted time deposits (1)
Other noncurrent assets:
Foreign exchange forward contracts
Accrued expenses and other current liabilities:
Foreign exchange forward contracts
Contingent consideration liabilities
Other noncurrent liabilities:
Foreign exchange forward contracts
Contingent consideration liabilities
(1) See Note 11
$
$
367
—
—
—
10
—
—
—
—
—
—
—
—
$
—
359
512
51
—
225
5
357
1
(58)
—
(17)
—
$
—
—
—
—
—
—
—
—
—
—
(9)
—
(13)
The following table summarizes the changes in Level 3 contingent consideration liabilities:
(in millions)
Beginning balance
Initial measurement recognized at acquisition
Change in fair value recognized in SG&A expenses
Payments and other adjustments
Ending balance
2023
2022
$
$
22 $
—
17
(9)
30 $
367
359
512
51
10
225
5
357
1
(58)
(9)
(17)
(13)
35
1
(1)
(13)
22
We measure the fair value of money market funds based on quoted prices in active markets for identical assets and
measure the fair value of our equity investment security based on the published daily net asset value at which investors can
freely subscribe to or redeem from the fund. The fair value of certificates of deposit and commercial paper is measured based
on relevant trade data, dealer quotes, or model-driven valuations using significant inputs derived from or corroborated by
observable market data, such as yield curves and credit spreads. The carrying value of the time deposits approximated fair value
as of each of December 31, 2023 and 2022.
We estimate the fair value of each foreign exchange forward contract by using a present value of expected cash flows
model. This model calculates the difference between the current market forward price and the contracted forward price for each
foreign exchange forward contract and applies the difference in the rates to each outstanding contract. The market forward rates
include a discount and credit risk factor. We estimate the fair value of each foreign exchange option contract by using a variant
of the Black-Scholes model. This model uses present value techniques and reflects the time value and intrinsic value based on
observable market rates.
We estimate the fair value of contingent consideration liabilities associated with acquisitions using a variation of the
income approach, which utilizes one or more significant inputs that are unobservable. This approach calculates the fair value of
such liabilities based on the probability-weighted expected performance of the acquired entity against the target performance
metric, discounted to present value when appropriate.
During the years ended December 31, 2023, 2022 and 2021 there were no transfers among Level 1, Level 2 or Level 3
financial assets and liabilities.
Cognizant
F-33
December 31, 2023 Form 10-K
Cognizant
F-34
December 31, 2023 Form 10-K
Note 14 — Accumulated Other Comprehensive Income (Loss)
December 31, 2023:
(in millions)
Foreign currency translation adjustments:
Change in foreign currency translation adjustments
Unrealized (losses) gains on cash flow hedges:
Unrealized gains arising during the period
Reclassifications of net losses to:
Beginning balance
Ending balance
Beginning balance
Cost of revenues
SG&A expenses
Net change
Ending balance
Beginning balance
Ending balance
Accumulated other comprehensive income (loss):
Other comprehensive income (loss)
Before Tax
Amount
2023
Tax
Effect
Net of Tax
Amount
$
$
$
$
$
$
(256)
147
(109)
(68)
55
23
3
81
13
(324)
228
(96)
$
$
$
$
$
$
(248)
144
(104)
(51)
41
18
2
61
10
(299)
205
(94)
$
$
$
$
$
$
8
(3)
5
17
(14)
(5)
(1)
(20)
(3)
25
(23)
2
2021
Tax
Effect
Changes in "Accumulated other comprehensive income (loss)" by component were as follows for the years ended
December 31, 2022 and 2021:
Before Tax
Amount
Net of Tax
Amount
Before Tax
Amount
Net of Tax
Amount
2022
Tax
Effect
Beginning balance
$
(22)
$
$
(20)
$
56
$
(1)
$
55
(234)
(256)
$
$
(228)
$
(248)
$
(78)
(22)
$
3
2
$
(75)
(20)
(in millions)
Foreign currency translation adjustments:
Change in foreign currency
translation adjustments
Ending balance
Unrealized gains (losses) on cash flow
hedges:
Beginning balance
Unrealized (losses) gains arising
during the period
Reclassifications of net losses
(gains) to:
Cost of revenues
SG&A expenses
Net change
Ending balance
Accumulated other comprehensive
income (loss):
Beginning balance
Other comprehensive income
(loss)
Ending balance
2
6
8
(3)
—
31
17
$
71
$
(14)
$
57
$
67
$
(12)
$
(153)
34
(119)
67
(13)
13
1
(139)
10
1
(108)
(55)
(8)
4
71
10
1
(2)
$
(68)
$
$
(51)
$
$
(14)
$
$
49
$
(12)
$
37
$
123
$
(13)
$
110
(373)
(324)
$
$
37
25
(336)
(74)
1
$
(299)
$
49
$
(12)
$
55
54
(45)
(7)
2
57
(73)
37
The following table summarizes the financial assets and (liabilities) measured at fair value on a recurring basis as of
Note 14 — Accumulated Other Comprehensive Income (Loss)
Level 1
Level 2
Level 3
Total
Changes in "Accumulated other comprehensive income (loss)" by component were as follows for the year ended
$
367
$
$
$
December 31, 2023:
(in millions)
Foreign currency translation adjustments:
Beginning balance
Change in foreign currency translation adjustments
Ending balance
Unrealized (losses) gains on cash flow hedges:
Beginning balance
Unrealized gains arising during the period
Reclassifications of net losses to:
Cost of revenues
SG&A expenses
Net change
Ending balance
Accumulated other comprehensive income (loss):
Beginning balance
Other comprehensive income (loss)
Ending balance
Before Tax
Amount
2023
Tax
Effect
Net of Tax
Amount
$
$
$
$
$
$
(256)
147
(109)
(68)
55
23
3
81
13
(324)
228
(96)
$
$
$
$
$
$
8
(3)
5
17
(14)
(5)
(1)
(20)
(3)
25
(23)
2
$
$
$
$
$
$
(248)
144
(104)
(51)
41
18
2
61
10
(299)
205
(94)
Changes in "Accumulated other comprehensive income (loss)" by component were as follows for the years ended
December 31, 2022 and 2021:
(in millions)
Foreign currency translation adjustments:
Before Tax
Amount
2022
Tax
Effect
Net of Tax
Amount
Before Tax
Amount
2021
Tax
Effect
Net of Tax
Amount
Beginning balance
Change in foreign currency
translation adjustments
Ending balance
$
(22)
$
(234)
(256)
$
$
2
6
8
$
(20)
$
56
$
(1)
$
55
(228)
$
(248)
$
(78)
(22)
$
3
2
$
(75)
(20)
Unrealized gains (losses) on cash flow
hedges:
Beginning balance
Unrealized (losses) gains arising
during the period
Reclassifications of net losses
(gains) to:
$
71
$
(14)
$
57
$
67
$
(12)
$
(153)
34
(119)
67
(13)
Cost of revenues
SG&A expenses
Net change
Ending balance
13
1
(139)
(68)
$
(3)
—
31
17
$
10
1
(108)
(51)
$
$
(55)
(8)
4
71
$
10
1
(2)
(14)
$
55
54
(45)
(7)
2
57
Accumulated other comprehensive
income (loss):
Beginning balance
Other comprehensive income
(loss)
Ending balance
$
49
$
(12)
$
37
$
123
$
(13)
$
110
(373)
(324)
$
$
37
25
(336)
(74)
1
$
(299)
$
49
$
(12)
$
(73)
37
December 31, 2022:
(in millions)
Cash equivalents:
Money market funds
Time deposits
Commercial paper
Short-term investments:
Time deposits
Equity investment security
Available-for-sale investment securities:
Certificates of deposit and commercial paper
Other current assets:
Foreign exchange forward contracts
Long-term investments
Restricted time deposits (1)
Other noncurrent assets:
Foreign exchange forward contracts
Accrued expenses and other current liabilities:
Foreign exchange forward contracts
