Why is Cognizant cutting 12,000 jobs?
In the firing line
Cognizant will let go of as many as 7000 jobs in the next few quarters and exit its content moderation business, impacting another 6000 employees, as it begins a strategic restructuring to cut jobs.
Why is it letting go of staff?
The layoffs underscore Cognizant’s ambition to regain its growth bellwether status and knock a few rivals off their perch. In a post-earnings conference call with analysts, the Teaneck, New Jersey-headquartered company said it would remove 10,000-12,000 mid-to-senior employees from their current roles, and reskill and redeploy about 5000 of those impacted.
Exits content business
Cognizant is also exiting its content moderation business for clients such as social media giant Facebook. The company has come in a significant scrutiny for the working environment of the moderators and the impact of the work on their mental health.
No death by a thousand cuts
“I do not believe in death by a thousand cuts, I would rather pull the Band-Aid off and get it behind us and set the context as to why this is critical and fast forward to the future,” the firm's CEO Brian Humphries had said earlier.
Saving for the future
“We need to be draconian with the cost structure and use those savings to fund the future,” he said.
Fit for growth
Humphries, who joined Cognizant in April, plans to reduce costs to ‘self-fund’ some investments and make the IT services exporter ‘fit-for-growth.’ The company had grown strongly over the past 25 years even though growth has been disappointing over the last few years but it was in the process of ‘ripping out cost.’
“It’s almost like having lived in a house for 20 years, having never moved and having not done spring cleaning. When you do move, you tend to find a lot of stuff you don’t really need anymore,” Humphries said. “At Cognizant, we need new eyes, a new perspective and to hone in on what we have that are hobbies and what is critical.”
Catching up with rivals
Lowering costs will also help the company better compete for deals, the CEO said, as the company had lost contracts to Tata Consultancy Services and Infosys because it did not have the cost structure to bid efficiently.