US-based Cognizant Technology Solutions Corp, which has most of its workforce in India, reported a 29 percent year-on -year fall in profit at $361 million for the April-June quarter as the coronavirus outbreak and ransomware attack hit revenue.
The company’s clocked a profit of $509 million in the same period last year.
The company, which is based in Teaneck in New Jersey, reported a 3.4 percent year-on-year decline in revenues to $4 billion for the second quarter ended June 30, 2020.
About two lakh of its 2.8 lakh employees are based out of India.
“Revenue across our business segments was negatively impacted by the COVID-19 pandemic and the ransomware attack, primarily in the month of April,” the company said in a statement.
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Except healthcare, other businesses such as financial services, products and resources and communications and media and technology declined.
“Revenue and bookings improved sequentially through May and June, with increased client demand in areas such as cloud and enterprise application services, IT modernization and digital engineering,” the statement added.
More high level layoffs
The quarter also saw another high level exit. Chief Financial Officer Karen McLoughlin is stepping down and Jan Siegmund will take over as CFO from September 1. McLoughlin will remain in an advisory role till the end of the year.
This follows the exits of Ramkumar Ramamoorthy, Cognizant India head, and Pradeep Shilige, Global Delivery Head.
Fit for growth plan
Under its Fit for Growth Plan updates, which aims to cut cost and optimise the operating model, the company’s headcount fell by 10,000.
Of the 15,000 employees targeted under the plan, 5,000 were reskilled and others let go off, going by the company’s statement. Cognizant has spent $170-200 million, which includes employee severance packages.
Early this month, Moneycontrol reported that the company was laying off its bench resources and the numbers could be high.
In the content moderation business, which the company exited in 2019, the head count fell 4,500 and had an annualised revenue loss of $225 million.
The company expects revenue to be in the range of $16.4-16.7 billion, or a decline on a constant currency basis of 2 - 0.5 percent.
Starting August, the company will roll out a new strategy to accelerate digital focus in the wake of the coronavirus pandemic, CEO Brian Humphries said during the earnings call.
According to Humphries, the pandemic has single-handedly accelerated the shift to digital, creating enormous opportunities. “Cognizant intend to capture this,” he added.The strategy, Cognizant Agenda, was intended to execute the same by accelerating digital, optimise core business and reskilling employees, the CEO said.