Contingent consideration liabilities
Other noncurrent liabilities:
Foreign exchange forward contracts
Contingent consideration liabilities
(1) See Note 11
(in millions)
Beginning balance
Initial measurement recognized at acquisition
Change in fair value recognized in SG&A expenses
Payments and other adjustments
Ending balance
—
—
—
10
—
—
—
—
—
—
—
—
—
359
512
51
—
225
357
5
1
(58)
—
(17)
—
$
$
—
—
—
—
—
—
—
—
—
—
(9)
—
(13)
22 $
—
17
(9)
30 $
367
359
512
51
10
225
357
5
1
(58)
(9)
(17)
(13)
35
1
(1)
(13)
22
The following table summarizes the changes in Level 3 contingent consideration liabilities:
2023
2022
We measure the fair value of money market funds based on quoted prices in active markets for identical assets and
measure the fair value of our equity investment security based on the published daily net asset value at which investors can
freely subscribe to or redeem from the fund. The fair value of certificates of deposit and commercial paper is measured based
on relevant trade data, dealer quotes, or model-driven valuations using significant inputs derived from or corroborated by
observable market data, such as yield curves and credit spreads. The carrying value of the time deposits approximated fair value
as of each of December 31, 2023 and 2022.
We estimate the fair value of each foreign exchange forward contract by using a present value of expected cash flows
model. This model calculates the difference between the current market forward price and the contracted forward price for each
foreign exchange forward contract and applies the difference in the rates to each outstanding contract. The market forward rates
include a discount and credit risk factor. We estimate the fair value of each foreign exchange option contract by using a variant
of the Black-Scholes model. This model uses present value techniques and reflects the time value and intrinsic value based on
observable market rates.
We estimate the fair value of contingent consideration liabilities associated with acquisitions using a variation of the
income approach, which utilizes one or more significant inputs that are unobservable. This approach calculates the fair value of
such liabilities based on the probability-weighted expected performance of the acquired entity against the target performance
metric, discounted to present value when appropriate.
During the years ended December 31, 2023, 2022 and 2021 there were no transfers among Level 1, Level 2 or Level 3
financial assets and liabilities.
Cognizant
F-33
December 31, 2023 Form 10-K
Cognizant
F-34
December 31, 2023 Form 10-K
Note 15 — Commitments and Contingencies
We are involved in various claims and legal proceedings arising in the ordinary course of business. We accrue a liability
when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is
reasonably possible but not probable, we do not record a liability, but instead disclose the nature and the amount of the claim,
and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. While we do
not expect that the ultimate resolution of any existing claims and proceedings (other than the specific matters described below,
if decided adversely), individually or in the aggregate, will have a material adverse effect on our financial position, an
unfavorable outcome in some or all of these proceedings could have a material adverse impact on results of operations or cash
flows for a particular period. This assessment is based on our current understanding of relevant facts and circumstances. As
such, our view of these matters is subject to inherent uncertainties and may change in the future.
On January 15, 2015, Syntel sued TriZetto and Cognizant in the USDC-SDNY. Syntel’s complaint alleged breach of
contract against TriZetto, and tortious interference and misappropriation of trade secrets against Cognizant and TriZetto,
stemming from Cognizant’s hiring of certain former Syntel employees. Cognizant and TriZetto countersued on March 23, 2015,
for breach of contract, misappropriation of trade secrets and tortious interference, based on Syntel’s misuse of TriZetto
confidential information and abandonment of contractual obligations. Cognizant and TriZetto subsequently added federal
DTSA and copyright infringement claims for Syntel’s misuse of TriZetto’s proprietary technology. The parties’ claims were
narrowed by the court and the case was tried before a jury, which on October 27, 2020, returned a verdict in favor of Cognizant
in the amount of $855 million, including $570 million in punitive damages. On April 20, 2021, the USDC-SDNY issued a post-
trial order that, among other things, affirmed the jury’s award of $285 million in actual damages, but reduced the award of
punitive damages from $570 million to $285 million, thereby reducing the overall damages award from $855 million to
$570 million. The USDC-SDNY subsequently issued a final judgment consistent with the April 20th order. On May 26, 2021,
Syntel filed a notice of appeal to the Second Circuit, and on June 3, 2021 the USDC-SDNY stayed execution of judgment
pending appeal. On May 25, 2023, the Second Circuit issued an opinion affirming in part and vacating in part the judgment of
the USDC-SDNY and remanding the case for further proceedings consistent with its opinion. The Second Circuit affirmed the
judgment in all respects on liability but vacated the $570 million award that had been based on avoided development costs
under the DTSA, and it remanded the case to the USDC-SDNY for further evaluation of damages. On June 23, 2023, the
Second Circuit issued its mandate returning the case to the USDC-SDNY, and the proceedings there regarding damages remain
ongoing. We will not record any gain in our financial statements until it becomes realizable.
On February 28, 2019, a ruling of the SCI interpreting the India Defined Contribution Obligation altered historical
understandings of the obligation, extending it to cover additional portions of the employee’s income. As a result, the ongoing
contributions of our affected employees and the Company were required to be increased. In the first quarter of 2019, we
accrued $117 million with respect to prior periods, assuming retroactive application of the SCI’s ruling, in "Selling, general and
administrative expenses" in our audited consolidated statement of operations. There is significant uncertainty as to how the
liability should be calculated as it is impacted by multiple variables, including the period of assessment, the application with
respect to certain current and former employees and whether interest and penalties may be assessed. Since the ruling, a variety
of trade associations and industry groups have advocated to the Indian government, highlighting the harm to the information
technology sector, other industries and job growth in India that would result from a retroactive application of the ruling. It is
possible the Indian government will review the matter and there is a substantial question as to whether the Indian government
will apply the SCI’s ruling on a retroactive basis. As such, the ultimate amount of our obligation may be materially different
from the amount accrued.
