As part of the voluntary separation programme (VSP) initiated by Cognizant Technology Services a few months back, 400 executives in top positions have accepted the offer, as per a report by Avik Das in Times of India.
The move will result in annual cost savings of about $60 million.
Initiated in May, the VSP will offer up to nine months of salary as part of the package to some of its top-level executives in the US and India.
The move is aimed at improving margins and employee utilisation at a time when the IT industry is facing a slowdown due to pressure from automation.
“In Q2, we took some actions that will improve our cost structure and operating margins while allowing us to continue to invest in the business for growth. These actions resulted in approximately $39 million of charges related to the realignment programme, primarily from severance cost, including those associated with the voluntary separation programme that was initiated and concluded in the second quarter,” Cognizant CFO, Karen McLoughlin said.
The exact number of Indian executives who accepted the offer is not clear but with more than 70% of its global workforce in India, the numbers could be on the higher side, the ToI report says.
“Of the $39 million of realignment charges, $35 million was for the roughly 400 associates who accepted our VSP. We expect approximately $60 million of annualised savings as a result of the VSP,” Karen McLoughlin said.
Cognizant also reported a fall of 4,400 jobs in its employee base for the first time, in the second quarter.
The CFO added that the company will continue to hire and invest in critical skills needed to grow the digital business while attrition is expected to slow down in the coming months, the ToI report adds.