Bengaluru: IT services major Cognizant is looking at trimming its senior-level headcount, a move that will result in severance costs of up to USD 35 million for the company, its CFO Karen McLoughlin said.
The company, which has a significant portion of its employees based in India, had a total headcount of 2,68,900 at the end of June 2018. “During the remainder of 2018, we intend to continue to improve our cost structure by further optimising the higher end of our resource pyramid,” she said at the company’s investor call after the Q2 results.
As a result of these actions, Cognizant expects to incur USD 25 million to USD 35 million in severance costs, McLoughlin said. Cognizant follows the January to December calendar as its financial year.
“Cognizant’s separation program has been designed to realign our workforce with our business strategy and recalibrate the personnel pyramid at the upper levels. This program involved few hundred people globally,” a company spokesperson said in response to an email query by PTI on the impact, overall and for India.
The spokesperson added: “When any organisation, especially one of our size, goes through a transition, the human resource management has to attune the workforce to changing business and technology demands. We are confident that our program will help us navigate this shift to digital and help us provide the digital at scale transformation that our clients require.”
Further, McLoughlin said this year, the company has split the timing of the raises and the promotions. Raises and promotions for the bottom half of the pyramid, for junior folks will happen in Q3 and for the more senior folks will happen in the Q4 time frame,” she said.
For the quarter ended June 2018, Cognizant posted 2.97 per cent drop in its net profit at USD 456 million, hurt by non-operating foreign exchange losses on account of rupee depreciation and the initial funding of Cognizant US Foundation.
Its revenue crossed USD 4 billion in the April-June 2018 quarter, up from USD 3.6 billion in the year-ago period, said Cognizant, which follows a January-December cycle as its fiscal year.
For the third quarter, the company expects its revenue to be in the range of USD 4.06 billion to USD 4.10 billion. Its full-year revenue is forecast to be in the range of USD 16.05 billion to USD 16.30 billion.
“As our second-quarter results confirm, we’re making solid progress on our plan to accelerate our shift to digital services and solutions,” Cognizant CEO and Vice Chairman Francisco D’Souza had said.
The company remains confident of its ability to invest for growth and achieve its financial targets, he added. The company had added 7,500 employees (net) in the June 2018 quarter, taking its total headcount to over 2.68 lakh at the end of June 2018.