BENGALURU: The announcement made by global IT services firm Cognizant about removing 10,000-12,000 employees from mid-senior level positions could affect nearly 5,000 of its employees in India. India has approximately 69 per cent (2 lakh employees) of Cognizant’s total workforce. The New Jersey-headquartered firm is the second largest recruiter in the IT services sector in India, after TCS.
Cognizant CEO Brian Humphries told analysts during the Q3 earnings call that the company, besides removing 5000-7000 employees (2 per cent of the total headcount) directly from their roles, would redeploy 5000 associates as part of the firm’s cost-cutting measures.
The Cognizant CEO said the company will also shut down its Digital Operations services arm by the end of 2020, as a result of which an additional 6000 employees could take a hit globally. “The exit will also impact revenue in the company’s Communications, Media and Technology segment, with the ramp down in work expected to be over the next one-to-two years,” Humphries said.
The IT services major announced that its quarterly revenue rose to $4.25 billion, up 4.2 per cent (5.1 per cent in constant currency) from the year-ago quarter. Cognizant had earlier indicated that it would decide the approximate number of employees it would lay off depending on its Q3 growth. The firm had announced that it would also boost the variable component of employees’ salaries as a cost-cutting measure.
Meanwhile in India, analysts predict the Cognizant’s decision to have a massive impact on the IT Services sector as well as hiring process.
“The mid-senior level associates are taking a hit across all IT Services firms as they have become increasingly unproductive, especially with the advent of new age technology like analytics, Machine Learning, etc. Those in the 35-50 age bracket would be impacted the most,” Kris Laxmikanth, CEO of staffing company, headhunters India, told TNIE.
He said nearly 3-5 per cent of the total IT Services workforce (especially those at the mid-senior level) in India would be impacted as a result of companies laying off staff to cut costs.