A few days back Cognizant announced that as part of their realignment program, the management is evaluating various strategies, including additional employee separation programs.
While the timing, nature, and magnitude of the layoffs were not finalized before, the latest update is that Cognizant’s job cuts will be focused on the middle levels.
This is not the first time Teaneck, New Jersey-headquartered Company is cutting jobs. Last August, the company said it was cutting 200 senior jobs to make way for juniors to grow. In 2017, it had offered employees a voluntary separation program.
The company has shared that its headcount growth has outstripped revenue growth in the past two quarters. And job cuts seem to be of the ‘pyramid actions’ for lowering the cost of delivery.
Analysts predict that CEO Brian Humphries has a tough job to do. The slow growth of Cognizant and the problems at the firm has been a result of activist investor Elliott Management’s plans for the company. n November 2016, Elliott Management disclosed a stake in the company and asked Cognizant to cut costs to raise its margin, return capital to shareholders and shake up its board. In February 2017, the company followed all the demands made by Elliott’s committed $3.4 Bn in share repurchases and dividends over two years, embracing automation, rationalizing staff and shifting focus towards higher margin digital business.
While Karen McLoughlin, Chief Financial Officer has shared that over the coming quarters they intend to bring the cost structure closer in line with their revised revenue expectations, the task will not be easy especially when it happens at the cost of several jobs.
The layoffs may not be avoidable for Cognizant at this stage, but how they handle them can be monitored well. As employees who might lose their jobs will mostly be from the middle level, Cognizant has to be mindful about their future going forward as well. The firm can help them make the transition through strong recommendations and help them take the next steps. How Cognizant manages these layoffs will be crucial for their employer brand.
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