Document

Financial Services

Healthcare

Products and Resources

Communications, Media and Technology

• Banking
• Insurance

• Healthcare
• Life Sciences

• Retail and Consumer Goods
• Manufacturing, Logistics, Energy and Utilities
• Travel and Hospitality

• Communications and Media
• Technology

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)



☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended	December 31, 2019
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File Number 0-24429

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)



Delaware		13-3728359
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Glenpointe Centre West
500 Frank W. Burr Blvd.
Teaneck,	New Jersey	07666
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (201) 801-0233

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	CTSH	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

The aggregate market value of the registrant’s voting shares of common stock held by non-affiliates of the registrant on June 28, 2019, based on $63.39 per share, the last reported sale price on the Nasdaq Global Select Market of the Nasdaq Stock Market LLC on that date, was $34.9 billion.

The number of shares of Class A common stock, $0.01 par value, of the registrant outstanding as of February 7, 2020 was 548,637,106 shares.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference into the Annual Report on Form 10-K: Portions of the registrant’s definitive Proxy Statement for its 2020 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

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	Item		Page
PART I			1

	1.	Business	1

	1A.	Risk Factors	8

	1B.	Unresolved Staff Comments	14

	2.	Properties	14

	3.	Legal Proceedings	14

	4.	Mine Safety Disclosures	14

PART II			15

	5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15

	6.	Selected Financial Data	17

	7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

	7A.	Quantitative and Qualitative Disclosures About Market Risk	37

	8.	Financial Statements and Supplementary Data	38

	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	38

	9A.	Controls and Procedures	38

	9B.	Other Information	39

PART III			40

	10.	Directors, Executive Officers and Corporate Governance	40

	11.	Executive Compensation	40

	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	40

	13.	Certain Relationships and Related Transactions, and Director Independence	40

	14.	Principal Accountant Fees and Services	40

PART IV			41

	15.	Exhibits, Financial Statements Schedules	41
	16.	Form 10-K Summary	43
SIGNATURES			44
EXHIBIT INDEX			41
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE			F-1

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PART I

Item 1. Business

Overview

Cognizant is one of the world’s leading professional services companies, transforming clients’ business, operating and technology models for the digital era. Our services include digital services and solutions, consulting, application development, systems integration, application testing, application maintenance, infrastructure services and business process services. Digital services have become an increasingly important part of our portfolio, aligning with our clients' focus on becoming data-enabled, customer-centric and differentiated businesses. We tailor our services and solutions to specific industries with an integrated global delivery model that employs client service and delivery teams based at client locations and dedicated global and regional delivery centers.

Certain terms used in this Annual Report on Form 10-K are defined in the Glossary included at the end of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Business Segments

We go to market across our four industry-based business segments. Our clients seek to partner with service providers that have a deep understanding of their businesses, industry initiatives, customers, markets and cultures and the ability to create solutions tailored to meet their individual business needs. Across industries, our clients are confronted with the risk of being disrupted by nimble, digital-native competitors. They are therefore redirecting their focus and investment to digital and embracing DevOps and key technologies like IoT, analytics, AI, digital engineering, cloud and automation. We believe that our deep knowledge of the industries we serve and our clients’ businesses has been central to our revenue growth and high client satisfaction, and we continue to invest in those digital capabilities that help to enable our clients to become modern businesses. Our business segments are as follows:

Our Financial Services segment includes banking, capital markets and insurance companies. Demand in this segment is driven by our clients’ need to be compliant with significant regulatory requirements and adaptable to regulatory change, and their adoption and integration of digital technologies, including customer experience enhancement, robotic process automation, analytics and AI in areas such as digital lending, fraud detection and next generation payments.

Our Healthcare segment consists of healthcare providers and payers as well as life sciences companies, including pharmaceutical, biotech and medical device companies. Demand in this segment is driven by emerging industry trends, including enhanced compliance, integrated health management, claims investigative services and heightened focus on patient experience, as well as services that drive operational improvements in areas such as claims processing, enrollment, membership and billing. Demand is also created by the adoption and integration of digital technologies such as AI to shape personalized care plans and predictive data analytics to improve patient outcomes.

Our Products and Resources segment includes manufacturers, retailers and travel and hospitality companies, as well as companies providing logistics, energy and utility services. Demand in this segment is driven by our clients’ focus on improving the efficiency of their operations, the enablement and integration of mobile platforms to support sales and other omni-channel commerce initiatives, and their adoption and integration of digital technologies, such as the application of intelligent systems to manage supply chains and enhance overall customer experiences, and IoT to instrument functions for factories, real estate, fleets and products to increase access to insight generating data.

Our Communications, Media and Technology segment includes information, media and entertainment, communications and technology companies. Demand in this segment is driven by our clients’ needs to create differentiated user experiences, transition to agile development methodologies, enhance their networks, manage their digital content and adopt and integrate digital technologies, such as cloud, interactive and IoT.

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For the year ended December 31, 2019, the distribution of our revenues across our four industry-based business segments was as follows:

See Note 2 to our consolidated financial statements for additional information related to disaggregation of revenues by client location, service line and contract-type for each of our business segments.

Services and Solutions

Our services include digital services and solutions, consulting, application development, systems integration, application testing, application maintenance, infrastructure services and business process services. Additionally, we develop, license, implement and support proprietary and third-party software products and platforms. Central to our strategy to align with our clients’ need to modernize is our investment in four key areas of digital: IoT, AI, digital engineering and cloud. These four capabilities enable clients to put data at the core of their operations, improve the experiences they offer their customers, tap into new revenue streams, defend against technology-enabled competitors and reduce costs. In many cases, our clients' new digital systems are built upon the backbone of their existing legacy systems. Also, clients often look for efficiencies in the way they run their operations so they can fund investments in new digital technologies. We believe our deep knowledge of their infrastructure and systems provides us with a significant advantage as we work with them to build new digital capabilities to make their operations more efficient and effective. We deliver all of our services and solutions across our four industry-based business segments to best address our clients' individual needs.

We seek to drive organic growth through investments in our digital capabilities across industries and geographies, including the extensive training and re-skilling of our technical teams and the expansion of our local workforces in the United States and other markets around the world where we operate. Additionally, we pursue select strategic acquisitions, joint ventures, investments and alliances that can expand our digital capabilities or the geographic or industry coverage of our business. In 2019, we completed five such acquisitions:


•	Mustache, a creative content agency based in the United States, that extends our capabilities in creating original and branded content for digital, broadcast and social mediums;


•	Meritsoft, a financial software company based in Ireland, that complements our service offerings to capital markets institutions;


•	Samlink, a developer of services and solutions for the financial sector based in Finland, that strengthens our banking capabilities and brings with it a strategic partnership with three Finnish financial institutions to transform and operate a shared core banking platform;


•	Zenith, a life sciences company based in Ireland, that extends our service capabilities for connected biopharmaceutical and medical device manufacturers; and


•	Contino, a technology consulting firm that extends our capabilities in enterprise DevOps and cloud transformation.

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We have organized our services and solutions into four practice areas: Digital Business, Digital Operations, Digital Systems and Technology and Consulting. These practice areas are supported by Cognizant Accelerator.

Digital Business

Our digital business practice helps clients build modern enterprises. Areas of focus within this practice area are:

•interactive, which is our global network of studios that help clients craft new experiences;

•application modernization, which updates legacy applications using modern technology stacks;


•	AI and analytics, which drive business growth and efficiencies through a greater understanding of customers and operations;

•IoT, which unlocks greater productivity and new business models;

•digital advisory, which provides enterprise transformation expertise; and

•digital engineering, which designs, engineers, and delivers software that powers modern businesses.

Digital Operations

Our digital operations practice helps clients rethink their operating models by assessing their existing processes and recommending automation and change management, allowing clients to fundamentally transform how their processes run while also realizing cost savings benefits from these process improvements. Areas of focus within this practice area are:

•automation, analytics and consulting for business process outsourcing;

•platform-based operations; and

•core business process operations.

We have extensive knowledge of core front office, middle office and back office processes, including finance and accounting, research and analytics, procurement and data management, which we integrate with our industry and technology expertise to deliver targeted business process services and solutions.

Digital Systems & Technology

Our digital systems and technology practice helps clients reshape their technology models to simplify, modernize and secure the enabling systems that form the backbone of their business. With cloud becoming an essential catalyst for large-scale transformation efforts, cloud adoption is driving changes across the entire IT value chain. Areas of focus within this practice area include:

•enterprise application services;

•application development and maintenance;

•quality engineering and assurance;

•cloud;

•infrastructure; and

•security.

Consulting

Our consulting practice helps clients drive the changes that the evolving technology landscape requires of their organizations by providing global business, process, operations and technology consulting services. Our consulting professionals and domain experts from our industry-based business segments work closely with our practice areas to create modern frameworks, platforms and solutions that leverage a wide range of digital technologies across our clients’ businesses to deliver higher levels of efficiency and new value for their customers.

Cognizant Accelerator

Cognizant Accelerator supports our business segments and four practice areas by developing innovative and practical offerings for clients' emerging needs through the application of new technologies.

