Cognizant sets aside $270 million for layoffs while launching global reset plan

Cognizant has set aside up to $270 million for employee-related costs as part of a broader restructuring programme, signalling workforce changes as the company seeks to realign its operations for an AI-driven environment.

The plan, called Project Leap, will cost between $230 million and $320 million in total, according to company disclosures reported by Financial Express and Mint. A significant portion of this outlay is directed towards severance and personnel-related expenses, indicating a restructuring that will involve job reductions.

The announcement was made alongside the company’s first-quarter results on April 29.

A global programme with workforce impact

While the company has not specified the number of roles that may be affected, executives have indicated that the changes will be widespread.

CFO Jatin Dalal described Project Leap as a “global programme” that will span multiple geographies and business units, according to reporting by Financial Express.

Key elements of the restructuring plan:

$230 million to $320 million total restructuring cost
$200 million to $270 million allocated for severance and employee costs
$30 million to $50 million for additional personnel-related expenses
Programme expected to run through 2026

The scale and allocation suggest that workforce rationalisation will be central to the company’s reset.

Efficiency push driven by AI and client demand

Cognizant said Project Leap is aimed at accelerating its transition to what it calls an “operating model of the future”.

In practical terms, this means reshaping how services are delivered, with a stronger focus on efficiency, automation and alignment with changing client expectations.

Clients are increasingly demanding productivity gains and cost optimisation, particularly as AI tools become more embedded in technology services. The restructuring reflects an effort to meet these expectations while protecting margins.

Savings expected to follow restructuring

The company expects the restructuring to generate financial benefits within a relatively short timeframe.

According to its guidance:

Savings of $200 million to $300 million are expected in 2026
Further gains are anticipated in 2027
Adjusted operating margin guidance has been raised to 16.0% to 16.2%

Some of these savings will be reinvested into growth areas such as AI, while the rest will contribute to margin improvement.

However, these gains will follow the upfront costs of restructuring, which will be absorbed during the current year.

Workforce model set for change

The restructuring is expected to reshape Cognizant’s workforce composition rather than reduce headcount uniformly.

The company plans to hire more than 20,000 fresh graduates in 2026, signalling a shift towards early-career talent trained in newer technologies. This approach suggests increasing pressure on mid-level roles, particularly in areas where automation can replace routine work.

At the same time, Cognizant’s overall workforce has continued to grow. Headcount reached 357,600 at the end of March 2026, up by 6,000 from the previous quarter and more than 21,000 year on year.

Attrition remained stable at 12.3%, indicating no immediate surge in voluntary exits.

Growth remains steady amid transition

The restructuring comes alongside moderate business growth.

Cognizant reported revenue of $5.4 billion in the first quarter, up 5.8% year on year. Growth in constant currency terms was 3.9%, reflecting underlying demand trends.

For the second quarter, the company expects revenue between $5.45 billion and $5.52 billion, pointing to continued but measured expansion.

A familiar pattern in a changing industry

Project Leap follows earlier cost optimisation efforts by Cognizant, including workforce reductions and real estate rationalisation under previous programmes.

The latest move reflects a broader shift across the IT services sector, where companies are rethinking workforce structures as automation and AI alter delivery models.

Unlike earlier cycles driven primarily by demand slowdowns, the current phase is also shaped by technological change, requiring firms to balance efficiency with capability building.

Cognizant’s restructuring underscores a wider transition underway in the IT services industry.

The company is attempting to recalibrate its cost base while investing in AI and digital capabilities, even as it continues to hire and expand in selected areas.

The outcome will depend on how effectively it can align its workforce with evolving client needs. For now, the message is clear. Growth will continue, but with a different mix of skills, roles and cost structures.

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