On October 31, 2016, November 15, 2016 and November 18, 2016, three putative shareholder derivative complaints were
filed in New Jersey Superior Court, Bergen County, naming us, all of our then current directors and certain of our current and
former officers at that time as defendants. These actions were consolidated in an order dated January 24, 2017. The complaints
assert claims for breach of fiduciary duty, corporate waste, unjust enrichment, abuse of control, mismanagement, and/or insider
selling by defendants. On April 26, 2017, the New Jersey Superior Court deferred further proceedings by dismissing the
consolidated putative shareholder derivative litigation without prejudice but permitting the parties to file a motion to vacate the
dismissal in the future.
On February 22, 2017, April 7, 2017, May 10, 2017 and March 11, 2019, four additional putative shareholder derivative
complaints were filed in the USDC-NJ, naming us and certain of our current and former directors and officers at that time as
defendants. These actions were consolidated in an order dated May 14, 2019. On August 3, 2020, lead plaintiffs filed a
consolidated amended complaint. The consolidated amended complaint asserts claims similar to those in the previously-filed
putative shareholder derivative actions. On February 14, 2022, we and certain of our current and former directors and officers
moved to dismiss the consolidated amended complaint. On September 27, 2022, the USDC-NJ granted those motions and
dismissed the consolidated amended complaint in its entirety with prejudice. Plaintiffs filed a notice of appeal on October 27,
2022.
On June 1, 2021, an eighth putative shareholder derivative complaint was filed in the USDC-NJ, naming us and certain of
our current and former directors and officers at that time as defendants. The complaint asserts claims similar to those in the
previously-filed putative shareholder derivative actions. On March 31, 2022, we and certain of our current and former directors
and officers moved to dismiss the complaint. On November 30, 2022, the USDC-NJ denied without prejudice those motions.
The USDC-NJ ordered the parties to conduct limited discovery related to the issue of whether our board of directors wrongfully
refused the plaintiff’s earlier litigation demand and, after the conclusion of such limited discovery, to file targeted motions for
summary judgment on the issue of wrongful refusal.
We are presently unable to predict the duration, scope or result of the putative shareholder derivative actions. Although
the Company continues to defend the putative shareholder derivative actions vigorously, these lawsuits are subject to inherent
uncertainties, the actual cost of such litigation will depend upon many unknown factors and the outcome of the litigation is
necessarily uncertain.
We have indemnification and expense advancement obligations pursuant to our bylaws and indemnification agreements
with respect to certain current and former members of senior management and the Company’s board of directors. In connection
with the matters that were the subject of our previously disclosed internal investigation, the DOJ and SEC investigations and the
related litigation, we have received and expect to continue to receive requests under such indemnification agreements and our
bylaws to provide funds for legal fees and other expenses. There are no amounts remaining available to us under applicable
insurance policies for our ongoing indemnification and advancement obligations with respect to certain of our current and
former officers and directors or incremental legal fees and other expenses related to the above matters.
See Note 11 for information relating to the ITD Dispute.
Many of our engagements involve projects that are critical to the operations of our clients’ business and provide benefits
that are difficult to quantify. Any failure in a client’s systems or our failure to meet our contractual obligations to our clients,
including any breach involving a client’s confidential information or sensitive data, or our obligations under applicable laws or
regulations could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although
we attempt to contractually limit our liability for damages arising from negligent acts, errors, mistakes, or omissions in
rendering our services, there can be no assurance that the limitations of liability set forth in our contracts will be enforceable in
all instances or will otherwise protect us from liability for damages. Although we have general liability insurance coverage,
including coverage for errors or omissions, we retain a significant portion of risk through our insurance deductibles and there
can be no assurance that such coverage will cover all types of claims, continue to be available on reasonable terms or will be
available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage as to any future
claim. The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage
or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance
requirements, could have a material adverse effect on our business, results of operations, financial position and cash flows for a
particular period.
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual
arrangements through which we may be obligated to indemnify clients or other parties with whom we conduct business with
respect to certain matters. These arrangements can include provisions whereby we agree to hold the indemnified party and
certain of their affiliated entities harmless with respect to third-party claims related to such matters as our breach of certain
representations or covenants, our intellectual property infringement, our gross negligence or willful misconduct or certain other
claims made against certain parties. Payments by us under any of these arrangements are generally conditioned on the client
making a claim and providing us with full control over the defense and settlement of such claim. It is not possible to determine
the maximum potential liability under these indemnification agreements due to the unique facts and circumstances involved in
each particular agreement. Historically, we have not made material payments under these indemnification agreements and
therefore they have not had a material impact on our operating results, financial position, or cash flows. However, if events
arise requiring us to make payment for indemnification claims under our indemnification obligations in contracts we have
entered, such payments could have a material adverse effect on our business, results of operations, financial position and cash
flows for a particular period.
Cognizant
F-35
December 31, 2023 Form 10-K
Cognizant
F-36
December 31, 2023 Form 10-K
Note 15 — Commitments and Contingencies
We are involved in various claims and legal proceedings arising in the ordinary course of business. We accrue a liability
when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is
reasonably possible but not probable, we do not record a liability, but instead disclose the nature and the amount of the claim,
and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. While we do
not expect that the ultimate resolution of any existing claims and proceedings (other than the specific matters described below,
if decided adversely), individually or in the aggregate, will have a material adverse effect on our financial position, an
unfavorable outcome in some or all of these proceedings could have a material adverse impact on results of operations or cash
flows for a particular period. This assessment is based on our current understanding of relevant facts and circumstances. As
such, our view of these matters is subject to inherent uncertainties and may change in the future.
On January 15, 2015, Syntel sued TriZetto and Cognizant in the USDC-SDNY. Syntel’s complaint alleged breach of
contract against TriZetto, and tortious interference and misappropriation of trade secrets against Cognizant and TriZetto,
stemming from Cognizant’s hiring of certain former Syntel employees. Cognizant and TriZetto countersued on March 23, 2015,
for breach of contract, misappropriation of trade secrets and tortious interference, based on Syntel’s misuse of TriZetto
confidential information and abandonment of contractual obligations. Cognizant and TriZetto subsequently added federal
DTSA and copyright infringement claims for Syntel’s misuse of TriZetto’s proprietary technology. The parties’ claims were
narrowed by the court and the case was tried before a jury, which on October 27, 2020, returned a verdict in favor of Cognizant
in the amount of $855 million, including $570 million in punitive damages. On April 20, 2021, the USDC-SDNY issued a post-
trial order that, among other things, affirmed the jury’s award of $285 million in actual damages, but reduced the award of
punitive damages from $570 million to $285 million, thereby reducing the overall damages award from $855 million to
$570 million. The USDC-SDNY subsequently issued a final judgment consistent with the April 20th order. On May 26, 2021,
Syntel filed a notice of appeal to the Second Circuit, and on June 3, 2021 the USDC-SDNY stayed execution of judgment
pending appeal. On May 25, 2023, the Second Circuit issued an opinion affirming in part and vacating in part the judgment of
the USDC-SDNY and remanding the case for further proceedings consistent with its opinion. The Second Circuit affirmed the
judgment in all respects on liability but vacated the $570 million award that had been based on avoided development costs
under the DTSA, and it remanded the case to the USDC-SDNY for further evaluation of damages. On June 23, 2023, the
Second Circuit issued its mandate returning the case to the USDC-SDNY, and the proceedings there regarding damages remain
ongoing. We will not record any gain in our financial statements until it becomes realizable.
