Cognizant Faces $230-$320 Million in Restructuring and Severance Expenses

Cognizant Announces Project Leap, Anticipating $230-$320 Million in Restructuring Costs

Nasdaq-listed Cognizant has announced Project Leap, a comprehensive restructuring plan that is expected to incur between $230 million and $320 million in costs. The majority of these costs will be driven by employee-related actions, with $200 million to $270 million allocated for severance and other personnel expenses, and an additional $30 million to $50 million earmarked for other charges.

The company expects to incur the bulk of these costs over the course of 2026. This move highlights Cognizant's efforts to rationalize its operations and improve efficiency in response to clients' increasing demands for productivity gains and cost optimization, particularly in an environment of automation and artificial intelligence (AI).

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This is not Cognizant's first cost reset. The company's earlier NextGen programme in 2023-24 resulted in the company cutting roughly 3,500 jobs and exiting about 11 million square feet of office space. While the exact scale of workforce impact of Project Leap is not disclosed, the allocation towards severance costs indicates that employee rationalization will be a key component of the programme.

The company has previously undertaken cost optimization initiatives, including real estate rationalization and workforce adjustments, as part of its efforts to protect margins during periods of demand uncertainty. With Project Leap, Cognizant appears to be entering another phase of structural reset, even as it positions itself to capture demand in areas such as AI, automation, and digital transformation.

Cognizant's headcount has increased to 357,600, a rise of 6,000 from the previous quarter. The company's estimates for Project Leap remain subject to assumptions, including local regulatory requirements, and actual costs could vary depending on execution timelines and market conditions.