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Global Delivery Model

We utilize a global delivery model, with delivery centers worldwide to provide the full range of services we offer to our clients. Our delivery model includes employees deployed at client sites, local or in-country delivery centers, regional delivery centers and offshore delivery centers, as required to best serve our clients. As we scale our digital services and solutions, we are focused on hiring in the United States and other countries where we deliver services to our clients to expand our in-country delivery capabilities. Our extensive facilities, technology and communications infrastructure are designed to enable the effective collaboration of our global workforce across locations and geographies.

Sales and Marketing

We market and sell our services directly through our professional staff, senior management and direct sales personnel operating out of our many offices around the world. We are increasing our investment in sales and marketing professionals to help us expand existing accounts and acquire new ones, and amplify our brand's stature in the marketplace. These new investments are designed to support and enhance the sales and marketing group, which works with our client delivery team as the sales process moves closer to a client's selection of a services provider. The duration of the sales process may vary widely depending on the type and complexity of services.

Clients

The services we provide are distributed among a number of clients in each of our business segments. Revenues from our top clients as a percentage of total revenues were as follows:



	For the years ended December 31,
	2019		2018		2017
Top five clients	7.9	%	8.6	%	8.9	%
Top ten clients	14.6	%	15.4	%	14.9	%

A loss of a significant client or a few significant clients in a particular segment could materially reduce revenues for that segment. The services we provide to our larger clients are often critical to their operations and a termination of our services would typically require an extended transition period with gradually declining revenues. Nevertheless, the volume of work performed for specific clients may vary significantly from year to year.

In the fourth quarter of 2019, we announced that we will exit certain content-related work that is not in line with our long-term strategic vision for the Company. We intend to exit this work in 2020 and this may negatively impact our relationship with the affected clients and the revenues from other services we provide to them. Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information.

Competition

The markets for our services are highly competitive, characterized by a large number of participants and subject to rapid change. Competitors may include systems integration firms, contract programming companies, application software companies, cloud computing service providers, traditional consulting firms, professional services groups of computer equipment companies, infrastructure management companies, outsourcing companies and boutique digital companies. Our direct competitors include, among others, Accenture, Atos, Capgemini, Deloitte Digital, DXC Technology, EPAM Systems, Genpact, HCL Technologies, IBM Global Services, Infosys Technologies, Tata Consultancy Services and Wipro. In addition, we compete with numerous smaller local companies in the various geographic markets in which we operate.

The principal competitive factors affecting the markets for our services include the provider’s reputation and experience, vision and strategic advisory capabilities, digital services capabilities, performance and reliability, responsiveness to customer needs, financial stability, corporate governance and competitive pricing of services. Accordingly, we rely on the following to compete effectively:


•	investments to scale our digital services;


•	our recruiting, training and retention model;


•	our global delivery model;


•	an entrepreneurial culture and approach to our work;


•	a broad client referral base;


•	investment in process improvement and knowledge capture;


•	financial stability and good corporate governance;


•	continued focus on responsiveness to client needs, quality of services and competitive prices; and


•	project management capabilities and technical expertise.

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Intellectual Property

We provide value to our clients based, in part, on our proprietary innovations, methodologies, software, reusable knowledge capital and other IP assets. We recognize the importance of IP and its ability to differentiate us from our competitors. We seek IP protection for some of our innovations and rely on a combination of IP laws, confidentiality procedures and contractual provisions, to protect our IP and our Cognizant brand, which is one of our most valuable assets. We have registered, and applied for the registration of, U.S. and international trademarks, service marks, domain names and copyrights. We own or are licensed under a number of patents, trademarks and copyrights of varying duration, relating to our products and services. While our proprietary IP rights are important to our success, we believe our business as a whole is not materially dependent on any particular IP right or any particular group of patents, trademarks, copyrights or licenses, other than our Cognizant brand.

Cognizant® and other trademarks appearing in this report are registered trademarks or trademarks of Cognizant and its affiliates in the United States and other countries, or third parties, as applicable.

Employees

We had approximately 292,500 employees at the end of 2019, with approximately 46,400 in North America, approximately 21,200 in Europe and approximately 224,900 in various other locations throughout the rest of the world, including approximately 203,700 in India. We are not party to any significant collective bargaining agreements.

Information About Our Executive Officers

The following table identifies our current executive officers:



Name	Age	Capacities in Which Served	In Current Position Since
Brian Humphries ⁽¹⁾	46	Chief Executive Officer	2019
Karen McLoughlin ⁽²⁾	55	Chief Financial Officer	2012
Robert Telesmanic ⁽³⁾	53	Senior Vice President, Controller and Chief Accounting Officer	2017
Matthew Friedrich ⁽⁴⁾	53	Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary	2017
Becky Schmitt ⁽⁵⁾	46	Executive Vice President, Chief People Officer	2020
Dharmendra Kumar Sinha ⁽⁶⁾	57	Executive Vice President and President, North America	2019
Santosh Thomas ⁽⁷⁾	51	Executive Vice President and President, Global Growth Markets	2016
Malcolm Frank ⁽⁸⁾	53	Executive Vice President and President, Cognizant Digital Business	2019
Balu Ganesh Ayyar ⁽⁹⁾	58	Executive Vice President and President, Cognizant Digital Operations	2019
Greg Hyttenrauch ⁽¹⁰⁾	52	Executive Vice President and President, Cognizant Digital Systems & Technology	2019
Pradeep Shilige ⁽¹¹⁾	51	Executive Vice President and Head of Global Delivery	2019

(1)

Brian Humphries has been our Chief Executive Officer and a member of the Board of Directors since April 2019. Prior to joining Cognizant, he served as Chief Executive Officer of Vodafone Business, a division of Vodafone Group, from 2017 until 2019. Mr. Humphries joined Vodafone from Dell Technologies where his positions from 2013 to 2017 included President and Chief Operating Officer of Dell’s Infrastructure Solutions Group, President of Dell’s Global Enterprise Solutions, and Vice President and General Manager, EMEA Enterprise Solutions. Before joining Dell, Mr. Humphries was with Hewlett-Packard where his roles from 2008 to 2013 included Senior Vice President, Emerging Markets, Senior Vice President, Strategy and Corporate Development, and Chief Financial Officer of HP Services. The early part of his career was spent with Compaq and Digital Equipment Corporation. He holds a bachelor’s degree in Business Administration from the University of Ulster, Northern Ireland.

(2)

Karen McLoughlin has been our Chief Financial Officer since February 2012. Ms. McLoughlin has held various senior management positions in our finance department since she joined Cognizant in 2003. Prior to joining Cognizant, Ms. McLoughlin held various financial management positions at Spherion Corporation and Ryder System, Inc. and served in various audit roles at Price Waterhouse (now PricewaterhouseCoopers). Ms. McLoughlin has served on the Board of Directors of Best Buy Co., Inc. since 2015, where she is currently a member of the Audit Committee and chair of the Finance and Investment Policy Committee. Ms. McLoughlin has a Bachelor of Arts degree in Economics from Wellesley College and an MBA degree from Columbia University.


(3)	Robert Telesmanic has been our Senior Vice President, Controller and Chief Accounting Officer since January 2017, a Senior Vice President since 2010 and our Corporate Controller since 2004. Prior to that, he served as our Assistant Corporate

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Controller from 2003 to 2004. Prior to joining Cognizant, Mr. Telesmanic spent over 14 years with Deloitte & Touche LLP. Mr. Telesmanic has a Bachelor of Science degree from New York University and an MBA degree from Columbia University.

(4)

Matthew Friedrich has been our Executive Vice President, General Counsel, Chief Corporate Affairs Officer and Secretary since May 2017. Prior to joining Cognizant, Mr. Friedrich served as Chief Corporate Counsel for Chevron Corporation from 2014 to 2017. Mr. Friedrich was a partner with the law firms of Freshfields Bruckhaus Deringer LLP and Boies Schiller & Flexner LLP prior to his role with Chevron. Mr. Friedrich began his legal career in 1995 as a federal prosecutor with the DOJ, where he remained for nearly 14 years, culminating with his designation as the acting Assistant Attorney General of the Criminal Division in 2008. Mr. Friedrich has served as a member of the Council on Foreign Relations since 2016, as a member of the Board of Directors of the U.S.-India Business Council since 2018 and as a member of the Board of Directors of the US Chamber of Commerce, Litigation Center since 2018. Mr. Friedrich has a Bachelor of Arts degree in Foreign Affairs from the University of Virginia and a Juris Doctor degree from the University of Texas School of Law. Following law school, Mr. Friedrich clerked for U.S. District Judge Royal Furgeson in the Western District of Texas.

