Bangalore: Cognizant Technology Solutions said that 400 of its executives have accepted a voluntary separation program (VSP), which started a few months ago, which should translate into an annual savings of about 60 million dollars.
The company launched the VSP in May, which offers up to nine months of salary as part of some of its top executives in the US. And India.
The move is part of the expansion plan of the listed company Nasdaq to improve margins and employee utilization in a rapidly evolving computer environment that has been under pressure due to automation and lower revenues from existing operations.
“In the second quarter, we have taken steps to improve our cost structure and operating margins instead of allowing us to continue to invest in economic growth.
These actions resulted in charges of approximately $ 39 million in connection with the reorganization project, mainly due to compensation costs, including those related to was launched and concluded in the second quarter voluntary separation program, CFO Karen McLoughlin said during a call after earnings analysis last week.
It was not immediately clear how many Indian executives have accepted the company’s offer, but given that more than 70% of the Conscious staff is based in that country, the number could be on the higher side according to more conservative estimates.
The company said the cost of the $ 39 million readjustment was $ 35 million for partners who have accepted their VSP. He also expects additional costs for consulting fees, severance pay, termination of the lease and consolidation costs for the facility for the remainder of the year.
McLoughlin said in February that the company aimed to improve costs through optimization, smart procurement, simplification of the top structure of the business unit and the use of corporate function expenses to increase operating margin, which is Significantly lower than its Indian rivals Infosys and TCS.
For the first time, Conscious also reported a decrease of 4 400 jobs in its workforce, the growth of its workforce to 256,800 at the end of June of 261,200 at the end of March. The decrease was attributed to performance evaluations and voluntary separation program.
“Although we will of course manage to count, we will continue to hire and invest in the essential skills necessary for the growth of our digital business, and we expect the wear and tear will decrease in the coming months,” he said.