Cognizant may lay off marginal performers or employees who are sitting on bench for a long period of time, it also delays campus hires.
Under new CEO Brian Humphries, Cognizant is undergoing a widespread restructuring aimed at boosting growth and lowering costs.
Cognizant has reportedly delayed joining date of new employees to increase utilisation. 64% of Cognizant’s total 2.88 lakh workforce is placed in India.
Cognizant is readying another round of layoffs, expected to number a few hundred, as part of its strategy to cut costs, and more ways of slashing spending are on the anvil, as per ET reports.
As part of the restructuring, the company is looking at boosting the variable pay component of salaries, a move that will reduce costs,
“It is part of the appraisal process; it is getting stricter. If you were a marginal performer or have not been allocated (a project), then they would look at beginning a separation process,” a person aware of the matter told ET.
The number would be in a few hundred and employees with more than eight years of experience would be targeted.
A Cognizant executive said the number of cuts was being evaluated and would depend on growth as the quarter progresses.
The company has already suspended non-essential travel and taken other steps to curb spending.
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.
“The joining dates are being calibrated to ensure that utilisation is maintained. There is a strong focus on cost control,” the second person said.
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.”
By: Abhinav Ranjan, Editorial Desk, DKODING Media