IT woes: Cognizant may slash more than 10,000 jobs

US-listed IT (information technology) major Cognizant Technology Solutions, which has a significant workforce in India, is said to be reducing its employee count by as much as five per cent.

Typically, the bottom one per cent of the workforce is weeded out for non-performance, a common practice across IT firms as part of the annual appraisal exercise that ends in March. But as the company is shifting its focus from traditional IT services to digital, Cognizant is reportedly looking ahead at trimming its workforce in larger number by doing away with redundant roles. Globally, the company employs around 260,000 employees, of this around 75 per cent of the workforce is based in India.

A Cognizant spokesperson said as part of its workforce management strategy, the company conducts regular performance reviews to ensure it has the right employee skill sets necessary to meet client needs and achieve its business goals. 

“This process results in changes, including some employees transitioning out of the company. Any actions, as a result of this process, are performance-based and generally consistent with those we've made in previous years. In any given year, the numbers may bounce a percentage here and there, but resizing our employee base is a part of our standard practice. At the same time, we continue to enhance our capabilities and hire for roles across all our practice areas in the company.”

This year, the appraisal cycle comes in the backdrop of various industry-changing developments. The digitisation and automation wave, which has caught up in the industry in recent times, would have an impact on the cutting down of manpower, say sources. 

As part of changing the way it manages the operating margins, the company is accelerating its broad-based high-value digital transformation work, and reassess less profitable opportunities that do not further its positioning the digital marketplace, said the company management following the announcement of results for the quarter ended December, 2016. 

Annualised attrition of 15.6 per cent during the quarter — including BPO and trainees — was down 350 basis points from a year-ago period. As such there is no consistent methodology in the industry to report attrition. Cognizant has historically reported attrition by annualising the turnover which occurred within the quarter, including both voluntary and involuntary. Cognizant’s attrition statistics include all departures, including BPO and employees in its training programme. The company ended the quarter with approximately 260,200 employees globally.

“We will leverage our scale to prove costs in 2017 and 2018 through cost-optimisation efforts and intelligent sourcing. And we will aggressively use automation to drive the optimisation of traditional offerings such as applications, infrastructure and process services. Some of these efficiencies will be offset by critical investments in building new digital capabilities, as well as potential pricing pressure in some traditional lines of service,” said Karen McLoughlin, chief financial officer, Cognizant, following the announcement of financial results.

The company is also investing extensively in training and re-skilling its team, and in substantially expanding its local workforces in the US and other local markets around the world where it operates. “As agile development and the pervasive influence of technology increases, the value of colocation and a consultative approach also goes up,” said Francisco D’Souza, CEO, Cognizant during an earnings call recently.