Cognizant is focusing on investments in digital capabilities, including AI, cloud, data modernization, automation, digital engineering, and IoT. The company also completed two strategic acquisitions in 2023 to expand its talent, experience, and capabilities in key digital areas.

The company initiated the NextGen program in the second quarter of 2023, aimed at simplifying its operating model, optimizing corporate functions, and consolidating and realigning office space. This program is expected to generate savings to fund investments in people, growth opportunities, and IT modernization.

Recent acquisitions contributed 110 basis points to overall revenue growth, primarily benefiting the Products and Resources and Communications, Media and Technology segments. This indicates a strategic focus on inorganic growth in specific areas.

Voluntary attrition for tech services decreased from 25.6% in 2022 to 13.8% in 2023, indicating improved employee retention. This is a key metric for the company's ability to deliver services and manage costs.

The company saw meaningful increases in employee engagement scores in 2023, indicating improved employee morale and a more positive work environment. This is a positive sign for the company's ability to attract and retain talent.

The company acknowledges that the NextGen program may result in the loss of institutional knowledge, disruption to operations, and difficulties in retention and productivity. The company also notes that it may not realize the anticipated benefits, savings and improvements in its cost structure.

The company acknowledges that global macroeconomic conditions, particularly in the United States and Europe, could cause clients to reduce spending, which could negatively impact revenues. Political and legal uncertainties in these regions may also reduce client spending.

The company faces intense competition for skilled labor, particularly in key digital areas, which could lead to increased costs to hire new employees and may affect profitability. The company also notes that it must continue to maintain a senior leadership team.

The company is exposed to legal, reputational, and financial risks from security breaches and cyberattacks. The company notes that it and its clients, suppliers, and partners face threats to data and systems, which could result in shutdowns, disruptions, and unauthorized access to sensitive data.

The company operates in highly competitive markets, characterized by a large number of participants and subject to rapid change. Competitors include systems integration firms, contract programming companies, application software companies, cloud computing service providers, traditional consulting firms, and outsourcing companies.

The company acknowledges that its service offerings must keep pace with significant technological advances in the rapidly changing markets it competes in. Failure to do so could result in a loss of competitive advantage and negatively impact growth.

The company's relationships with third-party alliance partners are critical to its ability to provide many of its services and solutions. The company notes that these partners may decide to compete with it, form exclusive arrangements with competitors, or reduce access to their products, which could impair its ability to meet client demands.

The cost of revenues increased by 1.3% as a percentage of revenues, primarily due to higher compensation costs for delivery personnel. This indicates that the company's cost structure is under pressure.

Selling, general, and administrative expenses decreased by 0.9% as a percentage of revenues, primarily due to savings generated from the NextGen program and the beneficial impact of foreign currency exchange rate movements. This indicates some improvement in operational efficiency.

The company initiated the NextGen program to simplify its operating model, optimize corporate functions, and consolidate and realign office space. This indicates a focus on improving operational efficiency and reducing costs.

The company is increasingly using AI-based technologies, including GenAI, in its client offerings and internal operations. It is also planning to make significant investments in its AI capabilities.

The company acknowledges that as AI-based technologies evolve, some services that it currently performs for its clients may be replaced by AI or forms of automation, which could lead to reduced demand for its services.

The company notes that the development, adoption, and use of AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices could result in unintended consequences and present business, financial, legal, and reputational risks.

The company's capital allocation framework anticipates deploying approximately 50% of its free cash flow for acquisitions, 25% for share repurchases, and 25% for dividend payments. This demonstrates a balanced approach to capital allocation.

The company repurchased $298 million of its Class A common stock under its stock repurchase program during the three months ended December 31, 2023, signaling a commitment to returning value to shareholders.

The company paid quarterly cash dividends of $0.29 per share, or $1.16 per share in total for the year. In February 2024, the Board of Directors approved a cash dividend of $0.30 per share, indicating a continued commitment to returning capital to shareholders.

The company's ESG program is designed to align with its clients' and employees' focus on ESG-related topics in its value chain, including supply chain, delivery, and solutions. This demonstrates a commitment to sustainability.

The company highlighted its diversity and inclusion efforts, including a global D&I organization, training programs, hiring policies, affinity groups, and sponsorships, indicating a commitment to diversity and inclusion.

The company acknowledges that its failure to meet ESG expectations or standards could harm its reputation, adversely impact its ability to attract and retain clients and employees, and expose it to increased scrutiny from the investment community and enforcement authorities.

The company notes that global macroeconomic conditions have a significant effect on its business and the businesses of its clients. Volatile, negative, or uncertain economic conditions could cause clients to reduce spending, making it difficult to forecast demand and have available the right resources to profitably address client demand.

The company is subject to numerous and evolving legal and regulatory requirements and client expectations in the many jurisdictions in which it operates. Violations of these requirements or an inability to meet them could harm its business.

The company notes that anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair its ability to serve clients and materially adversely affect its business.