On February 28, 2019, a ruling of the SCI interpreting the India Defined Contribution Obligation altered historical
understandings of the obligation, extending it to cover additional portions of the employee’s income. As a result, the ongoing
contributions of our affected employees and the Company were required to be increased. In the first quarter of 2019, we
accrued $117 million with respect to prior periods, assuming retroactive application of the SCI’s ruling, in "Selling, general and
administrative expenses" in our audited consolidated statement of operations. There is significant uncertainty as to how the
liability should be calculated as it is impacted by multiple variables, including the period of assessment, the application with
respect to certain current and former employees and whether interest and penalties may be assessed. Since the ruling, a variety
of trade associations and industry groups have advocated to the Indian government, highlighting the harm to the information
technology sector, other industries and job growth in India that would result from a retroactive application of the ruling. It is
possible the Indian government will review the matter and there is a substantial question as to whether the Indian government
will apply the SCI’s ruling on a retroactive basis. As such, the ultimate amount of our obligation may be materially different
from the amount accrued.
On October 31, 2016, November 15, 2016 and November 18, 2016, three putative shareholder derivative complaints were
filed in New Jersey Superior Court, Bergen County, naming us, all of our then current directors and certain of our current and
former officers at that time as defendants. These actions were consolidated in an order dated January 24, 2017. The complaints
assert claims for breach of fiduciary duty, corporate waste, unjust enrichment, abuse of control, mismanagement, and/or insider
selling by defendants. On April 26, 2017, the New Jersey Superior Court deferred further proceedings by dismissing the
consolidated putative shareholder derivative litigation without prejudice but permitting the parties to file a motion to vacate the
dismissal in the future.
On February 22, 2017, April 7, 2017, May 10, 2017 and March 11, 2019, four additional putative shareholder derivative
complaints were filed in the USDC-NJ, naming us and certain of our current and former directors and officers at that time as
defendants. These actions were consolidated in an order dated May 14, 2019. On August 3, 2020, lead plaintiffs filed a
consolidated amended complaint. The consolidated amended complaint asserts claims similar to those in the previously-filed
putative shareholder derivative actions. On February 14, 2022, we and certain of our current and former directors and officers
moved to dismiss the consolidated amended complaint. On September 27, 2022, the USDC-NJ granted those motions and
dismissed the consolidated amended complaint in its entirety with prejudice. Plaintiffs filed a notice of appeal on October 27,
2022.
On June 1, 2021, an eighth putative shareholder derivative complaint was filed in the USDC-NJ, naming us and certain of
our current and former directors and officers at that time as defendants. The complaint asserts claims similar to those in the
previously-filed putative shareholder derivative actions. On March 31, 2022, we and certain of our current and former directors
and officers moved to dismiss the complaint. On November 30, 2022, the USDC-NJ denied without prejudice those motions.
The USDC-NJ ordered the parties to conduct limited discovery related to the issue of whether our board of directors wrongfully
refused the plaintiff’s earlier litigation demand and, after the conclusion of such limited discovery, to file targeted motions for
summary judgment on the issue of wrongful refusal.
We are presently unable to predict the duration, scope or result of the putative shareholder derivative actions. Although
the Company continues to defend the putative shareholder derivative actions vigorously, these lawsuits are subject to inherent
uncertainties, the actual cost of such litigation will depend upon many unknown factors and the outcome of the litigation is
necessarily uncertain.
We have indemnification and expense advancement obligations pursuant to our bylaws and indemnification agreements
with respect to certain current and former members of senior management and the Company’s board of directors. In connection
with the matters that were the subject of our previously disclosed internal investigation, the DOJ and SEC investigations and the
related litigation, we have received and expect to continue to receive requests under such indemnification agreements and our
bylaws to provide funds for legal fees and other expenses. There are no amounts remaining available to us under applicable
insurance policies for our ongoing indemnification and advancement obligations with respect to certain of our current and
former officers and directors or incremental legal fees and other expenses related to the above matters.
See Note 11 for information relating to the ITD Dispute.
Many of our engagements involve projects that are critical to the operations of our clients’ business and provide benefits
that are difficult to quantify. Any failure in a client’s systems or our failure to meet our contractual obligations to our clients,
including any breach involving a client’s confidential information or sensitive data, or our obligations under applicable laws or
regulations could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although
we attempt to contractually limit our liability for damages arising from negligent acts, errors, mistakes, or omissions in
rendering our services, there can be no assurance that the limitations of liability set forth in our contracts will be enforceable in
all instances or will otherwise protect us from liability for damages. Although we have general liability insurance coverage,
including coverage for errors or omissions, we retain a significant portion of risk through our insurance deductibles and there
can be no assurance that such coverage will cover all types of claims, continue to be available on reasonable terms or will be
available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage as to any future
claim. The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage
or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance
requirements, could have a material adverse effect on our business, results of operations, financial position and cash flows for a
particular period.
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual
arrangements through which we may be obligated to indemnify clients or other parties with whom we conduct business with
respect to certain matters. These arrangements can include provisions whereby we agree to hold the indemnified party and
certain of their affiliated entities harmless with respect to third-party claims related to such matters as our breach of certain
representations or covenants, our intellectual property infringement, our gross negligence or willful misconduct or certain other
claims made against certain parties. Payments by us under any of these arrangements are generally conditioned on the client
making a claim and providing us with full control over the defense and settlement of such claim. It is not possible to determine
the maximum potential liability under these indemnification agreements due to the unique facts and circumstances involved in
each particular agreement. Historically, we have not made material payments under these indemnification agreements and
therefore they have not had a material impact on our operating results, financial position, or cash flows. However, if events
arise requiring us to make payment for indemnification claims under our indemnification obligations in contracts we have
entered, such payments could have a material adverse effect on our business, results of operations, financial position and cash
flows for a particular period.
Cognizant
F-35
December 31, 2023 Form 10-K
Cognizant
F-36
December 31, 2023 Form 10-K
Note 16 — Employee Benefits
We contribute to defined contribution plans, including 401(k) savings and supplemental retirement plans in the United
States. Total expenses for our contributions to these plans, excluding the India plans described below, were $185 million, $172
million and $135 million for the years ended December 31, 2023, 2022 and 2021, respectively.
