Cognizant to cut 3,500 jobs as revenue dips 0.3% to $4.8 bn

Cognizant said its revenue declined 0.3 percent to $4.8 billion during the first quarter of 2023 as clients started focusing on reduction in IT spending.
Cognizant employeesCognizant has generated revenue of $1.476 billion (–3.4 percent) from Financial Services, $1.433 billion (+2.9 percent) from Health Sciences, $1.118 billion (–1.1 percent) from Products and Resources, $785 million (+1.2 percent) from Communications, Media and Technology in Q1 2023.

Cognizant has generated revenue of $3.545 billion (–0.7 percent) from North America, $478 million (+5.5 percent) from United Kingdom, $461 million (+0.4 percent) from Continental Europe, $328 million (–4.9 percent) from Rest of World in Q1 2023.

Cognizant is targeting second quarter revenue of $4.83 billion – $4.88 billion, a decline of 0.6 percent to 1.6 percent.

Cognizant is targeting 2023 revenue of $19.2 billion – $19.6 billion, or a decline of 1.2 percent to growth of 0.8 percent.

Cognizant said bookings in the first quarter grew 28 percent. On a trailing-twelve-month basis, bookings grew 9 percent to $25.6 billion, which represented a book-to-bill of approximately 1.3x.

“Our accelerated bookings growth in the quarter, which included several large deals and a healthy mix of new and expansion work, reflects the strengths of our services, our brand, and the longstanding relationships we have with our clients,” said Ravi Kumar S, Chief Executive Officer of Cognizant, in its earnings report.

Cognizant said it will eliminate 3,500 employees, or approximately 1 percent of workforce, as part of the NextGen program.

Cognizant expects to record costs of $400 million — $350 million in 2023 and $50 million in 2024. This consists of $200 million of employee severance and other costs primarily related to non-billable and corporate personnel, and $200 million of costs related to the consolidation of office space.

Cognizant aims to reduce annual real estate costs by approximately $100 million by 2025 versus 2022. This reduction in real estate costs is net of investments to expand real estate footprint in smaller cities, primarily in India, in support of hybrid work strategy.

Cognizant said the total headcount at the end of the first quarter was 351,500, a decrease of 3,800 from Q4 2022 and an increase of 11,100 from Q1 2022. Voluntary attrition on trailing-twelve-month basis, declined to 23 percent from 26 percent in Q4 2022 and 30 percent in Q1 2022.