IT stocks, including Infosys and TCS are under vast pressure in Monday's trading session owing to reports that top IT player, Cognizant was planning to drop a minimum of nearly 6,000 jobs, defining 2.3% of its workforce in total, in order to sustain in the advanced IT environment, which is moving towards new digital services rapidly. "In 2016, we missed our original goals and our variable payout is reflective of that".
Cognizant, the Nasdaq listed IT services major with majority of its employees based in India, will reduce the variable component in the compensation package across all levels as the company adjusts itself to a growth environment in single digits. In previous years where we outperformed our goals, we paid significantly above the target payout.
As the appraisal season begins, ominous signs for employees at Cognizant have begun to emerge. The company's revenue for the quarter was up 7.1% compared to the same quarter past year.
The news was doing the round on the popular website Quora since last week and many are saying the number will be more than 6,000 this year. It will not be a part of the routine exercise where bottom 1% of the workforce are weeded out for non-performance, reported The Times of India. Also, CFO Karen Mcloughlin sold 5,000 shares of the company's stock in a transaction on Thursday, February 23rd.
The reduction in employee base will be a part of the appraisal process, according to reports, as digitisation and automation are becoming the new normal with Indian IT firms, and Cognizant is not different from Infosys, Wipro and TCS. "In any given year, the numbers may bounce a percentage here and there, but resizing our employee base is a part of our standard practice". "At the same time, we continue to enhance our capabilities and hire for roles across all our practice areas in the company", the spokesperson added.
Another employee, who has worked with Cognizant for eight years now, said, "This happens every year in all IT firms and for that matter any other sector too".