(5)

Becky Schmitt has been our Executive Vice President, Chief People Officer since February 2020. Prior to joining Cognizant, Ms. Schmitt was the Chief People Officer of Sam’s Club, a division of Walmart, Inc. from October 2018 through January 2020. Prior to that, she served as SVP, Chief People Officer, US eCommerce & Corporate Functions for Walmart from October 2016 through September 2018 and as VP, HR - Technology from February 2016 until October 2016. Prior to joining Walmart, Ms. Schmitt spent over 20 years with Accenture plc in various human resources roles, culminating in her role as HR Managing Director, North America Business from March 2014 through February 2016. Ms. Schmitt has served as a Board Member at Large for the Girl Scouts National Board since 2017. Ms. Schmitt has a Bachelor of Arts degree from University of Michigan, Ann Arbor.

(6)

Dharmendra Kumar Sinha has been our Executive Vice President and President, North America since June 2019. Prior to that, he served as Executive Vice President and President, Global Client Services from December 2013 until June 2019. He has also served as President and a director of the Cognizant U.S. Foundation, a non-profit organization, since April 2018. From 2007 to December 2013, Mr. Sinha served as our Senior Vice President and General Manager, Global Sales and Field Marketing. From 2004 to 2007, Mr. Sinha served as our Vice President responsible for our Manufacturing and Logistics, Retail and Hospitality, and Technology verticals. From 1997 to 2004, Mr. Sinha held a variety of other management roles. Prior to joining Cognizant in 1997, Mr. Sinha worked with Tata Consultancy Services and CMC Limited, an IT solutions provider. Mr. Sinha has a Bachelor of Science degree from Patna Science College, Patna and an MBA degree from the Birla Institute of Technology, Mesra.

(7)

Santosh Thomas has been our Executive Vice President and President, Global Growth Markets since August 2016. Prior to his current role, Mr. Thomas served as our Head, Growth Markets from 2011 through July 2016. From 1999 to 2011, Mr. Thomas held various senior positions at Cognizant including leading Continental European operations and various roles in client relationships and market development in North America. Prior to joining Cognizant in 1999, Mr. Thomas worked with Informix and HCL Hewlett Packard Limited. Mr. Thomas has an undergraduate degree in engineering from R.V. College of Engineering in Bangalore, India and a Postgraduate Diploma in Business Management from Xavier School of Management, India.

(8)

Malcolm Frank has been our Executive Vice President and President, Cognizant Digital Business since May 2019. Prior to that, he served as Executive Vice President, Strategy and Marketing at Cognizant from 2012 to May 2019 and as our Senior Vice President of Strategy and Marketing from 2005 to 2012. Prior to joining Cognizant in 2005, Mr. Frank was a founder and the President and Chief Executive Officer of CXO Systems, Inc., an independent software vendor providing dashboard solutions for senior managers, a founder and the President, Chief Executive Officer and Chairman of NerveWire Inc., a management consulting and systems integration firm, and a founder and executive officer at Cambridge Technology Partners, an information technology professional services firm. Mr. Frank has served on the Board of Directors of Factset Research Systems Inc. since June 2016, where he is a member of the Compensation Committee. He is also a member of the Board of Directors of the US-India Strategic Partnership Forum since May 2018. Mr. Frank has a Bachelor of Arts degree in Economics from Yale University.


(9)	Balu Ganesh Ayyar has been our Executive Vice President and President, Cognizant Digital Operations since August 2019. Prior to joining Cognizant, Mr. Ayyar was the CEO of Mphasis, a global IT services company listed in India, from 2009 to 2017. Prior to Mphasis, Mr. Ayyar spent nearly two decades with Hewlett-Packard, holding a variety of leadership roles across multiple geographies.

(10)

Greg Hyttenrauch has been our Executive Vice President and President, Cognizant Digital Systems & Technology since December 2019. Prior to joining Cognizant, Mr. Hyttenrauch served as Director, Global Cloud and Security Services for Vodafone from October 2015 to November 2019. Prior to Vodafone, Mr. Hyttenrauch held a variety of senior leadership positions at Capgemini from 2008 to 2015, including Deputy CEO, Global Infrastructure Services, and Global Sales Officer

and CEO of the UK and Nordic Outsourcing Business Unit. Before joining Capgemini, Mr. Hyttenrauch held positions with CSC and EDS. He began his career with 13 years in the Canadian military, rising to the rank of captain. Mr. Hyttenrauch holds a bachelor’s degree in Mechanical Engineering from the Royal Military College of Canada and an MBA in International Management from the University of Ottawa.

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(11)

Pradeep Shilige has been the Executive Vice President and Head of Global Delivery at Cognizant since July 2019. Prior to that, he served as Executive Vice President, Global Delivery and Digital Systems & Technology at Cognizant from 2015 through June 2019. Mr. Shilige has held multiple other leadership roles at Cognizant since joining the organization in 1996. Mr. Shilige is a member of the IT Services Council of NASSCOM, the premier industry association for the IT-BPM sector in India since 2017. He has a bachelor’s degree in Computer Engineering from the National Institute of Technology in Karnataka, India.

None of our executive officers is related to any other executive officer or to any of our Directors. Our executive officers are appointed annually by the Board of Directors and generally serve until their successors are duly appointed and qualified.

Corporate History

We began our IT development and maintenance services business in early 1994 as an in-house technology development center for The Dun & Bradstreet Corporation and its operating units. In 1996, we were spun-off from The Dun & Bradstreet Corporation and, in 1998, we completed an initial public offering to become a public company.

Available Information

We make available the following public filings with the SEC free of charge through our website at www.cognizant.com as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC:


•	our Annual Reports on Form 10-K and any amendments thereto;


•	our Quarterly Reports on Form 10-Q and any amendments thereto; and


•	our Current Reports on Form 8-K and any amendments thereto.

In addition, we make available our code of ethics entitled “Core Values and Code of Ethics” free of charge through our website. We intend to post on our website all disclosures that are required by law or Nasdaq Stock Market listing standards concerning any amendments to, or waivers from, any provision of our code of ethics.

No information on our website is incorporated by reference into this Form 10-K or any other public filing made by us with the SEC.

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Item 1A. Risk Factors

Factors That May Affect Future Results

We face various important risks and uncertainties, including those described below, that could adversely affect our business, results of operations and financial condition and, as a result, cause a decline in the trading price of our common stock.

Our results of operations could be adversely affected by economic and political conditions globally and in particular in the markets in which our clients and operations are concentrated.

Global macroeconomic conditions have a significant effect on our business as well as the businesses of our clients. Volatile, negative or uncertain economic conditions could cause our clients to reduce, postpone or cancel spending on projects with us and could make it more difficult for us to accurately forecast client demand and have available the right resources to profitably address such client demand. The short-term nature of contracts in our industry means that actions by clients may occur quickly and with little warning, which may cause us to incur extra costs where we have employed more professionals than client demand supports.

Our business is particularly susceptible to economic and political conditions in the markets where our clients or operations are concentrated. Our revenues are highly dependent on clients located in the United States and Europe, and any adverse economic, political or legal uncertainties or adverse developments, including due to the uncertainty related to the potential economic and regulatory impacts of the United Kingdom's exit from the European Union, may cause clients in these geographies to reduce their spending and materially adversely impact our business. Many of our clients are in the financial services and healthcare industries, so any decrease in growth or significant consolidation in these industries or regulatory policies that restrict these industries may reduce demand for our services. Economic and political developments in India, where a significant majority of our operations and technical professionals are located, or in other countries where we maintain delivery operations, may also have a significant impact on our business and costs of operations. As a developing country, India has experienced and may continue to experience high inflation and wage growth, fluctuations in gross domestic product growth and volatility in currency exchange rates, any of which could materially adversely affect our cost of operations. Additionally, we benefit from governmental policies in India that encourage foreign investment and promote the ease of doing business, such as tax incentives, and any change in policy or circumstances that results in the elimination of such benefits or degradation of the rule of law, or imposition of new adverse restrictions or costs on our operations could have a material adverse effect on our business, results of operations and financial condition.

If we are unable to attract, train and retain skilled professionals, including highly skilled technical personnel to satisfy client demand and senior management to lead our business globally, our business and results of operations may be materially adversely affected.

Our success is dependent, in large part, on our ability to keep our supply of skilled professionals, including project managers, IT engineers and senior technical personnel, in balance with client demand around the world and on our ability to attract and retain senior management with the knowledge and skills to lead our business globally. Each year, we must hire tens of thousands of new professionals and reskill, retain, and motivate our workforce of hundreds of thousands of professionals with diverse skills and expertise in order to serve client demands across the globe, respond quickly to rapid and ongoing technological, industry and macroeconomic developments and grow and manage our business. We also must continue to maintain an effective senior leadership team that, among other things, is effective in executing on our strategic goals and growing our digital business. The loss of senior executives, or the failure to attract, integrate and retain new senior executives as the needs of our business require, could have a material adverse effect on our business and results of operations.

Competition for skilled labor is intense and, in some jurisdictions in which we operate, there are more jobs for IT professionals than qualified persons to fill these jobs. Our business has experienced significant employee attrition, which may cause us to incur increased costs to hire new professionals with the desired skills. Costs associated with recruiting and training professionals are significant. If we are unable to hire or deploy professionals with the needed skillsets or if we are unable to adequately equip our professionals with the skills needed, this could materially adversely affect our business. Additionally, if we are unable to maintain an employee environment that is competitive and contemporary, it could have an adverse effect on engagement and retention, which may materially adversely affect our business.