In addition, we maintain employee benefit plans that cover substantially all India-based employees. The employees’
provident fund, pension and family pension plans are statutorily defined contribution retirement benefit plans. Under the plans,
employees contribute up to 12.0% of their eligible compensation, which is matched by an equal contribution by the Company.
For these plans, we recognized a contribution expense of $149 million, $143 million and $121 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
We also maintain a gratuity plan in India that is a statutory post-employment benefit plan providing defined lump sum
benefits. We make annual contributions to the employees’ gratuity fund established with a government-owned insurance
corporation to fund a portion of the estimated obligation. Our liability for the gratuity plan reflected the undiscounted benefit
obligation payable as of the balance sheet date, which was based upon the employees’ salary and years of service. As of
December 31, 2023 and 2022, the amount accrued under the gratuity plan was $130 million and $99 million, which is net of
fund assets of $221 million and $206 million, respectively. Expense recognized by us was $56 million, $45 million and $70
million for the years ended December 31, 2023, 2022 and 2021, respectively.
Note 17 — Stock-Based Compensation Plans
Our 2023 Incentive Plan provides for the issuance of a total of 25.0 million shares of Class A common stock to eligible
employees, less (i) the number of shares granted under the 2017 Incentive Plan between March 24, 2023 and June 6, 2023, plus
(ii) any shares subject to awards under the prior 2017 and 2009 Incentive Plans that are forfeited after June 6, 2023. The
Purchase Plan provides for the issuance of up to 50.0 million shares of Class A common stock to eligible employees. The 2023
Incentive Plan does not affect any awards outstanding under the prior plans. As of December 31, 2023, we have 25.1 million
and 11.5 million shares available for grant under the 2023 Incentive Plan and the Purchase Plan, respectively.
The allocation of total stock-based compensation expense between cost of revenues, selling, general and administrative
expenses and restructuring charges as well as the related income tax benefit were as follows for the three years ended
December 31:
(in millions)
Cost of revenues
SG&A expenses
Restructuring charges
Total stock-based compensation expense
Income tax benefit
2023
2022
2021
$
$
$
30
153
(7)
176
34
$
$
$
33
228
—
261
59
$
$
$
49
197
—
246
59
Restricted Stock Units and Performance Stock Units
We granted RSUs that vest in quarterly or annual installments over periods of up to four years to employees, including our
executive officers. A summary of the activity for RSUs granted under our stock-based compensation plans as of December 31,
2023 and changes during the year then ended is presented below:
Unvested at January 1, 2023
Granted
Vested
Forfeited
Unvested at December 31, 2023
Number of
Units
(in millions)
Weighted Average
Grant Date
Fair Value
(in dollars)
3.4
3.6
(2.7)
(1.0)
3.3
$
$
74.54
65.95
70.99
71.32
69.10
The weighted-average grant date fair value of RSUs granted in 2023, 2022 and 2021 was $65.95, $78.20 and $74.66,
respectively. As of December 31, 2023, $159 million of total remaining unrecognized stock-based compensation cost related to
RSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.6 years.
We granted PSUs that vest over periods up to four years to employees, including our executive officers. The vesting of
PSUs is contingent on meeting certain financial performance targets, market conditions and continued service. A summary of
the activity for PSUs granted under our stock-based compensation plans as of December 31, 2023 and changes during the year
then ended is presented below. The presentation reflects the number of PSUs at the maximum performance milestones.
Unvested at January 1, 2023
Granted
Vested
Forfeited
Adjustment at the conclusion of the performance measurement period
Unvested at December 31, 2023
Number of
Units
(in millions)
Weighted Average
Grant Date
Fair Value
(in dollars)
2.4
1.2
(0.4)
(1.4)
(0.3)
1.5
$
$
76.93
67.82
59.48
77.72
72.39
74.13
The weighted-average grant date fair value of PSUs granted in 2023, 2022 and 2021 was $67.82, $90.92 and $73.38,
respectively. As of December 31, 2023, $13 million of the total remaining unrecognized stock-based compensation cost related
to PSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.3 years.
All RSUs and PSUs have dividend equivalent rights, which entitle holders to the same dividend value per share as holders
of common stock. Dividend equivalent rights are subject to the same vesting and other terms and conditions as the
corresponding unvested RSUs and PSUs and are accumulated and paid when the underlying shares vest.
Purchase Plan
For the years ended December 31, 2023 and 2022, the Purchase Plan provided for eligible employees to purchase shares
of Class A common stock at a price equal to 95% of the fair market value per share of our Class A common stock on the last
date of the purchase period. This plan has been deemed non-compensatory and, therefore, no compensation expense has been
recorded. During the years ended December 31, 2023 and 2022, we issued 1.1 million shares and 1.3 million shares,
respectively, of Class A common stock under the Purchase Plan.
For the year ended December 31, 2021, the Purchase Plan provided for eligible employees to purchase shares of Class A
common stock at a price of 90% of the lesser of: (a) the fair market value of a share of Class A common stock on the first date
of the purchase period or (b) the fair market value of a share of Class A common stock on the last date of the purchase period.
Stock-based compensation expense for the Purchase Plan was recognized over the vesting period of three months on a straight-
line basis. The fair values of the options granted under the Purchase Plan were estimated at the date of grant during the year
ended December 31, 2021, based upon the following assumptions, and were as follows:
Dividend yield
Weighted average volatility factor
Weighted average risk-free interest rate
Weighted average expected life (in years)
Weighted average grant date fair value
2021
1.3 %
27.5 %
0.03 %
0.25
$
11.72
Cognizant
F-37
December 31, 2023 Form 10-K
Cognizant
F-38
December 31, 2023 Form 10-K
Note 16 — Employee Benefits
We contribute to defined contribution plans, including 401(k) savings and supplemental retirement plans in the United
States. Total expenses for our contributions to these plans, excluding the India plans described below, were $185 million, $172
million and $135 million for the years ended December 31, 2023, 2022 and 2021, respectively.
In addition, we maintain employee benefit plans that cover substantially all India-based employees. The employees’
provident fund, pension and family pension plans are statutorily defined contribution retirement benefit plans. Under the plans,
employees contribute up to 12.0% of their eligible compensation, which is matched by an equal contribution by the Company.
For these plans, we recognized a contribution expense of $149 million, $143 million and $121 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
We also maintain a gratuity plan in India that is a statutory post-employment benefit plan providing defined lump sum
benefits. We make annual contributions to the employees’ gratuity fund established with a government-owned insurance
corporation to fund a portion of the estimated obligation. Our liability for the gratuity plan reflected the undiscounted benefit
obligation payable as of the balance sheet date, which was based upon the employees’ salary and years of service. As of
December 31, 2023 and 2022, the amount accrued under the gratuity plan was $130 million and $99 million, which is net of
fund assets of $221 million and $206 million, respectively. Expense recognized by us was $56 million, $45 million and $70
million for the years ended December 31, 2023, 2022 and 2021, respectively.
