The American MNC Cognizant is considering to cut down its top- heavy pyramid but is not planning mass job cuts and has raised salaries for campus graduates next year by nearly 20%, said the company’s chief financial officer.
The Teaneck, New Jersey-headquartered company slashed its revenue growth guidance earlier this month and said it was looking at cutting jobs to reduce costs. The company now expects 2019 revenue to grow 3.9-4.9% in constant currency terms. It had previously forecast a growth of 7.0-9.0% for the year.
“Our pyramid is top-heavy. This does not mean there will be layoffs of thousands of people but there are quick actions that we can take,” Karen McLoughlin, chief financial officer at Cognizant, told analysts at a conference in New York.
Cognizant, whose headcount addition had outstripped revenue growth in the fourth and first quarters, will also pare hiring going forward to bring it in line with revenue growth. Even as the company is taking steps to cut costs, McLoughlin said it was also focused on bringing in skilled talent.
“We just announced this in India, for next year’s graduating class we are taking wages up 18% and will have industry-leading pay,” McLoughlin said. Fresher salaries have not increased substantially in over five years, even though companies are focused on paying more for niche skills from top universities.
She added that the company was also looking at its variable compensation procedures to offer existing employees an ‘upside.’ Under new CEO Brian Humphries who took over at the beginning of April, Cognizant will also look at ensuring it has a wider pool of clients. McLoughlin said about two-thirds of the company’s slashed revenue forecast could be attributed to five healthcare clients — four of whom were going through mergers, while the fifth was insourcing its IT spend.
“There is a need to broaden the portfolio of clients. We can’t be in a position where one or two clients blink and it hits the quarter,” McLoughlin said.