Cognizant Warns of Anti-Outsourcing Laws and Data Misuse

In its latest annual report for 2025, released in February 2026, IT services giant Cognizant has for the first time extensively flagged significant reputational and operational risks stemming from its heavy reliance on offshore outsourcing.

The New Jersey-headquartered firm, which maintains the vast majority of its workforce in India, warned that shifting political sentiments and negative perceptions could impair its global business model.

Political Headwinds and Anti-Outsourcing Sentiment

Cognizant highlighted that offshore outsourcing remains a contentious topic in its largest market, the United States.

The company cautioned that potential federal or state legislation restricts offshore services.

They added that imposing financial burdens on companies that utilize these services poses a direct threat.

Such measures are often driven by a perceived association between offshoring and domestic job displacement.

Cognizant noted that any new restrictive laws could “impair” its ability to serve clients and weigh heavily on its financial performance.

Data Privacy, AI-Led Risks and Ethical Concerns

The report specifically called out reputational risks linked to the “misuse of sensitive client data” by service providers in offshore locations.

With data privacy and “digital sovereignty” becoming top priorities for global enterprises, any high-profile leak or ethical breach could cause irreparable damage to the brand.

The lack of uniform data protection laws across all offshore regions creates a complex compliance landscape. This situation requires constant, costly oversight.

Adding to the complexity, the firm noted that its aggressive push into Generative AI introduces new vulnerabilities.

If AI tools fail to perform or result in biased outcomes, Cognizant could face cost overruns, financial penalties, and further reputational fallout.

Cognizant Visa Constraints and Rising Costs

Operationally, Cognizant remains vulnerable to changes in U.S. immigration policy.

Its North American subsidiary relies on a substantial number of skilled workers under H-1B and L-1 visas.

The company warned that processing delays or stricter regulations could lead to higher costs and project bottlenecks.

As of December 31, 2025, Cognizant’s India headcount grew to 256,900.

Meanwhile, its North American workforce saw a slight decline to 41,600, further deepening its dependency on the offshore model.

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