Cognizant close to firing 1,000 senior managers
Company may spend close to $60 million to streamline the operations.
In an unprecedented move Cognizant, the Nasdaq-listed IT company, whose operations are in Chennai, has instructed at least 1,000 of its senior managers to resign with immediate effect by opting for a voluntary exit scheme. The senior management will be given six- or nine-months’ pay as severance package, depending on their roles. The company is yet to officially confirm the move.
If Cognizant indeed goes through with the restructuring of its senior management, the exercise is likely to cost the company close to $60 million.
The IT industry‘s recent woes have been on account of margin pressures. Cognizant’s operating margins had dropped to 19 percent last year and the company hopes to take it to 22 percent this year. This incident has been triggered by Cognizant’s largest shareholder Elliott Management, which holds four percent of the company. In February, Cognizant committed to the investment firm that it would improve margins and buy back shares worth up to $3.5 billion.
Jesse Cohn, Senior Portfolio Manager at Elliott Management, said: “In an evolving industry, Cognizant must continue to invest for growth and the digital transition, while further optimising operations and returning capital to its shareholders. We are large shareholders of Cognizant because we believe the company has a strong position in the industry and can deliver compelling value to shareholders.”
Source: Your Story