Note 17 — Stock-Based Compensation Plans
Our 2023 Incentive Plan provides for the issuance of a total of 25.0 million shares of Class A common stock to eligible
employees, less (i) the number of shares granted under the 2017 Incentive Plan between March 24, 2023 and June 6, 2023, plus
(ii) any shares subject to awards under the prior 2017 and 2009 Incentive Plans that are forfeited after June 6, 2023. The
Purchase Plan provides for the issuance of up to 50.0 million shares of Class A common stock to eligible employees. The 2023
Incentive Plan does not affect any awards outstanding under the prior plans. As of December 31, 2023, we have 25.1 million
and 11.5 million shares available for grant under the 2023 Incentive Plan and the Purchase Plan, respectively.
The allocation of total stock-based compensation expense between cost of revenues, selling, general and administrative
expenses and restructuring charges as well as the related income tax benefit were as follows for the three years ended
December 31:
(in millions)
Cost of revenues
SG&A expenses
Restructuring charges
Income tax benefit
Total stock-based compensation expense
Unvested at January 1, 2023
Granted
Vested
Forfeited
Unvested at December 31, 2023
2023
2022
2021
$
$
$
30
153
(7)
176
34
$
$
$
33
228
—
261
59
$
$
$
49
197
—
246
59
Number of
Units
(in millions)
Weighted Average
Grant Date
Fair Value
(in dollars)
3.4
3.6
(2.7)
(1.0)
3.3
$
$
74.54
65.95
70.99
71.32
69.10
Restricted Stock Units and Performance Stock Units
We granted RSUs that vest in quarterly or annual installments over periods of up to four years to employees, including our
executive officers. A summary of the activity for RSUs granted under our stock-based compensation plans as of December 31,
2023 and changes during the year then ended is presented below:
The weighted-average grant date fair value of RSUs granted in 2023, 2022 and 2021 was $65.95, $78.20 and $74.66,
respectively. As of December 31, 2023, $159 million of total remaining unrecognized stock-based compensation cost related to
RSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.6 years.
We granted PSUs that vest over periods up to four years to employees, including our executive officers. The vesting of
PSUs is contingent on meeting certain financial performance targets, market conditions and continued service. A summary of
the activity for PSUs granted under our stock-based compensation plans as of December 31, 2023 and changes during the year
then ended is presented below. The presentation reflects the number of PSUs at the maximum performance milestones.
Unvested at January 1, 2023
Granted
Vested
Forfeited
Adjustment at the conclusion of the performance measurement period
Unvested at December 31, 2023
Number of
Units
(in millions)
Weighted Average
Grant Date
Fair Value
(in dollars)
2.4
1.2
(0.4)
(1.4)
(0.3)
1.5
$
$
76.93
67.82
59.48
77.72
72.39
74.13
The weighted-average grant date fair value of PSUs granted in 2023, 2022 and 2021 was $67.82, $90.92 and $73.38,
respectively. As of December 31, 2023, $13 million of the total remaining unrecognized stock-based compensation cost related
to PSUs is expected to be recognized over the weighted-average remaining requisite service period of 1.3 years.
All RSUs and PSUs have dividend equivalent rights, which entitle holders to the same dividend value per share as holders
of common stock. Dividend equivalent rights are subject to the same vesting and other terms and conditions as the
corresponding unvested RSUs and PSUs and are accumulated and paid when the underlying shares vest.
Purchase Plan
For the years ended December 31, 2023 and 2022, the Purchase Plan provided for eligible employees to purchase shares
of Class A common stock at a price equal to 95% of the fair market value per share of our Class A common stock on the last
date of the purchase period. This plan has been deemed non-compensatory and, therefore, no compensation expense has been
recorded. During the years ended December 31, 2023 and 2022, we issued 1.1 million shares and 1.3 million shares,
respectively, of Class A common stock under the Purchase Plan.
For the year ended December 31, 2021, the Purchase Plan provided for eligible employees to purchase shares of Class A
common stock at a price of 90% of the lesser of: (a) the fair market value of a share of Class A common stock on the first date
of the purchase period or (b) the fair market value of a share of Class A common stock on the last date of the purchase period.
Stock-based compensation expense for the Purchase Plan was recognized over the vesting period of three months on a straight-
line basis. The fair values of the options granted under the Purchase Plan were estimated at the date of grant during the year
ended December 31, 2021, based upon the following assumptions, and were as follows:
Dividend yield
Weighted average volatility factor
Weighted average risk-free interest rate
Weighted average expected life (in years)
Weighted average grant date fair value
2021
1.3 %
27.5 %
0.03 %
0.25
11.72
$
Cognizant
F-37
December 31, 2023 Form 10-K
Cognizant
F-38
December 31, 2023 Form 10-K
In January 2024, we acquired 100% ownership in Thirdera, an Elite ServiceNow Partner specializing in advisory,
implementation and optimization solutions related to the ServiceNow platform, for a preliminary purchase price of
$430 million. This acquisition augments our on-and-near-shore global ServiceNow expertise.
Note 18 — Segment Information
Note 19 — Subsequent Events
We have seven industry-based operating segments, which are aggregated into four reportable business segments:
Dividend
• Financial Services, which consists of the banking and insurance operating segments;
On February 5, 2024, our Board of Directors approved the Company's declaration of a $0.30 per share dividend with a
• Health Sciences (previously referred to as Healthcare), which consists of a single operating segment of the same name;
record date of February 20, 2024 and a payment date of February 28, 2024.
• Products and Resources, which consists of the retail and consumer goods; manufacturing, logistics, energy, and
utilities; and travel and hospitality operating segments; and
Acquisitions
• Communications, Media and Technology, which consists of a single operating segment of the same name.
Our segments are industry-based, and as such, we report revenue from clients in the segment with which our clients are
most closely aligned. Our client partners, account executives and client relationship managers are aligned in accordance with
the specific industries they serve. Our CODM evaluates the Company's performance and allocates resources based on segment
revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs.
Generally, operating expenses for each operating segment have similar characteristics and are subject to the same factors,
pressures and challenges. However, the economic environment and its effects on industries served by the operating segments
may affect revenues and operating expenses to differing degrees.
In 2023, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating
segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of
delivery. Specifically, segment operating profit now includes an allocation of both SG&A costs related to our integrated
practices and the excess or shortfall of incentive-based compensation for commercial and delivery employees as compared to
target, which were previously included in "unallocated costs." We have reported 2023 segment operating profits using the new
allocation methodology and have recast the 2022 and 2021 results to conform to the new methodology.
