Cognizant To Lay Off 3,500 and Gives up Office Space to Save Cost

IT major Cognizant is considering following the ranks of other tech companies such as Wipro, etc by gearing up to follow the layoff trend. According to Moneycontrol’s reports, the tech giant is considering giving a pink slip to 3,500 employees. The decision is a result of a pace reduction in the company’s revenue this year. Hence, Cognizant is taking cross-cutting measures. In addition to letting go of thousands of people, it will also be giving up 11 million sq feet of its office space.

These actions to revitalize the company were unveiled by the newly hired CEO Ravi Kumar S. He confronts a difficult assignment in reviving the Nasdaq-listed IT giant, which competes with companies like Accenture, TCS, and Infosys. Despite being listed in the US, the company’s operations are primarily based in India. In reported terms, Cognizant’s revenue projection ranged from $19.2 to $19.6 billion, or -1.2 to 0.8 per cent, or -1 to 1 per cent growth in constant currency for the entire year. It projected revenue between $4.83 and $4.88 billion for the second quarter, down 1% to flat in constant currency, or -1.6 to -0.6%.

Cognizant’s margins, which are comparable to Tech Mahindra’s, are among the lowest in the IT sector at 14.6%. The company has predicted that its adjusted operating margin will be between 14.2 and 14.7% for the entire year.

In the first quarter of FY23, which Kumar handled most of the time, Cognizant outperformed analyst estimates. On January 12, he succeeded Brian Humphries, who had been “involuntarily terminated” as CEO. The industry is experiencing various challenges at the moment, including a change in leadership and a new chairman of the board.

On an annual basis, Cognizant’s net profit increased by 3%, while sequential profit growth was 11.2 per cent. The company’s revenue came in at $4.81 billion, down 0.3% from the previous year but up 1.5% in constant currency. This exceeded the forecast’s revenue estimate, which ranged from $4.71 to $4.76 billion.

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