Business
Cognizant Takes Cost-Cutting Measures: To Lay Off 3,500 Employees, Give Up Office Space
Cognizant office in Chennai.
Cognizant, a US-listed IT services company with operations primarily based in India, is set to lay off 3,500 employees and give up office space to save costs as it expects a revenue decline in 2023.
The new CEO, Ravi Kumar S, is tasked with turning the company around and competing with industry giants like Accenture, TCS, and Infosys.
Cognizant has issued revenue guidance of $19.2 - $19.6 billion for the full year, indicating a decline of -1.2 per cent to 0.8 per cent in reported terms or -1 per cent to 1 per cent growth in constant currency.
Meanwhile, the company has forecasted a second-quarter revenue band of $4.83 - $4.88 billion, translating to a decline of -1.6 per cent to -0.6 per cent, or a decline of 1 per cent to flat in constant currency.
With a margin of 14.6 per cent, Cognizant's margins are among the lowest in the IT industry and comparable to Tech Mahindra. The company has predicted an adjusted operating margin in the range of 14.2-14.7 per cent for the full year.
Cognizant's new CEO, Ravi Kumar, oversaw most of the first quarter of FY23, during which the company beat analyst expectations. Kumar took over on 12 January after the "involuntary termination" of former CEO Brian Humphries, amid industry headwinds, reports Business Today.
The company's net profit increased by 3 per cent YoY and 11.2 per cent sequentially, while revenue stood at $4.81 billion, a decline of 0.3 per cent YoY, or growth of 1.5 per cent in constant currency. This surpassed its guidance range of $4.71-$4.76 billion.
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