Earlier this week, US-based Cognizant announced a major restructuring. In a letter sent to employees, Cognizant CEO Brian Humphries wrote about job cuts, delay in increments and more under the company’s ‘Fit-for-Growth’ plan. The letter says that the company will be laying off as many as 10,000 to 12,000 employees in the coming months and exit content moderation business. Though he did not reveal exact split geography-wise, India is likely to take the biggest brunt of the layoffs as it accounts for over 70% of Cognizant’s headcount.
Here are key excerpts from Brian Humphries’ email to Cognizant employees:
The refinement of our strategic posture also highlights a subset of our portfolio that’s not in line with our company’s strategic vision, and therefore an area that it makes sense to exit. Within Digital Operations, we have a Content Operation Business that offers a wide range of business process services to clients in all industries. Some of these projects involve ensuring proper brand and business experiences. But within one subset of Content Operations, our work is largely focused on determining whether certain content violates client standards, and this work can involve objectionable materials. We have determined that this subset of work is not inline with the company’s strategic vision. Exiting this subset will affect approximately 6,000 roles and impact our financial performance in the coming year. In the months ahead, we will work with our partners to explore ways to transition the work and the roles the alternative vendors, thereby reducing the impact to our valued associates.
While we intend to exit this work we recognize that cleansing the web of objectionable content is a worthy cause and one in which companies have a role to play. For this reason, we have decided to allocate $5 million to fund research aimed at increasing the level and sophistication of algorithms and automation, thereby reducing users’ exposure to objectionable content.
Growth always requires a significant investment, and the funds for this investment have to come from our cost please, which we need to right size. We must better align our costs with the strategic priorities and market opportunities of a business. as part of this effort, we are announcing a “Fit for Growth” plan to streamline our operating model, evolve our skill sets, and reduced cost.
In our people-intensive business, cost reduction always involves difficult choices. but with an eye to the long-term health of the company, we have made the decision to remove approximately 10000 to 12000 mid-to-senior level associates from their current roles in the coming quarters. This gross reduction will lead to a net reduction of approximately 5000 to 7000 roles, or about 2% of our total population, as we will aim to reskill our associates, thereby allowing us to reduce some lateral hiring in 2020. We will work with great care to treat our associates with dignity and respect they deserve. In addition, we are making changes to the Manager-plus annual salary divisions and promotions process. We are refining the process not to simply contain costs but to drive greater career mobility, just-in-time promotions, and a more meritocratic culture. Therefore for this population we are deferring all decisions on salary increases and promotions until next year.
Please keep in mind that a healthy year cost structure is a means to a clear end– driving growth. To compete and win in our four battlegrounds, we plan to make investments of over $200 million in areas that include:
* The previously announced hiring of approximately 500 revenue-generating associates over the coming year, a combination of customer-facing and sales support professionals who will help us expand existing accounts as we generate new ones.
* Significant investments in Cognizant Academy and in technical skills as we aim to reskill and redeploy our talent towards our digital imperatives.
* Accelerated investments in tooling and automation, and
* Increased investments in marketing and branding, as we aim to strengthen Our International operations and our digital brand.