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400 senior staff accept voluntary separation package: Cognizant

By Newsd
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Information technology (IT) services firm Cognizant Technology Solutions has said that its 400 senior staff has accepted a voluntary separation package (VSP). The step will aid the company save nearly $60 million this year. The voluntary separation programme was launched in the second quarter (Q) of 2017. It aimed to reduce cost and have improved utilisation as the IT services industry is seeing a slowdown.

Employees, both in the US and India, were offered nine months’ salary as compensation package as part of this programme. Cognizant reported a net reduction of 4,400 people in Q2 joining firms such as Tata Consultancy Services (TCS), Infosys and Tech Mahindra (TechM), for the first time in recent past.

“In Q2, we took some actions that will improve our cost structure and operating margins while allowing us to continue to invest in the business for growth. These actions resulted in approximately $39 million of charges related to the realignment programme, primarily from severance cost, including those associated with the voluntary separation programme that was initiated and concluded in the second quarter,” Karen McLoughlin, chief financial officer, Cognizant, said.

He stated further in an earnings call, “of the $39 million of realignment charges, $35 million was for the roughly 400 associates who accepted our voluntary separation package. We expect approximately $60 million of annualised savings as a result of the VSP.”

Out of the company’s 2,56,800 employees, the majority are based out of India. Thus, a big part of the 400 odd associates are Indian employees.

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