Cognizant CFO: AI Pressures IT Spending, but BFSI Growth Stays Strong

AI and weak discretionary spending are pressuring IT-services growth, but Cognizant’s banking, financial services and insurance business delivered double-digit growth in the second quarter.

AI is reshaping competition, delivery models and staffing: Cognizant said 40% of software-engineering work is AI-assisted, while industry employment is expected to remain largely flat over the next 18–24 months.

Cognizant reported 5% trailing-12-month bookings growth, plans gradual margin improvement and will maintain its 50/25/25 capital-allocation framework, including a recently accelerated $1 billion buyback.

Cognizant CFO Jatin Dalal said the IT services industry’s prolonged period of slow growth reflects both secular pressures from artificial intelligence and a broader lack of discretionary spending across several end markets. Speaking at a Citi fireside chat hosted by IT services analyst Bryan Keane, Dalal said banking, financial services and insurance remained a notable exception. Cognizant posted double-digit growth in BFSI during the second quarter, he said, despite AI-related productivity gains and other pressures affecting the industry.

“It is some amount of secular pressure, but it is also largely the lack of discretionary spend in the rest of the sector,” Dalal said.

Demand Varies by Industry

Dalal described demand conditions as broadly unchanged from the company’s recent earnings-call commentary, though performance differs significantly by vertical. In communications, media and technology, he said technology customers continue to invest in their futures and have maintained a strong discretionary-spending environment. However, aggregate CMT growth has been held back by communications-sector trends and the effect of a particular customer that weighed on Cognizant’s first-half results. Dalal said that customer’s situation has stabilized and should no longer create an additional negative headwind, potentially improving the outlook for the segment in coming quarters. He said Cognizant does not currently see similar customer spending decisions on the horizon. Elsewhere, products and resources customers are working through supply-chain effects tied to geopolitical conditions, while healthcare is navigating policy-related challenges and opportunities, according to Dalal.

AI Reshaping Delivery Models and Competition

Dalal said AI is changing the basis of competition for large IT services contracts. Rather than simply focusing on whether an incumbent provider is displaced by a new competitor, clients are increasingly evaluating whether providers understand the use case for AI and can demonstrate they will remain technologically relevant over the next several years. Incumbent providers still retain an advantage from their knowledge of a client’s existing IT environment, he said. That context is especially valuable in AI deployments, where Dalal characterized the outcome as a combination of AI and customer-specific context.

On workforce trends, Dalal said employment among major IT services firms increased from 2023 to 2024 and again from 2024 to 2025, but has become “largely flattish” from 2025 to 2026. He expects staffing levels to remain within a relatively narrow range for the next 18 to 24 months rather than show substantial additions or reductions. Over time, he said, employee costs should decline as a portion of cost of sales and be replaced in part by virtual effort and inference costs, while companies seek to preserve gross margins.