Corporate expenses, expenses related to our NextGen program, a portion of depreciation and amortization and the impact
of the settlements of the cash flow hedges are not allocated to individual segments in internal management reports used by the
CODM. Accordingly, such expenses are excluded from segment operating profit and are included below as “unallocated costs”
and adjusted against our total income from operations. Additionally, we do not disclose assets by segment as a significant
portion of the assets is used interchangeably among the segments and the CODM does not review such information.
For revenues by reportable business segment and geographic area see Note 2.
Segment operating profits by reportable business segment were as follows:
(in millions)
Financial Services
Health Sciences
Products and Resources
Communications, Media and Technology
Total segment operating profit
Less: unallocated costs
Income from operations
Geographic Area Information
Long-lived assets by geographic area are as follows:
(in millions)
Long-lived Assets:(1)
North America(2)
Europe
Rest of World(3)
Total
2023
2022
2021
1,156
1,352
984
625
4,117
1,428
2,689
$
$
1,323
1,190
1,071
769
4,353
1,385
2,968
$
$
1,296
1,247
960
691
4,194
1,368
2,826
2023
2022
2021
335
90
623
1,048
$
$
354
86
661
1,101
$
$
377
75
719
1,171
$
$
$
$
(1)
(2)
(3)
Long-lived assets include property and equipment, net of accumulated depreciation and amortization.
Substantially all relates to the United States.
Substantially all relates to India.
Cognizant
F-39
December 31, 2023 Form 10-K
Cognizant
F-40
December 31, 2023 Form 10-K
Note 18 — Segment Information
Note 19 — Subsequent Events
We have seven industry-based operating segments, which are aggregated into four reportable business segments:
Dividend
• Financial Services, which consists of the banking and insurance operating segments;
On February 5, 2024, our Board of Directors approved the Company's declaration of a $0.30 per share dividend with a
• Health Sciences (previously referred to as Healthcare), which consists of a single operating segment of the same name;
record date of February 20, 2024 and a payment date of February 28, 2024.
• Products and Resources, which consists of the retail and consumer goods; manufacturing, logistics, energy, and
utilities; and travel and hospitality operating segments; and
Acquisitions
In January 2024, we acquired 100% ownership in Thirdera, an Elite ServiceNow Partner specializing in advisory,
implementation and optimization solutions related to the ServiceNow platform, for a preliminary purchase price of
$430 million. This acquisition augments our on-and-near-shore global ServiceNow expertise.
• Communications, Media and Technology, which consists of a single operating segment of the same name.
Our segments are industry-based, and as such, we report revenue from clients in the segment with which our clients are
most closely aligned. Our client partners, account executives and client relationship managers are aligned in accordance with
the specific industries they serve. Our CODM evaluates the Company's performance and allocates resources based on segment
revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs.
Generally, operating expenses for each operating segment have similar characteristics and are subject to the same factors,
pressures and challenges. However, the economic environment and its effects on industries served by the operating segments
may affect revenues and operating expenses to differing degrees.
In 2023, we made certain changes to the internal measurement of segment operating profit for the purpose of evaluating
segment performance and resource allocation. The primary reason for the change was to reflect a more complete cost of
delivery. Specifically, segment operating profit now includes an allocation of both SG&A costs related to our integrated
practices and the excess or shortfall of incentive-based compensation for commercial and delivery employees as compared to
target, which were previously included in "unallocated costs." We have reported 2023 segment operating profits using the new
allocation methodology and have recast the 2022 and 2021 results to conform to the new methodology.
Corporate expenses, expenses related to our NextGen program, a portion of depreciation and amortization and the impact
of the settlements of the cash flow hedges are not allocated to individual segments in internal management reports used by the
CODM. Accordingly, such expenses are excluded from segment operating profit and are included below as “unallocated costs”
and adjusted against our total income from operations. Additionally, we do not disclose assets by segment as a significant
portion of the assets is used interchangeably among the segments and the CODM does not review such information.
For revenues by reportable business segment and geographic area see Note 2.
Segment operating profits by reportable business segment were as follows:
(in millions)
Financial Services
Health Sciences
Products and Resources
Communications, Media and Technology
Total segment operating profit
Less: unallocated costs
Income from operations
Geographic Area Information
(in millions)
Long-lived Assets:(1)
North America(2)
Europe
Rest of World(3)
Total
Long-lived assets by geographic area are as follows:
$
$
$
2023
2022
2021
1,156
1,352
984
625
4,117
1,428
2,689
1,323
1,190
1,071
769
4,353
1,385
2,968
1,296
1,247
960
691
4,194
1,368
2,826
$
$
$
$
$
$
2023
2022
2021
335
90
623
354
86
661
377
75
719
$
1,048
$
1,101
$
1,171
Long-lived assets include property and equipment, net of accumulated depreciation and amortization.
(1)
(2)
(3)
Substantially all relates to the United States.
Substantially all relates to India.
Cognizant
F-39
December 31, 2023 Form 10-K
Cognizant
F-40
December 31, 2023 Form 10-K
Cognizant Technology Solutions Corporation
Valuation and Qualifying Accounts
For the Years Ended December 31, 2023, 2022 and 2021
(in millions)
Description
Warranty accrual:
2023
2022
2021
Valuation allowance—deferred income tax
assets:2023
2022
2021
Balance at
Beginning of
Period
Charged to
Costs and
Expenses
Charged to
Other
Accounts
(in millions)
Deductions
/Other
Balance at
End of
Period
$
$
$
$
$
$
41
39
32
41
46
29
$
$
$
$
$
$
40
41
36
14
3
17
$
$
$
$
$
$
—
—
3
—
—
—
$
$
$
$
$
$
41
39
32
2
8
—
$
$
$
$
$
$
40
41
39
53
41
46
EXHIBIT 31.1
I, Ravi Kumar S, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Cognizant Technology Solutions Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 14, 2024
c)
d)
a)
b)
/s/ RAVI KUMAR S
Ravi Kumar S
Chief Executive Officer
(Principal Executive Officer)
Cognizant
F-41
December 31, 2023 Form 10-K
Cognizant Technology Solutions Corporation
Valuation and Qualifying Accounts
For the Years Ended December 31, 2023, 2022 and 2021
(in millions)
Description
Warranty accrual:
2023
2022
2021
assets:2023
2022
2021
Valuation allowance—deferred income tax
Balance at
Beginning of
Period
Charged to
Costs and
Expenses
Charged to
Other
Accounts
(in millions)
Deductions
/Other
Balance at
End of
Period
$
$
$
$
$
$
41
39
32
41
46
29
$
$
$
$
$
$
40
41
36
14
3
17
$
$
$
$
$
$
—
—
3
—
—
—
$
$
$
$
$
$
41
39
32
2
8
—
$
$
$
$
$
$
40
41
39
53
41
46
EXHIBIT 31.1
I, Ravi Kumar S, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Cognizant Technology Solutions Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 14, 2024
/s/ RAVI KUMAR S
Ravi Kumar S
Chief Executive Officer
(Principal Executive Officer)
Cognizant
F-41
December 31, 2023 Form 10-K
EXHIBIT 31.2
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*
In connection with the Annual Report on Form 10-K of Cognizant Technology Solutions Corporation (the
“Company”) for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), the undersigned, Ravi Kumar S, Chief Executive Officer of the Company, hereby certifies, pursuant to 18
U.S.C. Section 1350, that:
and
of operations of the Company.
