Cognizant looks to trim top brass

IT services major Cognizant is looking at trimming its senior-level headcount, a move that will result in severance costs of up to $35 million for the company, its Chief Financial Officer Karen McLoughlin said.

The company, which has a significant portion of its employees based in India, had a total headcount of 2,68,900 at the end of June 2018.

“During the remainder of 2018, we intend to continue to improve our cost structure by further optimising the higher end of our resource pyramid,” she said at the company’s investor call after the Q2 results.

As a result of these actions, Cognizant expects to incur $25 million to $35 million in severance costs, McLoughlin said.

Cognizant follows the January to December calendar as its financial year.

“Cognizant’s separation programme has been designed to realign our workforce with our business strategy and recalibrate the personnel pyramid at the upper levels. This programme involved few hundred people globally,” a company spokesperson said in response to a query by PTI on the impact.

The spokesperson added: “When any organisation, especially one of our size, goes through a transition, the human resource management has to attune the workforce to changing business and technology demands. We are confident that our programme will help us navigate this shift to digital and help us provide the digital at scale transformation that our clients require”.

Further, McLoughlin said this year, the company has split the timing of the raises and the promotions.

“So, we’re currently – as we just announced, raises and promotions for the bottom half of the pyramid, for more the junior folks will happen in Q3; for the more senior folks that will happen in the Q4 time frame,” she said.

For the quarter ended June 2018, Cognizant posted 2.97% drop in its net profit at $456 million, hurt by non-operating foreign exchange losses on account of rupee depreciation and the initial funding of Cognizant US Foundation.