Another person in the know said most of these job cuts were likely to happen in India, the largest offshore delivery location for the company. Cognizant, with a total employee base of 281,600 in 2018, had around 70 per cent of its total staff located in India.
“As part of our realignment programme, management is currently evaluating various strategies, including additional employee separation programmes. The timing, nature and magnitude of these initiatives are not finalised yet,” Cognizant said in an email reply.
Last week, Cognizant surprised the market by slashing its revenue guidance by nearly half ranging from 3.6 to 5.1 per cent for 2019. Its new Chief Executive Officer (CEO) Brian Humphries flagged up concerns with regard to execution apart from giving clear indication of cost optimisation measures, including slashing of jobs. “I believe, cost equals growth. We will improve our cost structure as a means to invest in growth,” Humphries said in the post-earnings analyst call. “Our headcount growth has exceeded the rise in revenue in the past two quarters,” he said.
Its Chief Financial Officer Karen McLoughlin has also said employee pyramid optimisation, sustaining higher level of utilisation and improvement in pricing were some of the options available before the company for margin expansion.
Some experts said while most IT services firms had added more number of employees in the past one year in anticipation of future growth, but in case of Cognizant, it seems to had not worked well because of a few client insourcing and project ramp downs.
“Cognizant has just seen growth slowdown and not a negative growth. It is still growing. Perhaps, the new CEO wants to start on a clean slate, which can be one of the possible reasons for this guidance and pyramid optimisation,” said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting. “Cognizant is rather very transparent with regard to employee issues,” he added.
The IT compnay had announced a major management reshuffle in January with its then founder and CEO Francisco D’Souza moving to a non-executive role. Last week, Cognizant’s new CEO has announced leadership changes in the digital and BFS (banking, financial services) verticals in order to drive future growth.