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We face challenges related to growing our business organically as well as inorganically through acquisitions, and we may not be able to achieve our targeted growth rates.

Achievement of our targeted growth rates requires continued significant organic growth of our business as well as inorganic growth through acquisitions. To achieve such growth, we must, among other things, continue to significantly expand our global operations, increase our product and service offerings, in particular with respect to digital, and scale our infrastructure to support such business growth. Continued business growth increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions, which we will have to continue to develop and improve to sustain such growth. We must continually recruit and train new personnel and retain and reskill, as necessary, existing sales, technical, finance, marketing and management personnel with the knowledge, skills and experience that our business model requires and effectively manage our personnel worldwide to support our culture, values, strategies and goals. Additionally, we expect to continue pursuing strategic and targeted acquisitions, investments and joint ventures to enhance our offerings of services and solutions or to enable us to expand in certain geographic and other markets. We may not be successful in identifying suitable opportunities, completing targeted transactions or achieving the desired results, and such opportunities may divert our management's time and focus away from our core business. We may face challenges in effectively integrating acquired businesses into our ongoing operations and in assimilating and retaining employees of those businesses into our culture and organizational structure. If we are unable to manage our growth effectively, complete acquisitions of the number, magnitude and nature we have targeted, or successfully integrate any acquired businesses into our operations, we may not be able to achieve our targeted growth rates or improve our market share, profitability or competitive position generally or in specific markets or services.

We may not be able to achieve our profitability and capital return goals.

Our goals for profitability and capital return rely upon a number of assumptions, including our ability to improve the efficiency of our operations and make successful investments to grow and further develop our business. Our profitability depends on the efficiency with which we run our operations and the cost of our operations, especially the compensation and benefits costs of the professionals we employ. We have incurred, and expect to continue to incur, substantial costs related to implementing our strategy to optimize such costs, and we may not realize the ultimate cost savings that we expect. We may not be able to efficiently utilize our professionals if increased regulation, policy changes or administrative burdens of immigration, work visas or outsourcing prevents us from deploying our professionals globally on a timely basis, or at all, to fulfill the needs of our clients. Increases in wages and other costs may put pressure on our profitability. Fluctuations in foreign currency exchange rates can also have adverse effects on our revenues, income from operations and net income when items originally denominated in other currencies are translated or remeasured into U.S. dollars for presentation of our consolidated financial statements. We have entered into foreign exchange forward contracts intended to partially offset the impact of the movement of the exchange rates on future operating costs and to mitigate foreign currency risk on foreign currency denominated net monetary assets. However, the hedging strategies that we have implemented, or may in the future implement, to mitigate foreign currency exchange rate risks may not reduce or completely offset our exposure to foreign exchange rate fluctuations and may expose our business to unexpected market, operational and counterparty credit risks. We are particularly susceptible to wage and cost pressures in India and the exchange rate of the Indian rupee relative to the currencies of our client contracts due to the fact that the substantial majority of our employees are in India while our contracts with clients are typically in the local currency of the country where our clients are located. If we are unable to improve the efficiency of our operations, our operating margin may decline and our business, results of operations and financial condition may be materially adversely affected. Failure to achieve our profitability goals could adversely affect our business, financial condition and results of operations.

With respect to capital return, our ability and decisions to pay dividends and repurchase shares consistent with our announced goals or at all depend on a variety of factors, including our cash flow generated from operations, the amount and geographic location of our cash and investment balances, our net income, our overall liquidity position, potential alternative uses of cash, such as acquisitions, and anticipated future economic conditions and financial results. Failure to achieve our capital return goals may adversely impact our reputation with shareholders and shareholders’ perception of our business and the value of our common stock.

Our failure to meet specified service levels or milestones required by certain of our client contracts may result in our client contracts being less profitable, potential liability for penalties or damages or reputational harm.

Many of our client contracts include clauses that tie our compensation to the achievement of agreed-upon performance standards or milestones. Failure to satisfy these measures could significantly reduce or eliminate our fees under the contracts, increase the cost to us of meeting performance standards or milestones, delay expected payments, subject us to potential damage claims under the contract terms or harm our reputation. The use of new technologies in our offerings can expose us to additional risks if those technologies fail to work as predicted, or there are unintended consequences of new designs or uses, which could lead to cost overruns, project delays, financial penalties, or damage to our reputation. Clients also often have the right to terminate

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a contract and pursue damage claims for serious or repeated failure to meet these service commitments. Some of our contracts provide that a portion of our compensation depends on performance measures such as cost-savings, revenue enhancement, benefits produced, business goals attained and adherence to schedule. These goals can be complex and may depend on our clients’ actual levels of business activity or may be based on assumptions that are later determined not to be achievable or accurate. As such, these provisions may increase the variability in revenues and margins earned on those contracts.

We face intense and evolving competition and significant technological advances that our service offerings must keep pace with in the rapidly changing markets we compete in.

The markets we serve and operate in are highly competitive, subject to rapid change and characterized by a large number of participants, as described in “Part I, Item 1. Business-Competition.” In addition to large, global competitors, we face competition from numerous smaller, local competitors in many geographic markets that may have more experience with operations in these markets, have well-established relationships with our desired clients, or be able to provide services and solutions at lower costs or on terms more attractive to clients than we can. Consolidation activity may also result in new competitors with greater scale, a broader footprint or vertical integration that makes them more attractive to clients as a single provider of integrated products and services. In addition, the short-term nature of contracts in our industry and the long-term concurrent use by many clients of multiple professional service providers means that we are required to be continually competitive on the quality, scope and pricing of our offerings or face a reduction or elimination of our business.

Our success depends on our ability to continue to develop and implement services and solutions that anticipate and respond to rapid and continuing changes in technology to serve the evolving needs of our clients. Examples of areas of significant change include digital-, cloud- and security-related offerings, which are continually evolving, as well as developments in areas such as AI, augmented reality, automation, blockchain, IoT, quantum computing and as-a-service solutions. If we do not sufficiently invest in new technologies, successfully adapt to industry developments and changing demand, and evolve and expand our business at sufficient speed and scale to keep pace with the demands of the markets we serve, we may be unable to develop and maintain a competitive advantage and execute on our growth strategy, which would materially adversely affect our business, results of operations and financial condition.

Our relationships with our third party alliance partners, who supply us with necessary components to the services and solutions we offer our clients, are also critical to our ability to provide many of our services and solutions that address client demands. There can be no assurance that we will be able to maintain such relationships. Among other things, such alliance partners may in the future decide to compete with us, form exclusive or more favorable arrangements with our competitors or otherwise reduce our access to their products impairing our ability to provide the services and solutions demanded by clients.

We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from security breaches or cyberattacks.

In order to provide our services and solutions, we depend on global information technology networks and systems, including those of third parties, to process, transmit, host and securely store electronic information (including our confidential information and the confidential information of our clients) and to communicate among our locations around the world and with our clients, suppliers and partners. Security breaches, employee malfeasance, or human or technological error could lead to shutdowns or disruptions of our operations and potential unauthorized disclosure of our or our clients’ sensitive data, which in turn could jeopardize projects that are critical to our operations or the operations of our clients’ businesses. Like other global companies, we and the businesses we interact with have experienced threats to data and systems, including by perpetrators of random or targeted malicious cyberattacks, computer viruses, malware, worms, bot attacks or other destructive or disruptive software and attempts to misappropriate client information and cause system failures and disruptions.

A security compromise of our information systems or of those of businesses with whom we interact that results in confidential information being accessed by unauthorized or improper persons could harm our reputation and expose us to regulatory actions, client attrition, remediation expenses, disruption of our business, and claims brought by our clients or others for breaching contractual confidentiality and security provisions or data protection laws. Monetary damages imposed on us could be significant and not covered by our liability insurance. Techniques used by bad actors to obtain unauthorized access, disable or degrade service, or sabotage systems evolve frequently and may not immediately produce signs of intrusion, and we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, a security breach could require that we expend substantial additional resources related to the security of our information systems, diverting resources from other projects and disrupting our businesses. If we experience a data security breach, our reputation could be damaged and we could be subject to additional litigation, regulatory risks and business losses.

We are required to comply with increasingly complex and changing data security and privacy regulations in the United States, the United Kingdom, the European Union and in other jurisdictions in which we operate that regulate the collection, use and transfer of personal data, including the transfer of personal data between or among countries. For example, the European Union’s

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General Data Protection Regulation has imposed stringent compliance obligations regarding the handling of personal data and has resulted in the issuance of significant financial penalties for noncompliance. In the United States, there have been proposals for federal privacy legislation and many new state privacy laws are on the horizon. Recently enacted legislation, such as the California Consumer Privacy Act, impose extensive privacy requirements on organizations governing personal information. Existing US sectoral laws such as the Health Insurance Portability and Accountability Act also impose extensive privacy and security requirements on organizations operating in the healthcare industry, which Cognizant serves. Additionally, in India, the Personal Data Protection Bill, 2018 was recently cleared for introduction in the current session of the Indian Parliament. If enacted in its current form it would impose stringent obligations on the handling of personal data, including certain localization requirements for sensitive data. Other countries have enacted or are considering enacting data localization laws that require certain data to stay within their borders. We may also face audits or investigations by one or more domestic or foreign government agencies or our clients pursuant to our contractual obligations relating to our compliance with these regulations. Complying with changing regulatory requirements requires us to incur substantial costs, exposes us to potential regulatory action or litigation, and may require changes to our business practices in certain jurisdictions, any of which could materially adversely affect our business operations and operating results.

