Cognizant has decided to lay off about 350 people as the company seeks to bring down costs and turn the focus more on digital from traditional technology services. The layoffs will be done from mid-to-senior level positions globally.
As per a company spokesperson, these employees are aged between 50-55 years, most of whom are based out of India and the list has been submitted to CEO Brian Humphries.
Analysts said though the number of affected people was small in this round, the company could significantly bring down costs as they are high-paying employees.
In a statement, Peter Bendor-Samuel, the Chief Executive at IT advisory and research firm Everest Group said, “This is a move to cut costs and improve margins. We can expect other moves to cut costs and this is likely to follow a model of further reorganization with some additional headcount reduction. We anticipate we are getting close to the end of this cycle. We do not anticipate this will be picked up and replicated with other service providers.”
Technology services companies such as Tata Consultancy Services, Infosys, HCL Technologies, Wipro, Tech Mahindra, and Cognizant have for decades been dependent on a business model where they billed clients based on the hours spent by employees.
With users increasingly consuming services on smartphones and handheld devices, tech service contracts are becoming outcome-based. This has disrupted the time and material based (hours put in by employees) model of these companies.
A Bengaluru-based analyst, who did not want to be named, said: “The job cuts of senior and mid-level roles would continue to happen and for Cognizant, in particular, this correction process would take another year.”
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