CEO Brian Humphries said during an investor call on Wednesday that the company is now removing underperformers on an annual basis.

Cognizants Delivery Center in Kolkata SaltlakeImage: Cognizant Technology Services' Photostream via Flickr (CC BY-SA 2.0)
Atom IT Thursday, July 30, 2020 - 19:04

US-based IT major Cognizant announced its results for the April-June quarter, which revealed that the company’s headcount had reduced by 10,500 people in the quarter. On March 31, the company had 2,91,700 employees globally, which now stands at 2,81,200 (as of June 30). Speaking to investors, the Cognizant CEO said the voluntary attrition (employees resigning on their own) stood at 10.5%, which translates to roughly 1,100 employees. This suggests that the 9,400 employees may have been let go by the company (involuntary attrition).

Speaking to investors during the earnings call on Wednesday, CEO Brian Humphries said that the company will be focused on performance orientation in the company when it comes to employees, “which means that we are now removing the underperformers on an annual basis.”

TNM has reached out to Cognizant. The article will be updated if and when Cognizant responds. 

However, sources told TNM that not all 9,000 employees were terminated by Cognizant, but were moved to the payroll of another vendor. Around 3000-4000 employees who were part of Cognizant’s content moderation segment moderated offensive content for Facebook. When this segment was terminated late last year, these employees, the source said, were moved out of Cognizant’s payroll to another vendor that now provides the same services to Facebook.

The company has also seen a spate of senior exits from the company. Cognizant, which announced its Q2 results on Wednesday, also announced that its Chief Financial Officer Karen McLoughlin resigned after more than eight years as CFO and 17 years at the company. Karen will be replaced by Jan Siegmund as the CFO starting September 1, 2020.

“Karen will continue in her capacity as CFO through August 31st and then remain with us in an advisory role through December 31, 2020, thereby ensuring a smooth CFO transition,” Brian told investors.

This is the third senior exit from the company in July, after India CMD Ramkumar Ramamoorthy and Global Delivery Head Pradeep Shilige resigned earlier this month.

Ramamoorthy had been with the company for over 22 years. This is one among many senior level exits that the company has witnessed after CEO Brian Humphries took charge last year. The exits included senior vice-presidents Jaideep Poondir, Rajesh Balaji and Vinayambika Kidiyur, and vice-presidents Archana Ramanakumar and Vikash Gaur.

Brian said that the company has upgraded the profile of the managing director role in India to be a direct report to the executive committee, and Brian. The search for the same is underway, he said.

In October 2019, Cognizant had said that it put in place a cost reduction plan ‘Fit for Growth’ as part of which it will be removing 10,000 to 12,000 mid-to-senior level associates from their current roles. Of these, the company said 5,000 associates would be reskilled and redeployed, resulting in around 5,000-7,000 employees eventually losing their jobs in the coming quarters.

During the earning calls for Q2 results, Brian said that net headcount declined approximately 2.5% year-over-year including the roughly 7,000 associates exited under the Fit for Growth plan.

“Given the volatility we've seen in the top-line, in the early part of this year, notably because of COVID, it goes without saying that we have responsibilities vis-a-vis, our shareholders, yes, to protect digital skills. But in the same vein, we also have to protect the bottom line by optimizing our team and our bench around the revenue curve. And that's why you've seen in recent quarters a disparity between total attrition levels versus voluntary attrition levels or involuntary levels,” he added.

The company reported a 29% decline in net profit in Q2 to $361 million as against $509 million for the same period last year. Revenues came in at $4 billion, a 3.4% decline.

Cognizant has said that the macroeconomic environment remains uncertain in light of the pandemic. However, it did give a guidance. For the full year 2020, Cognizant expects revenue to decline in the range of 2% to down 0.5% year-over-year in constant currency.


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