Dive Brief:
- Cognizant saw revenues increase 7.4% year-over-year to $5.42 billion in the third quarter fueled by strong growth in North America, CFO Jatin Dalal said during a Q3 2025 earnings call Wednesday. The professional services company also boosted profitability: its operating margin increased to 16% from 14.6% in Q3 2024.
- AI was a key revenue driver, according to Cognizant CEO Ravi Kumar S. The results "reflect the momentum we have built over the past two-and-a-half years helping clients embrace AI," said Kumar.
- Cognizant is banking on an "AI builder" strategy, which integrates the company's platforms and IP with additional AI capabilities through partnerships with model builders. Kumar pointed to a recently forged Anthropic alliance, in which Cognizant will deploy Anthropic's Claude model and agentic tools to support clients and its own internal operations.
Dive Insight:
Cognizant achieved third-quarter revenue gains despite persistent economic uncertainty, which has tightened enterprise IT budgets.
Clients across industries "are navigating elevated levels of uncertainty around trade policy,” Dalal said, noting that he is seeing customers “carefully evaluate technology investments.” The trend is consistent with the previous quarter, he added.
While cautious investment environments tend to slow discretionary tech spending, Cognizant saw investments in small projects revive in the financial services and healthcare sectors.
"That is all related to AI-led spend," Kumar said.
Overall, a cycle is emerging in which AI takes costs out of software development, freeing resources to fund AI-driven innovation projects.
"AI-led productivity is the funding engine for enterprise transformation, as we help clients accelerate software development, lower deployment costs, and reduce technical debt," said Kumar.
Partnerships and growing demand for AI also contributed to the company’s favorable quarter. Cognizant is broadening its alliances to include SaaS providers, hyperscalers, frontier-model AI companies, and startups.
“As AI infrastructure expands, our clients increasingly need support from partners who can help them move from experimentation to enterprise-wide adoption with speed, precision and trust,” Kumar said on the earnings call.
The Anthropic alliance falls into the frontier model category, and Kumar cited Workfabric AI as a startup partnership.
"It's a much broader partnership lens," he said.
Cognizant and Workfabric AI are working together in context engineering, an enterprise AI field that involves feeding a business's organizational knowledge, workflows and execution patterns into an LLM to create a "contextual agent," Kumar said.