Dated: February 14, 2024
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
/s/ RAVI KUMAR S
Ravi Kumar S
Chief Executive Officer
(Principal Executive Officer)
_____________________
* A signed original of this written statement required by Section 906 has been provided to Cognizant Technology Solutions
Corporation and will be retained by Cognizant Technology Solutions Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
I, Jatin Dalal, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Cognizant Technology Solutions Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 14, 2024
/s/ JATIN DALAL
Jatin Dalal
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 31.2
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*
In connection with the Annual Report on Form 10-K of Cognizant Technology Solutions Corporation (the
“Company”) for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), the undersigned, Ravi Kumar S, Chief Executive Officer of the Company, hereby certifies, pursuant to 18
U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: February 14, 2024
/s/ RAVI KUMAR S
Ravi Kumar S
Chief Executive Officer
(Principal Executive Officer)
_____________________
* A signed original of this written statement required by Section 906 has been provided to Cognizant Technology Solutions
Corporation and will be retained by Cognizant Technology Solutions Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
I, Jatin Dalal, certify that:
CERTIFICATION
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Cognizant Technology Solutions Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
Dated: February 14, 2024
c)
d)
a)
b)
/s/ JATIN DALAL
Jatin Dalal
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of Cognizant Technology Solutions Corporation (the
“Company”) for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), the undersigned, Jatin Dalal, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C.
Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Dated: February 14, 2024
/s/ JATIN DALAL
Jatin Dalal
Chief Financial Officer
(Principal Financial Officer)
_____________________
* A signed original of this written statement required by Section 906 has been provided to Cognizant Technology Solutions
Corporation and will be retained by Cognizant Technology Solutions Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
Corporate information
Directors
Stephen (Steve) J. Rohleder (AC) (FC) (GC)
Chair of Cognizant Board
Former Group Chief Executive, North
America and Chief Operating Officer
Accenture
Executive Committee
Ravi Kumar S
Chief Executive Officer
Jatin Dalal
Chief Financial Officer
Executive offices
300 Frank W Burr Blvd.
Suite 36, 6th Floor
Teaneck, NJ 07666 USA
Phone: 201.801.0233
www.cognizant.com
Zein Abdalla (CC) (GC*)
Former President
PepsiCo
Vinita Bali (CC) (GC)
Former CEO and Managing Director
Britannia Industries
Former Vice President
The Coca-Cola Company
Eric Branderiz (AC) (CC)
Former EVP and CFO
Enphase Energy
Archana (Archie) Deskus (AC) (CC) (FC)
EVP and CTO
PayPal
John M. Dineen (AC) (FC*)
Former President and CEO
GE Healthcare
Ravi Kumar S
CEO
Cognizant
Leo S. Mackay Jr. (AC) (CC*) (GC)
Senior Vice President
Ethics and Enterprise Assurance
Lockheed Martin
Michael Patsalos-Fox (CC) (FC)
Former Chair, Board of Directors
Cognizant
Former Chairman, the Americas
McKinsey & Company
Former CEO
Stroz Friedberg
Abraham (Bram) Schot (FC) (GC)
Former Chairman and CEO
Audi AG
Joseph (Joe) M. Velli (AC) (CC)
Former Senior EVP
The Bank of New York
Sandra S. Wijnberg (AC*) (FC)
Former CFO
Marsh & McLennan Companies
Former CAO
Aquiline Holdings
Ganesh Ayyar
Executive Vice President and President
Intuitive Operations and Automation and
Industry Solutions
Form 10-K
A copy of the Company’s Annual Report on
Form 10-K is available without charge upon
request by contacting Investor Relations.
Common stock information
The Company’s Class A Common Stock
(CTSH) is listed on the Nasdaq Global
Select market.
Annual meeting date
The Company’s annual meeting of
stockholders will be held on
Tuesday, June 4, 2024, via live
webcast—Please visit
www.virtualshareholdermeeting.com/
CTSH2024
Online check-in begins: 9:15 am
Meeting begins: 9:30 am
(All times U.S. Eastern Time)
Independent registered public
accounting firm
PricewaterhouseCoopers LLP
300 Madison Avenue
New York, NY 10017
Transfer agent
Equiniti Trust Company, LLC (formerly
American Stock Transfer & Trust Co.)
55 Challenger Road, Floor 2
Ridgefield Park, NJ 07660
Investor relations
For more information, contact:
Tyler Scott, Global Head of Investor Relations
Tyler.Scott@cognizant.com
Gaurav Chand
Executive Vice President, Chief
Marketing Officer
Kathryn (Kathy) Diaz
Executive Vice President and
Chief People Officer
Annadurai (Anna) Elango
Executive Vice President
Core Technologies and Insights
Surya Gummadi
Executive Vice President and President,
Americas
John Kim
Executive Vice President, Chief Legal
Officer, Chief Administrative Officer
and Corporate Secretary
Jane Livesey
Head of Cognizant Asia Pacific and Japan
Manoj Mehta
Head of Cognizant Europe, Middle East
and Africa
Rajesh Nambiar
Executive Vice President, Chairman
and Managing Director
Cognizant India
Prasad Sankaran
Executive Vice President
Software and Platform Engineering
Rob Vatter
Executive Vice President
Enterprise Platform Services
The Annual Report includes statements which may constitute forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which
are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be
accurate. These statements include but are not limited to, express or implied forward-looking statements relating
to our vision, strategy and initiatives, including our ability to become the employer of choice in our industry,
continue simplifying our operations, and to accelerate growth; strategic partnerships and collaborations;
competitive position and opportunities in the marketplace; investment in and growth of our business; the pace
Finance and Strategy Committee
Board committees
AC Audit Committee
FC
CC Compensation and Human Capital Committee
GC Governance and Sustainability Committee
* Denotes committee chairperson
and magnitude of change and client needs related to generative AI; the effectiveness of our recruiting and
talent retention efforts and related costs; the success of our Synapse skilling initiative; and the benefits of our
focus on ecological, social and economic threats. These statements are neither promises nor guarantees but
are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause
actual results to differ materially from those contemplated in these forward-looking statements, which speak
only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or
implied include general economic and industry conditions, changes in the regulatory environment, including with
respect to immigration and taxes, and the other factors discussed in our most recent Annual Report on Form
10-K and other filings with the SEC. Cognizant undertakes no obligation to update or revise any forward-looking
statements whether as a result of new information, future events, or otherwise, except as may be required under
applicable securities law.