In 2023, Cognizant incurred $115 million in employee separation costs and $114 million in facility exit and other costs totalling $229 million, or 1.2 per cent as a percentage of the revenues for the year ended December 31, 2023, in connection with the company’s NextGen programme launched in May 2023. It expects to incur total costs of approximately $300 million with approximately $70 million of such costs anticipated in 2024, said the US-based IT company in its 2023 annual report.
The NextGen programme was aimed at simplifying its operating model, optimising corporate functions, and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. Personnel-related actions of this programme were expected to impact approximately 3,500 employees, or approximately 1 per cent of the workforce, the company then announced.
The estimates of the charges and expenditures that the company expects to incur in connection with the NextGen programme, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen programme.
Cognizant expects the NextGen programme to be completed by the end of 2024, the annual report says.
Employees
The company had about 347,700 employees at the end of 2023 — 254,000 in India, 40,500 in North America, 16,300 in Continental Europe, 8,500 in the UK and 28,400 elsewhere. This represents a decrease of 7,600 employees from December 31, 2022. The company said it utilises subcontractors to provide additional capacity and flexibility in meeting client demand, though the number of subcontractors has historically been immaterial relative to the employee headcount.
For the years ended December 31, 2023, and 2022, the company had voluntary attrition — tech services was 13.8 per cent and 25.6 per cent, respectively, said the annual report.
On the business outlook, Cognizant said it is focusing on expanding its partner ecosystem across a broad range of technology companies, including hyperscalers, cloud providers, enterprise software companies, best-in-class digital software enterprises and emerging start-ups. This partner ecosystem will enable the company to enhance its innovative, integrated offerings, by combining third-party products with our service solutions, to deliver enterprise-wide digital transformation.
The company is also increasingly using AI-based technologies, including GenAI, in its client offerings and in its own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to make significant investments in our AI capabilities to meet the needs of our clients and harness its value in a flexible, secure, scalable and responsible way. As AI-based technologies evolve, we expect that some services that we currently perform for our clients will be replaced by AI or forms of automation. This may lead to reduced demand for certain services or harm our ability to obtain favourable pricing or other terms for our services, said the annual report.
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Published on February 16, 2024
