Cognizant Technology Solutions plans to cut 10,000-12,000 jobs from mid-to-senior level positions in coming quarters to improve cost structure.
Cognizant has around 2.88 lakh employees globally and over 75 percent of them are located in India. Cognizant did not disclose the likely impact of the job cut in India.
The gross reduction is expected to lead to a net reduction of approximately 5,000 to 7,000 roles or about 2 percent of the company’s total population, as the company aims to re-skill and redeploy approximately 5,000 of the total associates impacted.
We expect the remaining 5,000 to 7,000 associates to exit the company by mid-2020 either through attrition or role elimination. We believe these actions are critical for the long-term health and competitiveness of the company.
“The charges will also include charges related to optimizing our real estate portfolio. These actions will result in annualized gross run rate savings of $500 million to $550 million in year 2021,” Cognizant CEO Brian Humphries said.
“We will work with partners to explore ways to transition the work and roles to alternative vendors and we’ll provide impacted associates with a number of transition assistance programs including retention bonuses, severance packages and the opportunity to participate in various reskilling programs,” Brian Humphries said.
The plan also involves certain content work with Facebook. Cognizant today said it will be exiting this area over the course of 2020, without disclosing the name of the US-based social media company.
Cognizant may lose revenues of between $240 million to $270 million on an annualized basis within Communications, Media and Technology segment.
The company has initiated a multi-year evolution of its business, aimed at unlocking the company’s full growth potential and returning it to its historical position as a bellwether of the IT industry.
Cognizant announced the two-year Fit for Growth plan to simplify its work, lower the cost structure, and fund investments that will enable growth. The plan sharpens the IT services company’s strategic focus and simplifies the operating model.
Cognizant reported 4 percent increase in its net profit to $ 497 million for the third quarter ended September 30, 2019. Revenue of the US-based software company rose 4.2 percent to $4.25 billion.