Cognizant restructures software engineering business as clients seek AI returns
Bengaluru: Cognizant Technology Solutions Corp. is undertaking what is arguably its largest restructuring in nearly four years, merging its application development, digital engineering and software testing practices into a single group as clients demand greater returns on their artificial intelligence (AI) investments.
Effective 26 October, the Nasdaq-listed company started to reorganize its business into three “building blocks”—Industry Delivery Units (IDUs), Frontier Capability Units (FCUs) and Application Services Units (ASUs)—and has laid the groundwork for equipping its employees with these changes over the last four months, according to internal memos accessed by Mint.
The restructuring is part of Cognizant’s efforts to prepare for an AI-driven market, where companies are reassessing the work they outsource to technology services providers. It is arguably the largest organizational overhaul under chief executive Ravi Kumar, who took charge in January 2023.
“We are bringing together our ADM, DE and QE&A practices as one full-stack SEG (software engineering group), organized across Industry Delivery Units, Frontier Capability Units and a standalone Application Services Unit. The model is designed to protect strong client delivery today while building the talent, skills, offerings and partnerships needed for AI-native delivery tomorrow,” an internal memo on Cognizant’s employee platform, OneCognizant, read. Mint accessed the memo.
ADM refers to application development and maintenance, DE to digital engineering, and QE&A to quality engineering and assurance. Under the earlier structure, these three practices operated separately and were not organized along industry lines.
New model
Under the new model, the Software Engineering Group (SEG) will serve clients across industry segments, including financial institutions, healthcare and life sciences companies, product and resources companies, and communications, media and technology (CMT) firms.
Starting 1 October, employees started getting tagged to a newly formed SEG department aligned to an IDU or Application Services Unit.
The FCUs will focus on building AI-native software products using models from Anthropic, OpenAI and Google’s Gemini. SEG employees will also be assigned to ASU departments, where they will specialize in mainframes, application management and software testing tools.
Cognizant attributed the restructuring to clients’ demand for better returns on AI investments, according to another internal company memo, accessed by the Mint.
“The gap between AI investment and proportionate returns is the defining challenge enterprises face today. Fragmented adoption, disconnected workflows and ungoverned processes leave value stranded and the divide between enterprises that harness AI effectively and those that don't is widening right now,” read the company's internal memo.
Technology gap
Cognizant, which follows a January-December financial calendar, ended 2025 with revenue of $21.1 billion, up 7% from a year earlier. Nearly three-fourths of its workforce is based in India.
The company said it is addressing the technology gap through four areas: developing products with embedded AI, optimizing operations for efficiency, modernizing applications, and assuring quality through governance layers.
“Our Software Engineering Group is purpose-built for exactly this moment: a full-stack, AI-native organization with a clear mandate to build, modernize and accelerate software delivery in an AI-driven market. By bringing together industry expertise, engineering excellence and frontier AI capabilities, we are evolving how we deliver for clients while creating the capabilities needed for the next era of software engineering. Our relevance in this market depends on being exactly that kind of partner,” an internal company communication accessed by Mint earlier this month read.
Mint could not independently ascertain the leadership structure of the new units. Questions sent to the company on Sunday went unanswered.
Earlier steps
The restructuring follows steps taken earlier to prepare employees for changes in the technology services industry.
In June, Cognizant introduced a “Bridge Program” for its employees. The company said the initiative “is designed to support associates in building foundational capabilities and smoothly transitioning into future-ready roles, enabling them to stay relevant in a rapidly evolving business landscape.”
The company is also encouraging employees to develop their skills through AI courses on its in-house learning app, SkillSpring.
Cognizant is the latest technology services company to reorganize its business as the industry adapts to AI. In September 2025, Accenture Plc consolidated its consulting, digital marketing, technology and operations businesses under “Reinvention Services”. In July 2026, Tata Consultancy Services Ltd. undertook a similar exercise.
Cognizant has previously outlined its efforts to adapt to AI. Chief executive Kumar described AI as “magical” during the company’s second-quarter analyst call on 29 July. Earlier this month, Cognizant said it was stepping up its focus on clients with annual revenue of $1 billion to $5 billion, with management citing their AI needs.
In April, the company announced Project Leap, a transformation programme involving increased investments in AI, integrated digital offerings, and workforce upskilling. Cognizant expected the programme to cost $230-320 million, including $200-270 million of employee severance and other personnel-related costs, but generate savings of as much as $300 million this year.