Cognizant will lay off 3,500 employees as part of its restructuring plan

The consulting company Cognizant is laying off about 3,500 employees, which represents an approximate 1% reduction in the global workforce. The cut, according to the company, is part of NextGen’s restructuring plan, which also envisages reducing its office space to lower its costs.

Despite its 3% earnings growth last year, Cognizant appears wary of what it called “An uncertain macroeconomic environment, with the potential for changes in customer priorities«. This has been pointed out Its CEO, Ravi KumarAnd In a meeting with analysts And other interested parties after publication The results of the first quarter of the company 2023.

NextGen’s restructuring program, in addition to cutting costs, is designed to streamline Cognizant’s operating model. Also, as mentioned, to bring Cognizant’s office space online in a hybrid work format. They will also move towards an operating model with fewer layers with a view to “Improve agility and enable faster decision making«.

Cognizant has a presence in various countries around the world, and it is currently unknown what will be affected by the layoffs. What they confirmed from the consultant is that the majority will be positions that do not require direct work with clients.

Implementing the NextGen plan will cost Cognizant approximately $400 million. Half of those will go towards compensation for laid-off workers, as well as costs associated with job cuts. The remainder will be used to consolidate the office space. 350 of them are expected to be attributed in 2023, and the remaining 50 million will be due in 2024.

The impact of the restructuring on space will be most noticeable in India, where the company plans to cut 80,000 jobs and more than 1 million square meters of office space in large Indian cities. At the same time, Cognizant wants to increase its office space in smaller cities, especially in the United States. according to Its chief financial officer, Jan SigmundThe economic effects and savings resulting from the implementation of the plan will appear during the second half of this year.

Of course, the cost reduction associated with office expenses won’t start to yield savings until 2024. By 2025, they at Cognizant expect to reduce annual property-related costs by about $100 million compared to 2022.