Cognizant plans: layoffs, automation, investment in digital and M&A
Cognizant: someone’s gotta go…
Cognizant, a global provider of digital, technology, consulting and operations services, is to get rid of up to 4% of its workforce, according to The Hindu Business Line.
Cognizant is based in the US, but the majority of its workforce – 75% of 260,000 employees overall – is based in India.
It is understood the company is looking to reduce its headcount by up to 10,000 (nearly 4%).
According to the sources, these are going to be underperforming employees with a “skills mismatch”.
Over the last two years, Cognizant has already downsized its workforce by 3%. The exact number of new layoffs is to be known at the end of this month, once the appraisals are completed, it is understood.
Cognizant responded saying that it conducts “regular performance reviews” as part of its workforce management strategy, and as a result, “some employees transition out of the company”. In plain English this means they get sacked.
At the same time, Cognizant states it is keen to ramp up its digital capabilities.
Last month it unveiled “a comprehensive plan to accelerate the shift to digital services and solutions, execute on operational opportunities to drive leverage in its cost structure and return significant capital to shareholders”.
Among key elements of the plan are more investment in digital and the improvement of non-GAAP operating margins.
“To stay relevant to evolving client demand, the company will aggressively scale its digital capabilities across geographies and industry segments through both organic investments, in areas such as re-skilling and new technology practices, and through acquisitions,” Cognizant explains.
“The company is intensifying its M&A efforts to expand intellectual property, industry expertise, and platform and technology capabilities, by focusing primarily on strategic tuck-in acquisitions.”
Having reviewed its operational and corporate cost structures, Cognizant “will accelerate the pursuit of high-value digital transformation work, drive leverage in its cost structure, execute on opportunities to improve operational efficiency and aggressively employ automation to optimise traditional services”.
The company has a non-GAAP operating margin target of 22% in 2019.
