Cognizant Technology Solutions (CTSH) risk factors, 2025 10-K

Risks Related to our Business and Operations

1. 01Our results of operations could be adversely affected by economic and geopolitical conditions globally and in particular in the markets in which our clients and operations are concentrated
2. 02We face intense and evolving competition and our service offerings must keep pace with significant technological advances in the rapidly changing markets we compete in
3. 03December 31, 2024 Form 10-K
4. 04Our use of AI technologies may not be successful and may present business, financial, legal, and reputational risks
5. 05Finally, AI technology may be viewed negatively by the public due to media scrutiny over issues such as job displacement, privacy and ethical AI concerns. This negative perception can adversely affect our investments in AI technology, both directly and indirectly
6. 06Many of our contracts with clients are short-term, and our business, results of operations and financial condition could be adversely affected if our clients terminate their contracts on short notice
7. 07Our 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
8. 08We may not be able to achieve our profitability goals and maintain our capital return strategy
9. 09our need to devote time and resources to training, professional development and other typically non-chargeable activities. Increases in wages and other costs, including as a result of attrition, may also put pressure on our profitability
10. 10We 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
11. 11Our NextGen program and the associated reductions in headcount and consolidation of office space could disrupt our business and may not result in anticipated savings
12. 12We face legal, reputational and financial risks if we fail to protect client and/or Cognizant data from cybersecurity incidents
13. 13potential unauthorized access and/or 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 and have other adverse impacts on our business or the business of our clients
14. 14Fluctuations in foreign currency exchange rates, or the failure of our hedging strategies to mitigate such fluctuations, can adversely impact our profitability, results of operations and financial condition
15. 15Pandemics, epidemics or other outbreaks of disease have had and may in the future have a material adverse impact upon our business, liquidity, results of operations and financial condition
16. 16Climate change, extreme weather and risks arising from the transition to a lower-carbon economy may impact our business
17. 17Failure to meet ESG expectations or standards or achieve our ESG ambitions could adversely affect our business or damage our reputation
18. 18accurately, or that we will be able to score well as such criteria change. We supplement our participation in ratings systems with published disclosures of our ESG activities, but some investors may desire other disclosures that we do not provide
19. 19If our risk management, business continuity and disaster recovery plans are not effective and our global delivery capabilities are impacted, our business and results of operations may be materially adversely affected and we may suffer harm to our reputation

Legal, Regulatory and Legislative Risks

1. 20December 31, 2024 Form 10-K
2. 21Anti-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
3. 22We 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
4. 23Changes in tax laws or in their interpretation or enforcement, failure by us to adapt our corporate structure and intercompany arrangements 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
5. 24Our business subjects us to considerable potential exposure to litigation and legal claims and could be materially adversely affected if we incur legal liability
6. 25If we infringe upon the IP rights of others or our IP rights are infringed upon, our business may be adversely affected