US-based IT services firm Cognizant has recently offered a voluntary separation package for select employees in the United States. As the company weighs its prospect due to the COVID-19 pandemic, it has offered the scheme to employees who move to the bench between May 1 to August 31, 2020.
According to an internal email, the company said that it is introducing a Voluntary Separation Package (VSP) for US employees moving to the bench between May and August as the pandemic has caused a decrease in demand across functions. The package includes eight weeks of pay and health insurance benefits for three months.
The company has currently given 14 days to its employees to think over the scheme and decide whether they want to opt for the severance package or want to continue on the bench. According to various sources, the offer has only been made to US-based employees on bench as of now. However, the company may look at extending that to other employees in onsite (international) locations.
According to an Economic Times report, Cognizant is enhancing its bench policy by offering additional cash and extended health benefits to those who are or will become unutilized and for whom the company does not foresee future opportunities.
Cognizant recently withdrew its 2020 guidance citing the uncertainty arising out of the Covid19 pandemic. Its new CEO Brian Humphries recently said they would look at tweaking bench policies.
“Against today’s COVID-19 backdrop, we feel that traditional industry bench policies do not adequately address the interest of the impacted employees. Consequently, any employee impacted by demand/supply imbalances may benefit from extended medical coverage and exit packages through the end of the third quarter,” said a company spokesperson.
Meanwhile, according to a Times Of India report, around 400 executives holding the title of directors, senior directors, associate vice-presidents (AVPs), VPs and SVPs, would be asked to leave the IT firm in a staggered manner.
The company had a similar exercise in 2018 when it laid off about 200 senior executives at the Director level and above. A year before that it had also offered a voluntary separation scheme to 400 senior employees. However, the new CEO believes that there are still too many people in the middle and top.
Commenting on the recent development, a company spokesperson said, “In a people-intensive business like ours, effectively managing our workforce is a key element of aligning our cost structure with revenue. We have 290,000 employees serving clients worldwide. Like all services firms, we routinely manage supply and demand with a bench of unutilized employees.”
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