New Delhi: Cognizant, a major IT services company, has announced plans to lay off 3,500 employees, or roughly 1% of its workforce. The layoffs are part of the company’s ‘NextGen’ program, which aims to simplify its operating model, optimize corporate functions, and consolidate and realign office space to reflect the post-pandemic hybrid work environment. The company also plans to reduce its real estate costs by “eliminating 80,000 seats and 11 million square feet in large cities in India”.
Cognizant has attributed the layoffs to slowing revenue growth in 2023. The company reported a 3% year-on-year rise in its net profit to $580 million in the March quarter of FY23, but its revenue declined 0.3% year-over-year to $4.8 billion in Q1 2023. The company expects the savings generated by the NextGen program to help fund continued investments in people, revenue growth opportunities, and the modernization of office space.
Cognizant’s total employee headcount at the end of the first quarter was 351,500, a decrease of 3,800 from the previous quarter and an increase of 11,100 from Q1 2022. The company expects the personnel-related actions of the NextGen program to impact approximately 1% of its workforce.
In addition to the layoffs, Cognizant plans to operate with fewer layers in an effort to enhance agility and enable faster decision-making. The company expects the NextGen program to cost approximately $400 million, with approximately $350 million of such costs anticipated in 2023 and approximately $50 million in 2024.
Cognizant’s decision to lay off employees and reduce office space comes at a time when many companies are reevaluating their real estate needs in the wake of the pandemic. With more employees working remotely, companies are realizing that they may not need as much office space as they once thought. At the same time, many companies are looking to reduce costs in response to slowing revenue growth.
Cognizant’s decision to lay off employees has sparked concern among workers and labour advocates. Some workers have expressed frustration with the lack of transparency around the layoffs and the criteria used to select which employees would be let go. Labour advocates have called on the company to ensure that workers are treated fairly and that they receive adequate severance packages.
Overall, Cognizant’s decision to lay off employees and reduce office space reflects the challenging economic environment facing many companies today. As businesses continue to adapt to the post-pandemic landscape, they will need to find ways to reduce costs and remain competitive while also supporting their employees and investing in their future growth.