If our business continuity and disaster recovery plans are not effective and our global delivery capability is impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation.

Our business model is dependent on our global delivery capability, which includes coordination between our main operating offices in India, our other global and regional delivery centers, the offices of our clients and our associates worldwide. System failures, outages and operational disruptions may be caused by factors outside of our control such as hostilities, political unrest, terrorist attacks, natural disasters, pandemics and public health emergencies, such as the coronavirus, affecting the geographies where our operations and transmission equipment is located. Our business continuity and disaster recovery plans may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of a catastrophic event. Any such disruption may result in lost revenues, a loss of clients and reputational damage, which would have an adverse effect on our business, results of operations and financial condition.

A substantial portion of our employees in the United States, United Kingdom, European Union and other jurisdictions rely on visas to work in those areas such that any restrictions on such visas or immigration more generally or increased costs of obtaining such visas may affect our ability to compete for and provide services to clients in these jurisdictions, which could materially adversely affect our business, results of operations and financial condition.

A substantial portion of our employees in the United States and in many other jurisdictions, including countries in Europe, rely upon temporary work authorization or work permits, which makes our business particularly vulnerable to changes and variations in immigration laws and regulations, including written changes and policy changes to the manner in which the laws and regulations are interpreted or enforced, and potential enforcement actions and penalties that might cause us to lose access to such visas. The political environment in the United States, the United Kingdom and other countries in recent years has included significant support for anti-immigrant legislation and administrative changes. Many of these recent changes have resulted in, and various proposed changes may result in, increased difficulty in obtaining timely visas that impact our ability to staff projects, including as a result of visa application rejects and delays in processing applications, and significantly increased costs for us in obtaining visas. For example, in the United States, the current administration has implemented policy changes to increase scrutiny of the issuance of new and the renewal of existing H-1B visa applications and the placement of H-1B visa workers on third party worksites, and has issued executive orders designed to limit immigration. In addition, the administration has proposed for implementation in 2020 a policy change applicable to entities where more than 50% of the workers in the United States hold certain types of visas that, if implemented, would significantly increase the visa costs for such entities. In the EU, many countries continue to implement new regulations to move into compliance with the EU Directive of 2014 to harmonize immigration rules for intracompany transferees in most EU member states and to facilitate the transfer of managers, specialists and graduate trainees both into and within the region. The changes have had significant impacts on mobility programs and have led to new notification and documentation requirements for companies sending professionals to EU countries. Recent changes or any additional adverse revisions to immigration laws and regulations in the jurisdictions in which we operate may cause us delays, staffing shortages, additional costs or an inability to bid for or fulfill projects for clients, any of which could have a material adverse effect on our business, results of operations and financial condition.

Anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing could impair our ability to serve our clients and materially adversely affect our business, results of operations and financial condition.

The practice of outsourcing services to organizations operating in other countries is a topic of political discussion in the United States, which is our largest market, as well as other regions in which we have clients. For example, measures aimed at limiting or restricting outsourcing by U.S. companies have been put forward for consideration by the U.S. Congress and in state

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legislatures to address concerns over the perceived association between offshore outsourcing and the loss of jobs domestically. If any such measure is enacted, our ability to provide services to our clients could be impaired.

In addition, from time to time there has been publicity about purported negative experiences associated with offshore outsourcing, such as alleged domestic job loss and theft and misappropriation of sensitive client data, particularly involving service providers in India. Current or prospective clients may elect to perform certain services themselves or may be discouraged from utilizing global service delivery providers like us due to negative perceptions that may be associated with using global service delivery models or firms. Any slowdown or reversal of existing industry trends toward global service delivery would seriously harm our ability to compete effectively with competitors that provide the majority of their services from within the country in which our clients operate.

We are subject to numerous and evolving legal and regulatory requirements and client expectations in the many jurisdictions in which we operate, and violations of, unfavorable changes in or an inability to meet such requirements or expectations could harm our business.

We provide services to clients and have operations in many parts of the world and in a wide variety of different industries, subjecting us to numerous, and sometimes conflicting, laws and regulations on matters as diverse as import and export controls, temporary work authorizations or work permits, content requirements, trade restrictions, tariffs, taxation, anti-corruption laws (including the FCPA and the U.K. Bribery Act), government affairs, internal and disclosure control obligations, data privacy, intellectual property and labor relations. We are subject to a wide range of potential enforcement actions, audits or investigations regarding our compliance with these laws or regulations in the conduct of our business, and any finding of a violation could subject us to a wide range of civil or criminal penalties, including fines, debarment, or suspension or disqualification from government contracting, prohibitions or restrictions on doing business, loss of clients and business, legal claims by clients and damage to our reputation.

We face significant regulatory compliance costs and risks as a result of the size and breadth of our business. For example, we commit significant financial and managerial resources to comply with our internal control over financial reporting requirements, but we have in the past and may in the future identify material weaknesses or deficiencies in our internal control over financial reporting that causes us to incur incremental remediation costs in order to maintain adequate controls. As another example, we had to spend significant resources on conducting an internal investigation and cooperating with investigations by the U.S. DOJ and the SEC, each of which is now concluded, focused on whether certain payments relating to Company-owned facilities in India were made in violation of the FCPA and other applicable laws.

Various governmental bodies and many customers and businesses are increasingly focused on environmental and social issues, which has resulted and may in the future continue to result in the adoption of new laws and regulations and changing buying practices. If we fail to keep pace with these developments, our reputation and business could be adversely impacted.

Changes in tax laws or in their interpretation or enforcement, failure by us to adapt our corporate structure and intercompany arrangements to achieve global tax efficiencies or adverse outcomes of tax audits, investigations or proceedings could have a material adverse effect on our effective tax rate, results of operations and financial condition.

The interpretation of tax laws and regulations in the many jurisdictions in which we operate and the related tax accounting principles are complex and require considerable judgment to determine our income taxes and other tax liabilities worldwide. Tax laws and regulations affecting us and our clients, including applicable tax rates, and the interpretation and enforcement of such laws and regulations are subject to change as a result of economic, political and other factors, and any such changes or changes in tax accounting principles could increase our effective worldwide income tax rate and have a material adverse effect on our net earnings and financial condition. We routinely review and update our corporate structure and intercompany arrangements, including transfer pricing policies, consistent with applicable laws and regulations, to align with our evolving business operations and provide global tax efficiencies across the numerous jurisdictions, such as the United States, India and the United Kingdom, in which we operate. Failure to successfully adapt our corporate structure and intercompany arrangements to align with our evolving business operations and achieve global tax efficiencies may increase our worldwide effective tax rate and have a material adverse effect on our earnings and financial condition.

The following are several examples of changes in tax laws that may impact us:

•The Tax Reform Act was enacted in December 2017 and made a number of significant changes to the corporate tax regime in the United States. The U.S. Treasury department continues to issue proposed and final regulations which modify relevant aspects of the new tax regime.

•In December 2019, the Government of India enacted the India Tax Law effective retroactively to April 1, 2019 that enables Indian companies to elect to be taxed at a lower income tax rate of 25.17% as compared to the current rate

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of 34.94%. Once a company elects into the lower income tax rate, a company may not benefit from any tax holidays associated with SEZs and certain other tax incentives, including MAT carryforwards, and may not reverse its election. As of December 31, 2019, we had deferred income tax assets related to the MAT carryforwards of approximately $176 million. See Note 11 to our consolidated financial statements. Our current intent is to elect into the new tax regime once our MAT carryforwards are fully or substantially utilized. Our intent is based on a number of current assumptions and financial projections, and if our intent were to change and we were to opt into the new tax regime at an earlier time, the write-off of any remaining MAT deferred tax assets may materially increase our provision for income taxes and effective income tax rate and decrease our earnings per share, while the loss of the benefit of the MAT carryforwards may increase our cash tax payments.

•The OECD has been working on a Base Erosion and Profit Shifting project and is expected to continue to issue guidelines and proposals that may change numerous long-standing tax principles. The changes recommended by the OECD have been or are being adopted by many of the countries in which we do business and could lead to disagreements among jurisdictions over the proper allocation of profits among them. The OECD has also undertaken a new project focused on “Addressing the Tax Challenges of the Digitalization of the Economy.” This project may impact multinational businesses by implementing a global model for minimum taxation. Similarly, the European Commission and various jurisdictions have introduced proposals to or passed laws that impose a separate tax on specified digital services. These recent and potential future tax law changes create uncertainty and may materially adversely impact our provision for income taxes.

