Cognizant Technology Solutions has highlighted potential risks from artificial intelligence (AI) and automation in its latest annual report. The company warned that some traditional IT services could face lower demand or pricing pressures as clients increasingly adopt AI-driven solutions.
In its 2025 annual 10‑K filing, Cognizant noted that while AI offers opportunities, the notion that new AI tools can instantly replace large parts of enterprise IT work is “misplaced.” The firm emphasized that the transition to AI-enabled services will be complex and gradual.
The disclosure aligns Cognizant with other IT giants who are openly acknowledging AI’s potential to reshape traditional outsourcing and labor-intensive services. Analysts say this could pressure firms to rethink offerings, reskill employees, and adapt cost structures to stay competitive.
CEO Ravi Kumar S recently reiterated that while AI adoption is accelerating, its economic impact on existing enterprise IT workloads is not yet large enough to immediately replace legacy services.
Besides AI, Cognizant’s annual report also pointed to regulatory and reputational risks related to offshore outsourcing. Changes in laws or client perceptions could affect delivery models and workforce strategies, adding another layer of uncertainty to operations.
Despite these risks, Cognizant continues to invest in AI, cloud, and digital transformation services, aiming to help clients modernize and scale. The company is balancing growth opportunities with caution, ensuring emerging technologies do not cannibalize core business segments.
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