Many of the employees working for IT-global Cognizant may lose their jobs by end-October as its CEO Brian Humphries indicated at an investor event in New York. The company is taking steps to ensure that the ongoing restructuring at the company does not drag out over a long period. The announcement will be made at the end of this quarter along with its third-quarter results.
However, the compensation structure would be implemented from January 1. "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.
Moreover, as reported by the Times of India, the compensation of the sales team will also be changed where the variable component of their salaries will be changed. "Normally I imagine companies that you speak to tend to have a sales force that is somewhat leveraged. And when I say leverage, if you're earning $100,000 a year, perhaps $50,000 is fixed and $50,000 is variable or 60-40, sometimes 70-30. I would say Cognizant has historically operated with 85-15 or 90-10 type plans, so very little leverage. You're not going to get the best breed of salespeople in the world to come to your company if you have a 90% fixed on target earnings," Humphries said in the investor's conference.
He further added that Cognizant lost many projects to Tata consultancy services (TCS) and Infosys as they were more competitive. Notably, since he took over as Cognizant's CEO in April, his main focus has been on the company's cost competitiveness. His major plans include cost reduction to self-fund' some investments and transform the company 'fit-for-growth.'
Interestingly, since the last 25 years, the company has registered remarkable growth but in the last few years, its profit has fallen sharply due to increasing cost. Earlier this year, the company has already suspended non-essential travel to save costs.
Cognizant cut down its revenue growth forecast earlier this year and submitted that its hiring has overtaken revenue growth which eventually led to lower margins. In the past two months, the US-headquartered company sacked hundreds of employees, including at senior levels to improve productivity and cost structure.