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Too many top level exits in Cognizant in the last one year. Here's why

The company had seen at least half a dozen top level exits and termination of thousands of mid and senior employees since Brian Humphries took over

July 11, 2020 / 06:56 PM IST
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In a surprise development on July 9, NASDAQ-listed Cognizant’s India head Ramkumar Ramamoorthy quit after a 23 years stint. He had only taken over as the India chief on September 2019.

Of course, it is hardly an isolated event as the company has been witness to a series of top level exits since Brian Humphries became the CEO starting April 1, 2019.

There are several obvious reasons. “The executive churn is inevitable in any company whenever a new CEO takes charge. Most executives who left had been with the firm for close to 15-20 years, i.e. since the time of Francisco D’Souza,” said Pareekh Jain, founder, Pareekh Consulting, a tech consultancy firm.

With the pressure to perform and Humphries’ focus to bring back growth in Cognizant, there was an immense pressure to perform. In addition, Humphries took drastic measures to cut down costs and focus on growth.

This includes restructuring of sales team, getting out of the content moderation business that impacted 6,000 employees and termination of 7,000 mid- and senior employees in 2019. Earlier, the company offered voluntary separation package to close to 400 mid and senior employees, reports suggest.

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The recent pandemic and ransomware attack have not helped either, accelerating the top level exits, experts told Moneycontrol.

Those who resigned in the last one year include senior vice presidents such as Jaideep Poondir, Rajesh Balaji, and Vinayambika Kidiyur, Archana Ramanakumar and Vikash Gaur. Most recent being Ramamoorthy and Global Delivery Head Pradeep Shilige, both Cognizant veterans.

However in all these exits, Ramamoorthy’s resignation does stand out. He will leave the company effective July 17, after serving the full notice period.

In a LinkedIn post, he has said, "In the past few months, I felt a strong desire to double down on my abiding passion (also my first calling!) — education, skilling and mentoring entrepreneurs. I am all set to explore that world again from July 17."

His resignation too could have come at the back of pandemic, pressure to perform and the ongoing restructuring exercise.

Jain explained that, as an India head, Ramamoorthy's role was to build Cognizant’s brand in India, which accounts for majority of the company's workforce as most of the leadership was based overseas.

“When D’Souza was the CEO, the India connect was there. But after Brian, Cognizant did not have the Indian connect despite the country being the largest delivery centre unlike its peers,” Jain explained.

For firms such as Infosys, Tata Consultancy Services (TCS), HCL Technologies or Wipro, even if the leadership is based overseas, the promoters are based in India. Indian presence is important to get the competitive talent in the country, with more than 2 lakh of its 2.9 lakh workforce based here.

It is one of the reasons why most of the multinationals have India heads, even if they don’t have significant functional roles. “Ramamoorthy having served the company for over 20 years was that face,” another analyst said.

Pandemic and ransomware attack that cost the company close to $50-70 million could have led to this decision, the analyst added.

According to a BusinessLine report, the company is looking for a replacement. However, Jain said this might not happen immediately. “They need a face in India. But it might not be a priority.”

The priority would be to bring back growth and stability.

Till about few years back, Cognizant was a bellwether growing at double digit even when its peers such as Infosys scaled back after the global economic slowdown. According to reports, Cognizant grew at the rate of 48 percent between 2004 and 2008 and 28 percent between 2009 and 2013. For instance, Infosys grew close to 15 percent in 2010, whereas its growth was close to 40 percent in 2005.

However, the recent times have seen Cognizant’s numbers slump. The company that was growing in double digits saw single digit growth. The company slashed its guidance at the back of the pandemic.

Swathi Moorthy
first published: Jul 10, 2020 08:52 pm