US-based Cognizant Technology Solution has offered a ‘voluntary separation incentive’ to its top-rung staff.
The voluntary separation incentive of the Nasdaq-listed software company, which employs over 2.6 lakh people, of whom over 75 per cent are in India, represents a ‘very small percentage of our total workforce’, said a company source. A voluntary separation incentive, also referred to as a buyout, is a lumpsum payment made to eligible employees who separate through resignation, optional retirement, or early retirement.
This voluntary initiative is being communicated to management-level associates — from director-level to senior vice-president — and eligibility is at the discretion of Cognizant leadership. “Details of the incentive are not being disclosed,” he said.
The voluntary separation incentive package is part of the company’s plan to accelerate the shift to digital and taking steps to ensure that that workforce is appropriately aligned to deliver sustained, high-quality growth, said a Cognizant spokesperson.
“We are focussed on making sure that we have the team, capabilities and IP to serve our clients in the digital era. Doing so will make Cognizant even stronger and we are confident we are well-positioned to drive long-term shareholder value as we continue investing in our employees and in exciting new areas of growth,,” the spokesperson said.
Ryan Blanchard, Analyst, Professional Services, Technology Business Research, Inc, a US-based analyst who tracks Cognizant, told BusinessLine the company has seen significant turmoil since last year. “It started with the abrupt departure of their president (Gordon Coburn) and slowing revenue growth, particularly in the Consulting and Technology Services space.”
Recently, the head of Cognizant’s consulting unit left, and was replaced by Chell Smith, formerly with Ernst&Young. While this was not announced with the voluntary departures, it is an indication that the company and its investors are not happy with recent performance, he said.
In the short-term, Cognizant’s peers, particularly in India, will likely try to “capitalise on the temporary moment of weakness and unseat Cognizant on contracts that are coming up for re-compete”.