Cognizant Loses 500 Crores After Firing 20000+ Innocent Employees Q4 Layoff
Cognizant is a multinational technology company, and it is not publicly reported that the company lost 500 crores specifically as a result of firing 20,000 or more employees. However, it is known that the company has undergone significant restructuring in recent years, including layoffs, as it adjusts to changes in the technology industry and shifting client demand. The financial impact of such actions can be complex and difficult to quantify, as they may have both short-term costs and long-term benefits.
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Cognizant recently fired more than 20,000 of its employees, joining the trend of layoffs.
The corporation lost 518 crore rupees in the fourth quarter of the financial year, it has since been discovered.
Cognizant recently let go of almost 20,000 workers:
In times of economic difficulty, recessions, and layoffs, numerous tech organisations are coming up with new justifications for terminating workers in order to minimise their staff. Following background checks, cognizant just sacked more over 20,000 employees (6% of the entire workforce).
The technology major came across an attempt to solicit offers via letters from fictitious businesses.
Cognizant has carried out similar work.
Employees at Cognizant India have apparently been fired as a result of a similar incident to the layoffs at Accenture India caused by counterfeit documents and false experience letters. According to an ETNow article, Cognizant India reported a 6% involuntary attrition rate in the second quarter.
Over the past six months, there have been more layoffs as a result of background checks that were unsuccessful and side jobs. Background checks are increasing as businesses allow employees to work from home again, which makes such events more frequent.
According to the report, attrition in this context is just another word for dismissal. According to the report, even Rajesh Nambiar, the CEO of Cognizant India, acknowledged that there was a high rate of involuntary attrition as a result of inadequate background checks.
Along with falsified letters and paperwork, other businesses, such as Twitter, Meta, and others, have also seen widespread layoffs. Although companies have fired employees primarily to cut costs, this had an impact on thousands of people who rapidly lost their jobs.
And today, Cognizant’s net profit fell by 9.6% to $521 million in the fourth quarter due to impairment losses and higher operational expenses.
However, the company’s sales increased, increasing 1.3% year over year to $4.84 billion over the three-month span. It was marginally more than $4.83 billion in street predictions. While revenue remained steady, profit dropped by 20.7% sequentially.
The total net income for FY22 increased 7.2% year over year to $2.29 billion. Revenue for the entire year totaled $19.4 billion, an increase of 7.5% in constant currency. It was higher than the projected $19.3 billion amount.
The newly appointed CEO, Ravi Kumar S, stated that his first priority is to create up the environment necessary for the company’s employees to “excel and operate with a growth attitude” in Teaneck, New Jersey. Earlier this month, Cognizant announced organisational reforms that saw the return of top-deckers of Indian descent, including experienced executive Surya Gummadi, who has been in that position for 24 years.
According to Cognizant, the first quarter revenue is anticipated to be between $4.71 and $4.76 billion, a decrease of 1.5% to 2.5% or a decrease of 1.0% to flat in constant currency. This takes into account roughly 100 basis points from inorganic growth. The business opted not to issue full-year projections and stated that it will do so at its upcoming earnings announcement in early May. Cognizant decreased their yearly guidance to $19.3 billion in the third quarter for the third consecutive quarter.
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Operationally, the operating margin decreased 120 basis points from the previous year to 14.2%. This was primarily caused by a $59 million impairment charge associated with a significant volume-based contract with a customer in the health sciences. The company’s anticipated lower volume is the main cause of the impairment.