Our worldwide effective income tax rate may increase as a result of these recent developments, changes in interpretations and assumptions made, additional guidance that may be issued and ongoing and future actions the Company has or may take with respect to our corporate structure and intercompany arrangements.

Additionally, we are subject from time to time to tax audits, investigations and proceedings. Tax authorities have disagreed, and may in the future disagree, with our judgments, and are taking increasingly aggressive positions, including with respect to our intercompany transactions. For example, we are currently involved in an ongoing dispute with the ITD in which the ITD asserts that we owe additional taxes for two transactions by which CTS India repurchased shares from its shareholders, as more fully described in Note 11 to the consolidated financial statements. Adverse outcomes in any such audits, investigations or proceedings could increase our tax exposure and cause us to incur increased expense, which could materially adversely affect our results of operations and financial condition.

Our business subjects us to considerable potential exposure to litigation and legal claims and could be materially adversely affected if we incur legal liability.

We are subject to, and may become a party to, a variety of litigation or other claims and suits that arise from time to time in the conduct of our business. Our business is subject to the risk of litigation involving current and former employees, clients, alliance partners, subcontractors, suppliers, competitors, shareholders, government agencies or others through private actions, class actions, whistleblower claims, administrative proceedings, regulatory actions or other litigation. While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.

Our client engagements expose us to significant potential legal liability and litigation expense if we fail to meet our contractual obligations or otherwise breach obligations to third parties or if our subcontractors breach or dispute the terms of our agreements with them and impede our ability to meet our obligations to our clients. For example, third parties could claim that we or our clients, whom we typically contractually agree to indemnify with respect to the services and solutions we provide, infringe upon their intellectual property rights. Any such claims of intellectual property infringement could harm our reputation, cause us to incur substantial costs in defending ourselves, expose us to considerable legal liability or prevent us from offering some services or solutions in the future. We may have to engage in legal action to protect our own intellectual property rights, and enforcing our rights may require considerable time, money and oversight, and existing laws in the various countries in which we provide services or solutions may offer only limited protection.

We also face considerable potential legal liability from a variety of other sources. Our acquisition activities have in the past and may in the future be subject to litigation or other claims, including claims from professionals, clients, stockholders, or other third parties. We have also been the subject of a number of putative securities class action complaints and putative shareholder derivative complaints relating to the matters that were the subject of our now concluded internal investigation into potential violations of the FCPA and other applicable laws, and may be subject to such legal actions for these or other matters in the future. See "Part I, Item 3. Legal Proceedings" for more information. We establish reserves for these and other matters when a loss is considered probable and the amount can be reasonably estimated; however, the estimation of legal reserves and possible losses involves significant judgment and may not reflect the full range of uncertainties and unpredictable outcomes inherent in litigation,

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and the actual losses arising from particular matters may exceed our estimates and materially adversely affect our results of operations.

Our earnings may be adversely affected if we change our intent not to repatriate Indian accumulated undistributed earnings.

A significant portion of our accumulated earnings are held and ongoing earnings are derived from our operations in India. We consider our Indian accumulated undistributed earnings to be indefinitely reinvested in India. See Note 11 to our consolidated financial statements. While we have no plans to do so, we may change our intent not to repatriate such earnings. Factors that may lead us to change our intent, include, but are not limited to, changes in cash estimates, capital requirements outside of India, discretionary transactions, changes to our shareholder capital return plan and legislative developments in India and other jurisdictions. For example, the Budget, as presented by the India Finance Minister on February 1, 2020, contains a number of proposed provisions related to tax, including a replacement of the dividend distribution tax, which is due from the dividend payer, with a tax payable by the shareholder receiving the dividend. This measure is proposed to be effective for the India financial year starting April 1, 2020. We are in the process of reviewing the various tax provisions outlined in the Budget, and will finalize our assessment once the Budget proposals are passed into law by the Parliament of India. A change in our intent not to repatriate Indian accumulated undistributed earnings would result in a material increase to our provision for income taxes and a decrease in our net income and earnings per share in the period such decision is made.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We have major sales and marketing offices, innovation labs, and digital design and consulting centers in major business markets, including New York, London, Paris, Melbourne, Singapore, and Sao Paulo, among others, which are used to deliver services to our clients across all four of our business segments. We lease 0.1 million square feet of office space for our worldwide headquarters in Teaneck, New Jersey in the United States. In total, we have offices and operations in more than 79 cities in 37 countries around the world.

We utilize a global delivery model with delivery centers worldwide, including in-country, regional and global delivery centers. We have over 27 million square feet of owned and leased facilities for our delivery centers. Our largest delivery center presence is in India: Chennai (10 million square feet); Pune (4 million square feet); Kolkata (3 million square feet); Hyderabad (3 million square feet); and Bangalore (2 million square feet). Our India delivery centers represent approximately 80% of our total delivery centers on a square-foot basis. We also have a significant number of delivery centers in other countries, including the United States, Philippines, Canada, Mexico and countries throughout Europe.

We believe our current facilities are adequate to support our operations in the immediate future, and that we will be able to obtain suitable additional facilities on commercially reasonable terms as needed.

Item 3. Legal Proceedings

See Note 15 to our consolidated financial statements.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Class A common stock trades on the Nasdaq under the symbol “CTSH”. As of December 31, 2019, the approximate number of holders of record of our Class A common stock was 119 and the approximate number of beneficial holders of our Class A common stock was 302,700.

Cash Dividends

During 2019, we paid quarterly cash dividends of $0.20 per share. In February 2020, our Board of Directors approved a 10% or $0.02 increase to our quarterly cash dividends and the Company's declaration of a $0.22 per share dividend with a record date of February 18, 2020 and a payment date of February 28, 2020. We intend to continue to pay quarterly cash dividends during 2020 in accordance with our capital return plan. Our ability and decisions to pay future dividends depend on a variety of factors, including our cash flow generated from operations, the amount and location of our cash and investment balances, our net income, our overall liquidity position, potential alternative uses of cash, such as acquisitions, and anticipated future economic conditions and financial results.

Issuer Purchases of Equity Securities

Our stock repurchase program, as amended by our Board of Directors in February 2020, allows for the repurchase of up to $7.5 billion, excluding fees and expenses, of our Class A common stock through open market purchases, including under a trading plan adopted pursuant to Rule 10b5-1 of the Exchange Act or in private transactions, including through ASR agreements entered into with financial institutions, in accordance with applicable federal securities laws. The timing of repurchases and the exact number of shares to be purchased are determined by management, in its discretion, or pursuant to a Rule 10b5-1 trading plan, and will depend upon market conditions and other factors.

During the three months ended December 31, 2019, we repurchased $150 million of our Class A common stock under our stock repurchase program. The following table sets out the stock repurchase activity under our stock repurchase program during the fourth quarter of 2019 and the approximate dollar value of shares that may yet be purchased under the program as of December 31, 2019.



Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions)
October 1, 2019 - October 31, 2019
Open market purchases	2,481,713	$	60.44	2,481,713	$	369
November 1, 2019 - November 30, 2019
Open market purchases	—	—		—	369
December 1, 2019 - December 31, 2019
Open market purchases	—	—		—	369
Total	2,481,713	$	60.44	2,481,713

We regularly purchase shares in connection with our stock-based compensation plans as shares of our Class A common stock are tendered by employees for payment of applicable statutory tax withholdings. For the three months ended December 31, 2019, we purchased 192,182 shares at an aggregate cost of $13 million in connection with employee tax withholding obligations.

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Performance Graph

The following graph compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the S&P 500 Index, Nasdaq-100 Index and a Peer Group Index (capitalization weighted) for the period beginning December 31, 2014 and ending on the last day of our last completed fiscal year. The stock performance shown on the graph below is not indicative of future price performance.

COMPARISON OF CUMULATIVE TOTAL RETURN⁽¹⁾⁽²⁾

Among Cognizant, the S&P 500 Index, the Nasdaq-100 Index

And a Peer Group Index⁽³⁾ (Capitalization Weighted)



Company / Index	Base Period 12/31/14		12/31/15		12/31/16		12/31/17		12/31/18		12/31/19
Cognizant Technology Solutions Corp	$	100	$	113.98	$	106.40	$	135.74	$	122.62	$	121.31
S&P 500 Index	100		101.38		113.51		138.29		132.23		173.86
Nasdaq-100 Index	100		108.43		114.81		150.99		149.42		206.15
Peer Group	100		117.45		122.99		155.96		150.97		198.40


(1)	Graph assumes $100 invested on December 31, 2014 in our Class A common stock, the S&P 500 Index, the Nasdaq-100 Index, and the Peer Group Index (capitalization weighted).


(2)	Cumulative total return assumes reinvestment of dividends.


(3)	We have constructed a Peer Group Index of other information technology consulting firms. Our peer group consists of Accenture plc., DXC Technology, EPAM Systems Inc., ExlService Holdings Inc., Genpact Limited, Infosys Ltd., Wipro Ltd. and WNS (Holdings) Limited.

