Under new CEO Brian Humphries, Cognizant is undergoing a widespread restructuring aimed at boosting growth and lowering costs.
Cognizant is readying for more job cuts to rein in costs. A “few hundred” employees with over eight years of experience face the axe, even as the joining dates for freshers have been delayed, Economic Times reports, citing sources. The IT major – which continues to underperform on revenue growth and profitability – has implemented several belt-tightening measures: it retrenched some director-level employees and mid-level managers, suspended non-essential travel, and altered the salary structure to include a higher variable pay component. Meanwhile, Cisco and GE Digital are also said to have laid off “a few tens of employees”.
Earlier this year, Cognizant slashed its revenue growth forecast and said its headcount addition had outstripped revenue growth, leading to narrowing margins. The firm had 288,200 staff as of June 30, a 7% increase from 268,900 a year earlier. It had about 281,600 employees at the end of 2018, with 194,700, or 69%, in India, according to Cognizant’s annual report for 2018.
Separately, the Teaneck, New Jersey-based company has extended the time between giving offer letters to new employees and assigning their joining dates, a second person said. It is looking to balance the work it has with the staff strength, the person said. “The joining dates are being calibrated to ensure that utilisation is maintained. There is a strong focus on cost control,” the second person said.
A Facebook group called ‘Cognizant Freshers’ has a group of people saying they were given offer letters in March but had yet to get a joining date.
Another person suggested the delay in joining dates could be due to a growing number of employees on the bench. “When more people are sitting out without projects, it’s quite obvious that freshers joining will be delayed,” the person said.
Cognizant did not respond to ET’s questions on the job cuts. “We cannot be commenting on every speculation in the marketplace. It would be important to note that Cognizant’s Q2 revenue came in at the higher end of our guided range and beat consensus EPS estimates,” a spokesperson said on email. The company said it had begun onboarding freshers from June.
“We have already onboarded several thousand students who are currently undergoing training in Cognizant Academy, and the rest will be onboarded in a staggered fashion, as is the process every year. Cognizant has a long history of honouring all campus offers and there is no reason to believe that this year will be any different,” the spokesperson said.
In an email to employees on ‘embracing change as path to succeed’ sent after the company reported its quarterly results on July 31, CEO Humphries stressed the need to control costs.
“We will optimise the utilisation of unbilled people, institutionalise greater expense discipline, avoid unnecessary overheads, reduce the duplication of activities… This is about getting back to basics,” Humphries said in the mail, which ET accessed. “We can and will do all of these things and more.”