18,000 Cognizant workers may get pink slip, most from India
Sindhu Hariharan & Shilpa Phadnis TNN
Chennai/Bengaluru:1.11.2019
In the largest layoff exercise ever in the Indian IT sector, Cognizant will part with some 18,000 people in the coming months.
About 6,000 of these will be from the content moderation business that Cognizant does for Facebook. The company, which will exit this business, said it will try to find new homes for the employees involved.
The remaining are mid-tosenior-level employees who the company indicated are not adding much value. While the company did not provide a split, most of the layoffs are likely to be in India, which has more than 70% of Cognizant’s 2.9 lakh employees. Cognizant CEO Brian Humphries, who took over in April and who has been taking major steps to revitalize the company, said they looked at the employee pyramid and found there had been excessive growth in the director plus population in Cognizant in recent years and also in non-billable resources. The Facebook content moderation business has been a thorn in Cognizant’s foot.
TVS Motor & Bajaj Auto end DTSi war
Ten years after TVS Motor and Bajaj Auto sparred over digital twin spark ignition or DTSi technology patent rights, both parties have agreed to ‘amicably settle’ the dispute. While Bajaj claimed ownership for the patent , TVS had said its engine was developed in collaboration with AVL, Austria, and filed a ₹250-crore defamation suit against Bajaj. P15
‘Layoffs in mid/senior levels tough, but necessary to compete with IT players’
The Verge journalist Casey Newton in February investigated the working conditions of the employees in this business and found them severely wanting, and noted that while the median Facebook employee earns $240,000 annually in salary, bonuses, and stock options, a content moderator working for Cognizant in Arizona earns just $28,800 a year.
The work involves determining whether certain content violates client standards and whether they involve objectionable materials. “We’ve determined that this subset of work is not in line with our strategic vision for the company. We recognise cleansing the web is a worthy cause, and one in which companies have a role to play. For this reason, we decided to allocate $5 million to fund research aimed at increasing the level of sophistication of algorithms and automation, thereby reducing users’ exposure to objectionable content,” Cognizant management said in an investor call on Thursday.
Humphries said the company can work with its platform partners to review how it could potentially transfer the employees to a new home “once we complete our contractual obligations to our vendors.”
Cognizant started to simplify its structure at the top and mid-level earlier this year, with cumulative savings from actions taken in previous quarters of the fiscal resulting in annualised savings of over $100 million. The current cost optimisation drive will end by 2020 and result in total charges of approximately $150-200 million in severance and exit costs, and bring annualised gross savings run rate of around $500-550 million in year 2021, the company said.
Phil Fersht, CEO of HfS Research, believes layoffs in the mid/senior levels are tough, but necessary to compete on niche digital projects with mid-cap IT players with lesser mid management weight. “There is an excessive layer of middle management in Cognizant, not unlike several of its competitors, and this impedes the firm’s ability to price competitively in a cut-throat market,” he said.
Cognizant said it continues to recruit and hire talent around the world with a focus on its digital priority areas. It said it plans to hire 5,000 for its digital operations.
The exit from the content moderation business will result in a revenue loss for Cognizant of $240-$270 million on an annualised basis in its communications, media and technology (CMT) segment. Moshe Katri, MD of US-based Wedbush Securities, said the management is targeting adjusted operating margin in 2020 to be in the range of 16%- 17%. “The new CEO’s ambitious `disruptive’ strategic plan effectively makes 2020 an investment year (sales, infrastructure, skill sets, acquisitions), which will likely also showcase a much more competitive Cognizant in the large deal space,” he said.
Sindhu Hariharan & Shilpa Phadnis TNN
Chennai/Bengaluru:1.11.2019
In the largest layoff exercise ever in the Indian IT sector, Cognizant will part with some 18,000 people in the coming months.
About 6,000 of these will be from the content moderation business that Cognizant does for Facebook. The company, which will exit this business, said it will try to find new homes for the employees involved.
The remaining are mid-tosenior-level employees who the company indicated are not adding much value. While the company did not provide a split, most of the layoffs are likely to be in India, which has more than 70% of Cognizant’s 2.9 lakh employees. Cognizant CEO Brian Humphries, who took over in April and who has been taking major steps to revitalize the company, said they looked at the employee pyramid and found there had been excessive growth in the director plus population in Cognizant in recent years and also in non-billable resources. The Facebook content moderation business has been a thorn in Cognizant’s foot.
TVS Motor & Bajaj Auto end DTSi war
Ten years after TVS Motor and Bajaj Auto sparred over digital twin spark ignition or DTSi technology patent rights, both parties have agreed to ‘amicably settle’ the dispute. While Bajaj claimed ownership for the patent , TVS had said its engine was developed in collaboration with AVL, Austria, and filed a ₹250-crore defamation suit against Bajaj. P15
‘Layoffs in mid/senior levels tough, but necessary to compete with IT players’
The Verge journalist Casey Newton in February investigated the working conditions of the employees in this business and found them severely wanting, and noted that while the median Facebook employee earns $240,000 annually in salary, bonuses, and stock options, a content moderator working for Cognizant in Arizona earns just $28,800 a year.
The work involves determining whether certain content violates client standards and whether they involve objectionable materials. “We’ve determined that this subset of work is not in line with our strategic vision for the company. We recognise cleansing the web is a worthy cause, and one in which companies have a role to play. For this reason, we decided to allocate $5 million to fund research aimed at increasing the level of sophistication of algorithms and automation, thereby reducing users’ exposure to objectionable content,” Cognizant management said in an investor call on Thursday.
Humphries said the company can work with its platform partners to review how it could potentially transfer the employees to a new home “once we complete our contractual obligations to our vendors.”
Cognizant started to simplify its structure at the top and mid-level earlier this year, with cumulative savings from actions taken in previous quarters of the fiscal resulting in annualised savings of over $100 million. The current cost optimisation drive will end by 2020 and result in total charges of approximately $150-200 million in severance and exit costs, and bring annualised gross savings run rate of around $500-550 million in year 2021, the company said.
Phil Fersht, CEO of HfS Research, believes layoffs in the mid/senior levels are tough, but necessary to compete on niche digital projects with mid-cap IT players with lesser mid management weight. “There is an excessive layer of middle management in Cognizant, not unlike several of its competitors, and this impedes the firm’s ability to price competitively in a cut-throat market,” he said.
Cognizant said it continues to recruit and hire talent around the world with a focus on its digital priority areas. It said it plans to hire 5,000 for its digital operations.
The exit from the content moderation business will result in a revenue loss for Cognizant of $240-$270 million on an annualised basis in its communications, media and technology (CMT) segment. Moshe Katri, MD of US-based Wedbush Securities, said the management is targeting adjusted operating margin in 2020 to be in the range of 16%- 17%. “The new CEO’s ambitious `disruptive’ strategic plan effectively makes 2020 an investment year (sales, infrastructure, skill sets, acquisitions), which will likely also showcase a much more competitive Cognizant in the large deal space,” he said.
No comments:
Post a Comment