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Item 6. Selected Financial Data

The following table sets forth our selected consolidated historical financial data as of the dates and for the periods indicated. Our selected consolidated financial data set forth below as of December 31, 2019 and 2018 and for each of the years ended December 31, 2019, 2018 and 2017 have been derived from the consolidated financial statements included elsewhere herein. Our selected consolidated financial data set forth below as of December 31, 2017, 2016 and 2015 and for each of the years ended December 31, 2016 and 2015 are derived from our consolidated financial statements not included elsewhere herein. Our selected consolidated financial information for 2019 and 2018 should be read in conjunction with the consolidated financial statements and the accompanying notes and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are included elsewhere in this Annual Report on Form 10-K.



	2019⁽¹⁾		2018⁽¹⁾		2017		2016		2015
	(in millions, except per share data)
For the year ended December 31:
Revenues	$	16,783	$	16,125	$	14,810	$	13,487	$	12,416
Income from operations	2,453		2,801		2,481		2,289		2,142
Net income⁽²⁾	1,842		2,101		1,504		1,553		1,624

Basic earnings per share⁽²⁾	$	3.30	$	3.61	$	2.54	$	2.56	$	2.67
Diluted earnings per share⁽²⁾	$	3.29	$	3.60	$	2.53	$	2.55	$	2.65
Cash dividends declared per common share	$	0.80	$	0.80	$	0.45	$	—	$	—
Weighted average number of common shares outstanding-Basic	559		582		593		607		609
Weighted average number of common shares outstanding-Diluted	560		584		595		610		613

As of December 31:
Cash, cash equivalents and short-term investments⁽³⁾	$	3,424	$	4,511	$	5,056	$	5,169	$	4,949
Working capital⁽³⁾⁽⁴⁾	4,628		5,900		6,272		6,182		5,195
Total assets^(3)(4)(5)	16,204		15,846		15,221		14,262		13,061
Total debt	738		745		873		878		1,283
Stockholders’ equity	11,022		11,424		10,669		10,728		9,278


(1)	On January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method. Results for reporting periods beginning on or after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting policies.

(2)

In March 2016, the FASB issued an update related to stock compensation. The update simplified the accounting for excess tax benefits and deficiencies related to employee stock-based payment transactions. We adopted this standard prospectively on January 1, 2017. For the year ended December 31, 2019, the net excess tax benefit on stock-based compensation awards in our income tax provision was immaterial. For the years ended December 31, 2018 and 2017, we recognized net excess tax benefits on stock-based compensation awards in our income tax provision in the amount $20 million, or $0.03 per share, and $40 million, or $0.07 per share, respectively. In prior periods, such net excess tax benefits were recorded in additional paid in capital.


(3)	Includes $414 million and $423 million in restricted time deposits as of December 31, 2019 and 2018, respectively. See Note 11 to our consolidated financial statements.

(4)

On January 1, 2019, we adopted the New Lease Standard using the effective date method applied to all lease contracts existing as of January 1, 2019. Results for reporting periods beginning on January 1, 2019 are presented under the New Lease Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting policies. See Note 7 to our consolidated financial statements.


(5)	In 2019, we changed our policy with regard to the presentation of certain amounts due to customers, such as discounts and rebates. See Note 1 to our consolidated financial statements. Balances for 2019 and 2018 reflect the new presentation while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting policies.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations



Executive Summary

In 2019, we initiated the execution of a multi-year plan aimed at accelerating revenue growth. As part of our 2020 Fit for Growth Plan, we have refined our strategic focus and launched a series of measures designed to improve our operational and commercial models and implement cost reductions.

We are aligning our strategic posture with our clients' needs to become more data-enabled, customer-centric and differentiated businesses. We are planning to invest significantly in technology, sales and marketing, talent re-skilling, acquisitions and partnerships to further sharpen our strategic positioning in key digital areas - IoT, AI, digital engineering and cloud, while working to maintain and optimize our core portfolio of services through efficiency, tooling and automation, delivery optimization, protection of renewals, industry alignment and geographic expansion. To support our strategy, we are increasing our investment in sales and marketing professionals to help us expand existing accounts and acquire new ones, and amplify our brand's stature in the marketplace. In addition, in January 2020, we introduced a new, more variable sales compensation structure that rewards our teams for selling the entire portfolio of our services and offerings. Further, we have improved the alignment of our sales professionals and client support personnel with our client accounts, based on the size and scope of the existing relationship as well as the potential for account expansion and growth.

The refinement of our strategic posture also highlighted that certain content-related work is not in line with our strategic vision for the Company. This work is largely focused on determining whether certain content violates client standards - and can involve objectionable materials. As part of our 2020 Fit for Growth Plan, we intend to exit this work over the course of the next year while our other content-related work will continue. We anticipate that this decision may negatively impact our relationship with the affected clients and estimate that we may lose revenues of $225 million to $255 million on an annualized basis within our Communications, Media and Technology segment in North America. We anticipate revenues will ramp down over the next one to two years and the impact on 2020 revenues is expected to be between $180 million and $200 million. In the meantime, we will comply with our contractual obligations and determine the best mutual path forward with the small number of affected clients.

The 2020 Fit for Growth Plan also involves certain measures, which commenced in the fourth quarter of 2019, to simplify our organizational model and optimize our cost structure in order to partially fund the investments required to execute on our strategy and advance our growth agenda. In 2019, we incurred $48 million of employee separation, retention and facility exit costs under this plan, including $5 million of costs related to our exit from certain content-related services. See Note 4 to our consolidated financial statements for additional information. We expect to incur additional charges in the range of $100 million to $150 million in 2020, primarily related to severance and facility exit costs, under our 2020 Fit for Growth Plan. The optimization measures under this plan are expected to generate an annualized gross savings run rate, before anticipated investments, in the range of approximately $500 million to $550 million. The cost savings realized in 2020 is expected to be lower than the annualized run rate.

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2019 Financial Results

The following table sets forth a summary of our financial results for the years ended December 31, 2019 and 2018:



					Increase / (Decrease)
	2019		2018		$			%
	(Dollars in millions, except per share data)
Revenues	$	16,783	$	16,125	$	658		4.1
Income from operations	2,453		2,801		(348		)	(12.4	)
Net income	1,842		2,101		(259		)	(12.3	)
Diluted earnings per share	3.29		3.60		(0.31		)	(8.6	)
Other Financial Information¹
Adjusted Income From Operations	2,787		2,920		(133		)	(4.6	)
Adjusted Diluted EPS	3.99		4.02		(0.03		)	(0.7	)

During the year ended December 31, 2019, revenues increased by $658 million as compared to the year ended December 31, 2018, representing growth of 4.1%, or 5.2% on a constant currency basis¹. Revenues from clients added during 2019, including those related to acquisitions, were $234 million.

The following charts set forth revenues and revenue growth by business segment and geography for the year ended December 31, 2019:



	Financial Services								Healthcare
			Increase / (Decrease)								Increase / (Decrease)
Dollars in millions	Revenues		$		%		CC %¹		Revenues		$		%		CC %¹
North America	$	4,137	(25	)	(0.6	)	(0.6	)	$	4,147	(107	)	(2.5	)	(2.5	)
United Kingdom	484		3		0.6		4.0		130		39		42.9		46.8
Continental Europe	728		62		9.3		14.3		341		71		26.3		30.7
Europe - Total	1,212		65		5.7		10.0		471		110		30.5		34.8
Rest of World	520		(16	)	(3.0	)	—		77		24		45.3		45.5
Total	$	5,869	24		0.4		1.6		$	4,695	27		0.6		1.0

	Products and Resources								Communications, Media and Technology
			Increase / (Decrease)								Increase / (Decrease)
Dollars in millions	Revenues		$		%		CC %¹		Revenues		$		%		CC %¹
North America	$	2,678	281		11.7		11.7		$	1,764	284		19.2		19.2
United Kingdom	380		22		6.1		10.9		319		(25	)	(7.3	)	(3.1	)
Continental Europe	453		13		3.0		8.8		169		(18	)	(9.6	)	(4.5	)
Europe - Total	833		35		4.4		9.8		488		(43	)	(8.1	)	(3.6	)
Rest of World	259		39		17.7		22.4		197		11		5.9		12.6
Total	$	3,770	355		10.4		12.0		$	2,449	252		11.5		13.1

Financial Services: Revenues in our Financial Services segment increased in our Europe region primarily due to Samlink revenues, while decreasing in our North America and Rest of World regions as certain banking clients continue to transition the support of some of their legacy systems and operations in-house or to captives.


¹	Constant currency revenue growth, Adjusted Income From Operations and Adjusted Diluted EPS are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.

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Healthcare: Revenues from our Healthcare segment increased in our Europe and Rest of World regions, primarily due to revenues from our life sciences clients, including revenues from our acquisition of Zenith. Revenues in our North America region were negatively impacted by mergers within the healthcare industry, the establishment of an offshore captive by a large client, the Customer Dispute and a ramp down of a client relationship in which we were a subcontractor to a third party for the purpose of delivering healthcare-related systems implementation services to local government, partially offset by growth among our life sciences clients in this region. Revenue growth among our life sciences clients was driven by demand for our digital operations services and solutions.

