IT services major Cognizant Technology Solutions Corp. has laid off thousands of employees on bench, i.e. those who were not actively involved in any client projects, as per reports by State IT employee unions in Karnataka and Chennai.
The unions have alleged that Cognizant is executing mass layoffs after benching nearly 18,000 employees across India. Typically, in IT services companies, employees on the bench are considered “non-billable" resources as their cost is not billed to any client. But companies do maintain a small percentage of bench employees so that they are prepared to execute projects immediately.
The Karnataka State IT/ITeS Employees Union (KITU) has “strongly condemned" the decision taken by the management of Cognizant.
KITU said in a statement, “The reports on large scale layoffs are coming from ‘Cognizant’ in the name of ‘effectively managing workforce utilization’. Thousands of employees all over India are going to be the victims of this. Several victimized employees approached KITU, and the Union has initiated a legal battle against the Cognizant management for this illegal action/”
Similarly, the New Democratic Labour Front (NDLF), a Chennai-based IT employees' union, had also alleged that Cognizant is benching employees at its Chennai offices and then asking them to resign after 41 days.
A Cognizant spokesperson, however, has indicated that any reported layoffs are only likely to be performance-based exits. The spokesperson added that performance management is a normal process across all companies in the IT industry, including Cognizant.
The spokesperson added, “While Cognizant does not comment on rumor and speculation in the marketplace, we would like to clarify that recent third-party allegations regarding a specific number of job actions are not accurate, not based on facts, and were not announced by Cognizant."
The IT firm, which like TCS, employs more than 2 lakh staff in India, has a global headcount of almost 2.9 lakhs. Most of the employees are based out of Chennai. The firm maintains it continues to hire at all levels in India and globally and will invest majorly in upskilling and reskilling its employees at scale in newer digital technologies, including cloud, analytics, digital engineering, and internet of things (IoT), where the company is seeing above industry-average growth.
However, in recent months, the firm has also seen has seen several exits and witnessed layoffs in the last year as part of its restructuring strategy. In May this year, it was offering a "voluntary separation" package to US-based employees who are not working on active, revenue-generating projects. The layoffs come despite Cognizant having pursued a strategy of expansion and acquisition for the last few months, and is most likely driven by cost pressures as Cognizant's clients cut their own spending due to the COVID-19 pandemic.