, Cognizant mentioned its plan to layoff 3,500 employees.){kind=link}
Nearly six weeks after Accenture announced layoffs affecting around 19,000 of its employees, another IT and consulting giant has announced job cuts.
While announcing its financial results for the first quarter of 2023 (Jan-March), Cognizant mentioned its plan to layoff 3,500 employees.
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Cognizant Announces Financial Results
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Cognizant’s total headcount at the end of the first quarter was 3,51,500, including a decrease of 3,800 from Q4 2022 (Oct-Dec 2022) but an increase of 11,100 from Q1 2022 (Jan-March 2022).
The company earned a revenue of $4.8 billion in Q1, and expects second quarter revenue to be $4.83 – $4.88 billion. Cognizant also reported a 3% increase in net profit on a year-on-year basis at $580 million.
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NextGen Program To Result In 3,500 Layoffs
In the second quarter of 2023 (April-June), Cognizant initiated the NextGen program aimed at simplifying its operating model, optimising corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment.
This drive for simplification will include operating with fewer layers in an effort to enhance agility and enable faster decision-making. Cognizant expects the savings generated by the program to help fund continued investments in people, revenue growth opportunities and the modernization of office space.
Cognizant expects the personnel-related actions of this program to impact approximately 3,500 employees, or approximately 1% of its workforce.
“Our accelerated bookings growth in the quarter, which included several large deals and a healthy mix of new and expansion work, reflects the strengths of our services, our brand, and the longstanding relationships we have with our clients. I am also encouraged by the continuing reduction in our voluntary attrition,” said Ravi Kumar S, Cognizant’s CEO.
“Clients recognize how deeply we understand their businesses and how well-positioned we are to create value for them at the intersection of technology and industry use cases. Having spent more than three months assessing the business, meeting with over a hundred clients and thousands of employees, I firmly believe Cognizant has a strong foundation for accelerating growth.”
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Reduction Of Office Spaces
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In connection with the NextGen program, Cognizant expects to record costs of approximately $400 million with approximately $350 million of such costs anticipated in 2023 and approximately $50 million in 2024. This consists of approximately $200 million of employee severance and other costs primarily related to non-billable and corporate personnel, which it expects to mostly incur in 2023, and approximately $200 million of costs related to the consolidation of office space, with approximately $150 million in 2023 and $50 million in 2024.
Cognizant does not expect the NextGen program to drive meaningful cost savings until the second half of 2023 and the real estate actions will not begin to generate savings until 2024.
By 2025, it expects to reduce annual real estate costs by approximately $100 million versus 2022. This reduction in real estate costs is net of investments to expand the real estate footprint in smaller cities, primarily in India, in support of a hybrid work strategy.
Also Read: How Big Tech CEOs Justified Their Company’s Mass Layoffs
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