Approximately 400 senior executives of Cognizant have accepted the company's voluntary separation package, in a move which is touted to help save about $60 million annually. The US-based company had initiated a voluntary separation programme, offering up to nine months of salary to some of its top-level executives in the US and India.
With a significant part of its total 256,000 workforce in India, it is reported that of the 400 who opted for the separation, many could be from the country. “Of the $39 million of realignment charges, $35 million was for the roughly 400 associates who accepted our VSP. We expect approximately $60 million of annualised savings as a result of the VSP,” company CFO Karen McLoughlin said. She added that Cognizant expects to incur additional cost related to advisory fees, severance, lease termination, and facility consolidation costs in the remaining part of the year. McLoughlin said the company has made “good headway” in the June quarter driving utilisation rates higher by “slowing the pace of our hiring and improving resource alignment” to its re-skilling and multi-skilling programmes.
The overall headcount decreased by about 4,400 people at the end of June, from March 2017 quarter, even though it had hired 10,800 people during the June quarter. “Our attrition level was higher than normal given reductions resulting from performance evaluations and the voluntary separation programme,” the CFO said. Adding that while the company will carefully manage headcount, it will continue to hire and invest in critical skills needed to grow Cognizant's digital business.
Cognizant president Rajeev Mehta said the company was investing “tens of millions of dollars” this year to continuously deepen and broaden skills in areas like analytics, artificial intelligence, data science, and digital security.