(File photo)

BENGALURU: Nasdaq-listed Cognizant initiated rationalisation of its top deck with a ‘voluntary separation’ programme at the director level and above in June with a generous severance payout of up to a year’s salary and other stock benefits based on their tenures in the company.

The voluntary separation programme could be for 300-400 executives holding the title of a director, including assistant vice-presidents and VPs, sources said. The company is learnt to have identified executives who are going to be part of the separation programme in India, the US and other geographies, they added. These senior executives would be counselled and offered outplacement services.

Under its new CEO Brian Humphries , who has taken a dispassionate view on the company, Cognizant wants to regain its mojo after a drubbing it received from its peers and is expected to grow at most by 5% this year, down from over 20% just a few years ago. Humphries is going back to the basics with a two-pronged approach—strengthening execution and improving the cost structure.

The top-deck shake-up is an attempt to keep the pyramid lean to improve its margins and accelerate revenue growth that has taken a beating in the last few quarters. Cognizant said, “It is business as usual at Cognizant. As our CEO said on the Q1 earnings call earlier this month, our focus is on getting fit for growth and providing opportunities of growth to our more than 285,000 associates around the globe. ”

Ray Wang, CEO of Constellation Research, said, “The Cognizant layoffs in the D (director and above) band reflect the constant cost cutting you’ll from the new leadership. Expect layoffs of senior folks who have higher salaries with a focus on bringing in more younger talent. This will be blended with those with newer skill sets that are needed to add to the digital talent.”

Some two years ago, Cognizant embarked on realigning its business to accelerate the shift to digital services while improving the overall operational efficiency. In 2017, Cognizant incurred $72 million in realignment charges that includes employment separation charge of $53 million. For the year ended December 2018, Cognizant had $18 million in severance payout. However, there were no realignment charges in 2015 and 2016. Last year, Cognizant let go off about 200 senior employees at the director level and above and the programme was involuntary while the year before that, it offered a voluntary separation scheme to 400 senior employees.



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