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Cognizant (CTSH) Inks Deal With Zurich Insurance Subsidiary

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Cognizant Technology Solutions (CTSH - Free Report) recently announced that the company has been selected as a strategic technology provider for Zurich Beteiligungs-AG, the German subsidiary of Zurich Insurance Group (ZURVY - Free Report) , to help in its digital transformation.

Zurich Group Germany is one of the leading insurers in Germany with a wide range of property and life insurance products. The company’s multi-year contract with Cognizant will help it provide more digital services to clients and partners.

Cognizant will aid Zurich to extend its AI, data, software engineering and cloud capabilities in the general insurance domain by establishing a joint DevOps team.

The establishment of the DevOps team in Zurich’s general insurance domain will aid in reducing total cost of ownership, speed up the time to market new digital services and products, and accelerate its digital transformation.

Clients, globally, are transitioning to digital operating models to increase profitability. Cognizant is well-poised to benefit from such new trends in the market amid the fourth industrial revolution.

The recent multi-year deal with Zurich is another notable addition to Cognizant’s plans to grow market share in the insurance industry globally, with the company also expanding its presence in the Indian insurance market with its recent multi-year deal with National Insurance Company Ltd.

Cognizant Investing in AI To Grow Digital Business

Cognizant is experiencing significant growth in its digital business operations, which is outgrowing the BPO market, thus reflecting momentum in AI, AR, automation, blockchain, IoT, quantum computing and as-a-service solutions.

This was reflected in the first quarter of 2022 results, with digital business growing 20% and representing 50% of Cognizant’s revenues.

However, Cognizant shares have been negatively impacted by the current macro-economic situation and geopolitical tensions. Various factors like global inflation, interest rate hike by the U.S. Federal Reserve and the Russia-Ukraine war have negatively impacted the outlook regarding Cognizant.

Cognizant is also facing significant threat in the AI industry and the cloud space from companies like International Business Machines (IBM - Free Report) and Accenture (ACN - Free Report) .

IBM is poised to benefit from strong demand for hybrid cloud and AI, which will drive its top-line growth. IBM has recently expanded its collaboration with the U.S. federal government to address current problems like cybersecurity and supply chain sustainability via its data fabric solutions and IBM Watson.

Accenture is improving its market share in the industry with its recent acquisition of digital engineering and operational technology from Trancom ITS. This, in turn, will help Accenture provide customers with cloud-based logistics systems and merge warehouse operations with IoT and sensor technology.

Shares of Cognizant, which currently carries a Zacks Rank #4 (Sell), have lost 23.9% year to date compared with the Zacks Business-Sofware Services industry’s decline of 32.7%.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Amid tough competition and rising volatility in the tech industry, Cognizant is looking to address changing dynamics in the insurance industry to counter competitors in the AI space.

Pandemics and wars can no longer be addressed as black swan events as these occur every few decades. Their impacts on people and economy need to be considered as a common incidence and this changes operational dynamics for insurance companies.

Insurance companies need to reduce processing time and shift operations to the cloud supported by AI and automation to reduce manual efforts and provide more personalized experience for clients.

Cognizant’s recent investments in developing its digital business model will help the company address the changing dynamics and contribute to top-line growth.