Cognizant to fire 400 senior executives: Report
The severance package has been reduced from 20 weeks' salary to three months' pay plus one-week pay for every year of service completed.
May 28, 2020 / 10:04 AM IST
Cognizant's net profit declined 29 percent to $361 million in the June quarter due to COVID-19 pandemic (Image Courtesy: Wikimedia Commons)
Software major Cognizant will ask around 400 senior executives to leave as it looks to cut costs and improve delivery efficiency.
The said executives include directors senior directors, associate vice-presidents (AVPs), VPs and SVPs, The Times of India reported.
The severance package has been reduced from 20 weeks' salary to three months' pay plus one-week pay for every year of service completed, the report said.
Moneycontrol could not independently verify the story.
The move is a part of Cognizant's "realignment programme”, The Times of India reported.
"We have 290,000 employees serving clients worldwide. Like all services firms, we routinely manage supply and demand with a bench of unutilised employees. What distinguishes us is that we are enhancing our bench policy by offering additional cash and extended health benefits to those who are or will become unutilised and for whom we unfortunately do not foresee future opportunities," a Cognizant spokesperson told the publication.
In 2018, Cognizant gave the pink slip to 200 senior employees, who had designations of director and above, the report said. The following year, it offered a voluntary retirement scheme to 400 senior staff.
In 2019, Cognizant recorded costs of $22 million on executive transition (paid to leaders who leave the firm), $64 million on employee separation, $45 million on employee retention and $38 million in third-party realignment, the report said.
"We anticipate that the employee separations completed as part of our realignment programme will reduce our compensation expense by approximately $140 million on an annualised basis,” the company said in its annual report.