Cognizant to lay off 3,500 employees; Q1 revenue down by 0.3 per cent YoY
BENGALURU, MAY 4: US-headquartered Cognizant, which has a large presence in India, will lay off 1 per cent or 3,500 employees. The company will also expand its footprint in smaller cities in India in support of its hybrid work strategy.
Cognizant, which reported a 0.3% y-o-y decline in its revenue for Q1 at $4.8 billion, said that it expects the personnel-related actions of the NextGen program, which is aimed at simplifying its operation model, to impact approximately 3,500 employees.
In connection with the NextGen program, it expects to record costs of $400 million with about $350 million of such costs anticipated in 2023 and about $50 million in 2024.
“This consists of approximately $200 million of employee severance and other costs primarily related to non-billable and corporate personnel, which we expect to mostly incur in 2023,” the company said.
It also expects to incur $200 million of costs related to the consolidation of office space, with $150 million in 2023 and $50 million in 2024. “We do not expect the NextGen program to drive meaningful cost savings until the second half of 2023 and the real estate actions will not begin to generate savings until 2024. By 2025, we expect to reduce our annual real estate costs by approximately $100 million versus 2022,” the company announced.
The company’s net profit for the first quarter of 2023 stood at $580 million, a 3% increase, compared to $563 million in the same quarter last year.
The company expects its second-quarter revenue to be $4.83 – $4.88 billion, a decline of 0.6% to 1.6%, or a decline of 1.0% to flat in constant currency. For the full-year 2023, revenue is expected to be $19.2 – $19.6 billion, or a decline of 1.2% to a growth of 0.8%, or a decline of 1.0% to a growth of 1.0% in constant currency.
“Our accelerated bookings growth in the quarter, which included several large deals and a healthy mix of new and expansion work, reflects the strengths of our services,” said Ravi Kumar S, Chief Executive Officer.
“Having spent more than three months assessing the business, meeting with over a hundred clients and thousands of employees, I firmly believe Cognizant has a strong foundation for accelerating growth, ” he added.
In 2023, the company expects to return approximately $1.4 billion to shareholders through share repurchases and dividends, including $800 million of share repurchases. Cognizant bookings in the first quarter grew 28% year-over-year. Its total headcount at the end of the first quarter was 351,500, a decrease of 3,800 from Q4 2022. Voluntary attrition – Tech Services on a trailing-twelve-month basis, declined to 23% from 26% in Q4 2022 and 30% in Q1 2022.
-TNIE
