It also expects an 8-10% rise in full year revenue from the $13.49 billion in 2016.
"As we enter 2017, the time is right for us to accelerate the shift to digital services and solutions to meet the growing demands from our clients to transform their business models in the face of the rapid business and technology shifts disrupting their industries," said Francisco D'Souza, Chief Executive Officer in a statement.
"To meet this opportunity, we are evolving our business model to focus on aggressively scaling our digital capabilities, driving efficiencies in our core business, and launching a robust capital return program," he added.
The shift to digital services and solutions and return capital to shareholders, would include "intensifying its M&A (mergers and acquisitions) efforts to expand intellectual property, industry expertise, and platform and technology capabilities, by focusing primarily on strategic tuck-in acquisitions".
Cognizant also said it is looking at improving its non-GAAP operating margins to 22% in 2019. The non-GAAP operating margin for the quarter ending December 31, 2016 was 18.7%.
The IT services company met the lower end of its fourth quarter revenue forecast at $3.46 billion. It had expected revenue to be between $3.45 billion and $3.51 billion.
It also met the lower end of its full year revenue forecast at $13.49 billion, and expects full-year revenue for 2017 in the range of $14.56 billion to $14.84 billion.
Cognizant had a tough last year as it trimmed the top end of its full-year guidance thrice and disclosed that it had made payments in India that fell foul of the US Foreign Corrupt Practices Act. In November, activist hedge fund Elliott Management Services disclosed a 4% stake in company and asked it to shake up its board.
For the first quarter, it forecast an increase of 1-2% sequential increase in revenue, at $3.51 billion to $3.55 billion.
Download The Economic Times News App to get Daily Market Updates & Live Business News.