 "Cognizant")
IT services company Cognizant posted a 3 per cent year-on-year rise in net income for the January-March quarter, gave muted guidance for the full year 2023 revenue and said its new 'NextGen programme' aimed at simplifying operating model and optimising corporate functions will impact nearly 3,500 employees.
The drive for simplification will include operating with fewer layers in an effort to enhance agility and enable faster decision-making, the company said about the 'NextGen programme'.
The net income rose to USD 580 million during the three months ended March 31, 2023, against USD 563 million in the year-ago period. The revenue dipped marginally to USD 4,812 million in the just-ended quarter, from USD 4826 million in the same period of the previous year.
Cognizant follows January-December financial year.
"Full-year 2023 revenue is expected to be USD 19.2 to 19.6 billion, or a decline of 1.2 per cent to growth of 0.8 per cent, or a decline of 1 per cent to growth of 1 per cent in constant currency," the company said in the earnings statement.
In the second quarter of 2023, Cognizant initiated the NextGen programme aimed at simplifying operating model, optimising corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment.
"We expect the personnel-related actions of this program to impact approximately 3,500 employees, or approximately 1 per cent of our workforce," the company said.
Total headcount at the end of the first quarter was 351,500, a decrease of 3,800 from Q4 2022 and an increase of 11,100 from Q1 2022. Voluntary attrition for tech Services on a trailing-twelve-month basis, declined to 23 per cent from 26 per cent in Q4 2022 and 30 per cent in Q1 2022.
The company does not expect the NextGen programme to drive meaningful cost savings until the second half of 2023 and the real estate actions will not begin to generate savings until 2024.
"By 2025, we expect to reduce our annual real estate costs by approximately USD 100 million versus 2022. This reduction in real estate costs is net of investments to expand our real estate footprint in smaller cities, primarily in India, in support of our hybrid work strategy," it said.
Cognizant company is listed on Nasdaq, but a large portion of its operations are based in India.
In connection with the NextGen programme, the company expects to record costs of about USD 400 million with about USD 350 million of such costs anticipated in 2023 and USD 50 million in 2024.
"This consists of approximately USD 200 million of employee severance and other costs primarily related to non-billable and corporate personnel, which we expect to mostly incur in 2023, and approximately USD 200 million of costs related to the consolidation of office space, with approximately USD 150 million in 2023 and USD 50 million in 2024," the statement explained.
On Cognizant's Q1 report card, Ravi Kumar S, Chief Executive Officer noted that "...accelerated bookings growth in the quarter, which included several large deals and a healthy mix of new and expansion work, reflects the strengths of our services, our brand, and the longstanding relationships we have with our clients."
He added: "Having spent more than three months assessing the business, meeting with over a hundred clients and thousands of employees, I firmly believe Cognizant has a strong foundation for accelerating growth."
In January this year, Cognizant named Ravi Kumar S as CEO and a member of the Board, with immediate effect. Kumar succeeded Brian Humphries in both roles.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
