Cognizant cuts growth guidance despite industry-beating growth in September

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Cognizant beats quarterly growth but cuts full-year 2026 guidance amid stable macro, rising discretionary risks, and restructuring costs.

By Rohan Das

Updated - October 29, 2026 at 09:51 PM. | Chennai

This is the third straight quarter where Cognizant cut the higher end of its guidance, which was estimated at 6.5 per cent at the start of the year.

IT major Cognizant Technology Solutions trimmed its revenue guidance for 2026 despite reporting an industry-beating revenue growth metrics for the quarter ended September 2026. 

The US-based company, which follows calendar year accounting, reported revenues of $5.7 billion in Q3, a 4.8 per cent y-o-y growth in constant currency (CC) terms. Out of this, inorganic growth from recently completed acquisitions stood at 2.1 per cent.

Cognizant beat its peers in revenue growth this quarter. Infosys posted growth of 1.2 per cent, Wipro 0.6 per cent, HCL Tech 2.6 per cent, while TCS came the closest with a growth of 2.8 per cent.

Despite this, the company trimmed its full year growth guidance for 2026, narrowing the range from the 4-5.5 per cent guided in June to 4-4.4 per cent. This is the third straight quarter where Cognizant cut the higher end of its guidance, which was estimated at 6.5 per cent at the start of the year.

Discretionary spending

CEO Ravi Kumar said in an investor call that though macroeconomic conditions were largely stable in the third quarter, the uncertainties have begun to weigh more on discretionary spending in the fourth quarter, particularly in healthcare and consumer-facing sectors resulting in a downward revision.

“A lot has changed since the start of 2026. If you look at the larger macro, the macro has not improved. You have oil prices up, inflation up, interest rates are up,” Kumar said at a press conference.

CFO Jatin Dalal added that the guidance also assumes lower revenues from third-party resales and higher impact from furloughs in the fourth quarter than previously expected.

Net profit for the September quarter stood at $627 million, up significantly from the $274 million in the year-ago period, when it was impacted by a one-time non-cash income tax expense of $390 million.

Financial services led the growth with a 12.3 per cent growth for the quarter.

“There is a tailwind on deregulation. AI-led benefits are accruing to financial services clients,” Ravi Kumar said.

Restructuring programme

The company has also revised the costs it expects to incur as part of the Project Leap workforce restructuring programme from the earlier estimated $230 million-$320 million to around $180 million to $250 million.

Dalal said the company has been able to cross train and redeploy more employees than what it had initially planned and expects to conclude the programme by March 2027.

Cognizant added about 10,100 employees on a year-on-year basis. This was also higher than its tier 1 rivals Infosys (551), Wipro (836), TCS(4,742) and HCL Tech (3,699).

On its plans for the India listing, Dalal said the company is evaluating the recent changes in the IPO framework proposed by SEBI.

“Once we have visibility of that final framework, which we think should be in a few weeks to a couple of months timeframe, we should be able to take a final decision on the matter,” he said. 

The company is planning to roll out promotions over the course of the fourth quarter and first quarter 2027.

On the disruptions due to suspension of Cognizant’s permanent labour certification applications, Dalal said they have invested significantly to scale its local US talent base over the last several years with around 32,000 people in the U.S

Published on October 29, 2026

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