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Cognizant CEO plans surgical strike with job cuts by October

CEO Brian Humphries says job cuts will happen in one go as he does not want to prolong restructuring.

, ET Bureau|
Updated: Sep 06, 2019, 08.23 AM IST
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Agencies
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One of the measures being considered is raising the variable pay component of employee salaries.
Cognizant could see a slew of job cuts as early as end-October, CEO Brian Humphries indicated at an investor event in New York, to ensure that the ongoing restructuring at the company does not drag out over time.

“I do not believe in death by a thousand cuts, I would rather pull the Band-Aid off and get it behind us and set the context as to why this is critical and fast forward to the future,” Humphries said.

The announcements would be made along with the company’s third quarter results, expected next month, and to the employees ahead of that, he said.

“We need to be draconian with the cost structure and use those savings to fund the future,” he said.

Humphries, who joined Cognizant in April, said earlier it planned to reduce costs to ‘self-fund’ some investments and make the IT services exporter ‘fit-for-growth.’ The Teaneck, New Jersey-headquartered company had grown strongly over the past 25 years even though growth has been disappointing over the last few years, he said, but it was in the process of ‘ripping out cost.’ “It’s almost like having lived in a house for 20 years, having never moved and having not done spring cleaning. When you do move, you tend to find a lot of stuff you don’t really need anymore,” Humphries said. “At Cognizant, we need new eyes, a new perspective and to hone in on what we have that are hobbies and what is critical.”

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ET
earlier reported about potential job cuts at Cognizant.

A key focus will be changing the compensation structure.

One of the measures being considered is raising the variable pay component of employee salaries, ET reported, and this is particularly expected to impact the company’s sales force. Humphries said changes to sales compensation will be made in January.

Lowering costs will also help the company better compete for deals, the CEO said, as the company had lost contracts to Tata Consultancy Services and Infosys because it did not have the cost structure to bid efficiently.

“Already, I am having more pricing dialogue with the cost structure we expect to have,” Humphries said.

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