Products and Resources: Revenue growth in our Products and Resources segment was primarily driven by our clients' adoption and integration of digital technologies and revenues from our recently completed acquisitions.

Communications, Media and Technology: Revenue growth in our Communications, Media and Technology segment was strongest in our North America region and was primarily driven by the demand from our technology clients for digital content services and solutions and revenues from our recently completed acquisitions. As previously noted, our decision to exit certain content-related services will affect future revenue growth in this segment.

In 2017, we began a realignment program with the objective of improving our client focus, our cost structure and the efficiency and effectiveness of our delivery while continuing to drive revenue growth. Under our realignment program, in 2019, we incurred $22 million of Executive Transition Costs, $64 million in employee separation costs, $45 million in employee retention costs and $38 million in third party realignment costs. We anticipate that the employee separations completed as part of our realignment program will reduce our compensation expense by approximately $140 million on an annualized basis. We expect to incur $17 million of additional realignment charges related to our retention program in the first half of 2020.

On a combined basis with our 2020 Fit for Growth Plan described above, during the year ended December 31, 2019, we incurred $217 million in restructuring charges reported in the caption "Restructuring charges" in our consolidated statements of operations.

Our operating margin and Adjusted Operating Margin²decreased to 14.6% and 16.6%, respectively, for the year ended December 31, 2019 from 17.4% and 18.1%, respectively for the year ended December 31, 2018. The decreases in our operating margin and Adjusted Operating Margin² were due to an increase in costs related to our delivery personnel (including employees and subcontractors) outpacing revenue growth, the dilutive impact of our recently completed acquisitions, contract renegotiations with recently merged Healthcare clients and the Customer Dispute, partially offset by the benefit of lower incentive-based compensation accrual rates. Our 2019 GAAP operating margin was additionally negatively impacted by the incremental accrual related to the India Defined Contribution Obligation as described in Note 15 and higher restructuring charges while our 2018 GAAP operating margin was negatively impacted by the initial funding of the Cognizant U.S. Foundation.

During the year ended December 31, 2019, we returned $2,609 million to our stockholders through $2,156 million in share repurchases and $453 million in dividend payments. Our shares outstanding decreased to 548 million as of December 31, 2019 from 577 million as of December 31, 2018. We review our capital return plan on an on-going basis, considering our financial performance and liquidity position, investments required to execute our strategic plans and initiatives, acquisition opportunities, the economic outlook, regulatory changes and other relevant factors. As these factors may change over time, the actual amounts expended on stock repurchase activity, dividends and acquisitions, if any, during any particular period cannot be predicted and may fluctuate from time to time.

Other Matters

We accrued $117 million in 2019 related to the India Defined Contribution Obligation as described in Note 15 to our consolidated financial statements. It is possible that the Indian government will review the matter and there is a substantial question as to whether the Indian government will apply the Supreme Court’s ruling on a retroactive basis. As such, the ultimate amount of our obligation may be materially different from the amount accrued.

We are involved in an ongoing dispute with the ITD described in Note 11 to our consolidated financial statements. The dispute with the ITD is currently pending and no final decision has been reached.


²	Adjusted Operating Margin is not a measurement of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and a reconciliation to the most directly comparable GAAP financial measure.

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2020 Business Outlook

In 2020, we expect growing demand from our clients for digital services as they invest to transform into data-enabled, customer-centric and differentiated businesses. As our clients continue their efforts to optimize the cost of supporting their legacy systems and operations, our core portfolio of services may be subject to pricing pressure and lower demand as clients look to transition certain work in-house or to new or existing captives.

Our clients will likely continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policies and other macroeconomic factors, which could affect their demand for our services. Client demand may also be impacted by uncertainty related to the potential economic and regulatory effects of the United Kingdom's exit from the European Union. Additionally, revenue from our technology clients will be affected by our strategic decision to exit certain content-related work under our 2020 Fit for Growth Plan.

We expect our 2020 financial results to be impacted by the initial cost optimization measures executed in 2019 as part of our 2020 Fit for Growth Plan, and the expected execution of additional measures under this plan in 2020. In addition, our 2020 results may be impacted by uncertainty regarding regulatory changes, including potential regulatory changes with respect to immigration and taxes as well as costs related to the potential resolution of legal and regulatory matters discussed in Note 15 to our consolidated financial statements.

During 2020, we intend to continue to invest in our digital capabilities, our talent base and new service offerings across industries and geographies, while increasing our investment in sales and marketing professionals to help us expand existing accounts and acquire new ones. We will continue to pursue strategic acquisitions that we believe add new technologies or platforms that complement our existing services, improve our overall service delivery capabilities or expand our geographic presence. Additionally, we will continue to focus on maintaining and optimizing our core portfolio of services through efficiency, tooling and automation, delivery optimization, protection of renewals, industry alignment and geographic expansion. Finally, through the execution of our 2020 Fit for Growth Plan and other initiatives, we will focus on operating discipline in order to appropriately manage our cost structure.



Business Segments

Our reportable segments are:


•	Financial Services, which consists of our banking and insurance operating segments;


•	Healthcare, which consists of our healthcare and life sciences operating segments;


•	Products and Resources, which consists of our retail and consumer goods; manufacturing, logistics, energy, and utilities; and travel and hospitality operating segments;


•	Communications, Media and Technology, which includes our communications and media operating segment and our technology operating segment.

The services we provide are distributed among a number of clients in each of our business segments. A loss of a significant client or a few significant clients in a particular segment could materially reduce revenues for that segment. The services we provide to our larger clients are often critical to their operations and a termination of our services would typically require an extended transition period with gradually declining revenues. Nevertheless, the volume of work performed for specific clients may vary significantly from year to year.

In 2019, we made certain changes to the internal measurement of segment operating profits. See Note 19 to our consolidated financial statements for additional information relating to this change and on our business segments.

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Results of Operations

For a discussion of our results of operations for the year ended December 31, 2017, including a year-to-year comparison between 2018 and 2017, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report Form 10-K for the year ended December 31, 2018.

The Year Ended December 31, 2019 Compared to The Year Ended December 31, 2018

The following table sets forth certain financial data for the years ended December 31:



				% of				% of	Increase / Decrease
	2019			Revenues	2018			Revenues	$			%
	(Dollars in millions, except per share data)
Revenues	$	16,783		100.0	$	16,125		100.0	$	658		4.1
Cost of revenues⁽¹⁾	10,634			63.4	9,838			61.0	796			8.1
Selling, general and administrative expenses⁽¹⁾	2,972			17.7	3,007			18.6	(35		)	(1.2	)
Restructuring charges	217			1.3	19			0.1	198			*
Depreciation and amortization expense	507			3.0	460			2.9	47			10.2
Income from operations	2,453			14.6	2,801			17.4	(348		)	(12.4	)
Other income (expense), net	90				(4		)		94			*
Income before provision for income taxes	2,543			15.2	2,797			17.3	(254		)	(9.1	)
Provision for income taxes	(643		)		(698		)		55			(7.9	)
Income (loss) from equity method investment	(58		)		2				(60		)	*
Net income	$	1,842		11.0	$	2,101		13.0	$	(259	)	(12.3	)
Diluted EPS	$	3.29			$	3.60			$	(0.31	)	(8.6	)
Other Financial Information ³
Adjusted Income From Operations and Adjusted Operating Margin	$	2,787		16.6	$	2,920		18.1	(133		)	(4.6	)
Adjusted Diluted EPS	$	3.99			$	4.02			$	(0.03	)	(0.7	)


(1)	Exclusive of depreciation and amortization expense.


*	Not meaningful

Revenues - Overall

During 2019, revenues increased by $658 million as compared to 2018, representing growth of 4.1%, or 5.2% on a constant currency basis³. Revenues from clients added during 2019, including those related to acquisitions, were $234 million. Growth was driven by our clients' adoption and integration of digital technologies, demand for our digital operations services and solutions as well as revenues from our recently completed acquisitions. This was partially offset by pricing pressure within our core portfolio of services as our clients continue their efforts to optimize the cost of supporting their legacy systems and operations.

Revenues from our top clients as a percentage of total revenues were as follows:



	For the years ended December 31,
	2019		2018
Top five clients	7.9	%	8.6	%
Top ten clients	14.6	%	15.4	%


³	Constant currency revenue growth, Adjusted Income from Operations, Adjusted Operating Margin and Adjusted Diluted EPS are not measurements of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.

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Revenues - Reportable Business Segments

Revenues by reportable business segment were as follows:



	2019		2018		Increase / (Decrease)
	2019		2018		$		%	CC%⁴
	(Dollars in millions)
Financial Services	$	5,869	$	5,845	$	24	0.4	1.6
Healthcare	4,695		4,668		27		0.6	1.0
Products and Resources	3,770		3,415		355		10.4	12.0
Communications, Media and Technology	2,449		2,197		252		11.5	13.1
Total revenues	$	16,783	$	16,125	$	658	4.1