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Cognizant Predicts Lower 2025 Revenue as IT Spending Tightens

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Cognizant Technology Solutions (CTSH.O) revised its 2025 revenue forecast downwards on Wednesday, citing the impact of ongoing uncertainty about future interest rate cuts, which is prompting businesses to reduce their spending on IT services and consultancy. The company warned that while demand for AI-related investments remains strong, persistent high capital costs are leading enterprises to reconsider their IT spending strategies.

Despite the cautious outlook for the upcoming year, Cognizant saw a positive fourth quarter, driven by a surge in demand from the financial services sector. The company secured more large deals compared to the previous year, helping its quarterly revenue exceed Wall Street’s expectations.

Jatin Dalal, Cognizant’s finance chief, noted a strong pipeline of transformation and modernization projects, particularly within North America’s insurance sector and select areas of banking and financial services. This helped the company achieve fourth-quarter revenue of $5.08 billion, surpassing analysts’ projections of $5.07 billion. Additionally, Cognizant’s adjusted earnings for the quarter came in at $1.21 per share, beating analysts’ average estimate of $1.12.

For the first quarter of 2025, Cognizant forecasts revenue to range between $5 billion and $5.1 billion, slightly above analysts’ expectations of $5.06 billion. However, the company expects its 2025 annual revenue to be between $20.30 billion and $20.80 billion, which is lower than the $20.89 billion forecasted by analysts. The projected adjusted earnings per share for 2025 are expected to fall between $4.90 and $5.06, with the midpoint of $4.98 per share, in line with analysts’ estimates of $4.99.

 

Infosys Files Counterclaim Against Cognizant for Anti-Competitive Practices

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Infosys, India’s second-largest software company, has filed a counterclaim against rival Cognizant in a Texas federal court, accusing the U.S.-based tech firm of engaging in anti-competitive practices and poaching key executives. The Bengaluru-based company alleges that Cognizant implemented anti-competitive contract clauses that prevented clients from awarding IT services work to competitors, as well as refusing training on its software.

In addition, Infosys claims that Cognizant engaged in targeted recruitment of senior executives, including hiring S Ravi Kumar as its CEO in 2023, which allegedly delayed the development of Infosys’ competing software, Infosys Helix. Infosys argues that these actions were aimed at hindering its ability to compete effectively in the software market.

Cognizant responded to the accusations by stating it would take decisive action to address any allegations. The company emphasized its commitment to promoting competition but insisted that competitors should not use Cognizant’s intellectual property to unfairly compete, which it alleges Infosys has done.

Infosys has not yet responded publicly to a request for comment on the counterclaim. This legal dispute follows a separate lawsuit filed by Cognizant’s subsidiary, TriZetto, in August 2023. TriZetto, a healthcare software provider, accused Infosys of stealing trade secrets related to its healthcare insurance software, Facets, and QNXT, which are used by insurance companies to automate administrative tasks.

TriZetto’s lawsuit claimed that Infosys misused its software to create “Test Cases for Facets,” improperly repackaging TriZetto’s data into an Infosys product. Infosys is seeking triple damages as well as attorney fees and other related costs, though the specific amount of damages has not been disclosed.

The legal battle is ongoing, with the case being heard in the U.S. District Court for the Northern District of Texas (Case No. 3:24-cv-02158-X).