As many as 400 senior executives of Cognizant have accepted the company's voluntary separation package (VSP), a move that the US-based company said will help it save about $60 million (Rs 3,900 crore) annually.
It is estimated that a large number of them could be from India, though the company did not reveal how many Indian executives accepted the offer. About 1.5 lakh employees of Cognizant's total 2.56 lakh workforce are in India.
The development comes after Cognizant's offer in May to pay up to nine months' salary as part of the package to some of its top-level executives in the US and India. "Of the $39 million of realignment charges, $35 million was for the roughly 400 associates who accepted our VSP.
We expect approximately $60 million of annualised savings as a result of the VSP," said Cognizant CFO Karen McLoughlin at a recent investor call. She added that Cognizant expects to incur additional cost related to advisory fees, severance, lease termination, and facility consolidation costs in the remaining part of 2017.
McLoughlin said the company has also made good headway in the June quarter driving utilisation rates higher by slowing the pace of our hiring and improving resource alignment to its re-skilling and multi-skilling programmes.
Cognizant's overall headcount decreased by about 4,400 people at the end of June from March 2017 quarter, even though it had hired 10,800 people (gross) during the June quarter. She explained that these adjustments will help improve the company's profitability.
"Our attrition level was higher than normal given reductions resulting from performance evaluations and the voluntary separation programme," said McLoughlin. She added that while the company will carefully manage headcount, it will continue to hire and invest in critical skills needed to grow Cognizant's digital business.
The annualised attrition rate for Cognizant stood at 23.6 per cent, including BPO and trainees, during the June quarter from 17.1 per cent in the year-ago period. ... we expect attrition to decline in the coming months, she said. Cognizant President Rajeev Mehta said the company is investing tens of millions of dollars this year to continuously deepen and broaden skills in areas like analytics.