Cognizant Technology Solutions, one of the biggest names in the Indian IT industry could lay-off over 6,000 employees in the current appraisal cycle. This move follows Snapdeal, which let go off over 500 employees recently.
With the Indian IT sector facing hardship, companies are keen to cut costs. Cognizant is likely to fire underperforming employees, aiming to retain only those employees with updated skillsets. While typical appraisal cycles at Cognizant see 1% employee layoffs, this cycle will double this number.
In addition to the layoffs, the variable payout to employees could also take a hit.
Cognizant currently employs around 2.65 lakh individuals globally, with close to 2 lakh employed in India.
The company conducts periodic reviews to identify underperformers. As part of this restructuring, the non-GAAP (Generally Accepted Accounting Principles) operating target is to 22%. This is 2-3% higher than the 19-20% target it previously employed.
Automation across different levels has led to certain positions being redundant. Employees in such positions are likely to be the first in the firing line.
Increasing competition has led to reduced profit for Cognizant. Last year the company registered a growth of 8.6%, down from the double-digit growth it was previously accustomed to.
Additionally, it is also under pressure to return over $3 billion to investors and shareholders, leading to such drastic measures.