In a bid to reduce employee utilisation, Cognizant Technology Solutions will move its India-based workforce on to a 9-hour workday from the present 8-hour.

To be effective from February 15, this will bring it on par with its industry peers like Tata Consultancy Services. “It has also enhanced the number of paid leaves annually,” said an official of the Nasdaq-listed IT company that has over 75 per cent of its 2.90 lakh employees working in India.

Cognizant’s offshore utilisation excluding trainees increased to 87 per cent in December 2020 quarter as against 85 per cent in the September quarter and 80 per cent in the June quarter. The onsite utilisation has been just over 90 per cent.

Tactical change

On managing utilisation, Cognizant’s CEO Brian Humphries told analysts, “We are doing some tactical things internally. We have moved our India-based workforce onto a nine-hour workday, which is in line with industry practice. This will result in a reduction of utilisation in India, in theory, in the next quarter or so by one to two points. But we will continue to look at utilisation and track it and understand how these dynamics play in.”

He added, “The utilisation levels are quite high. We are at the stage now that our benches are light and are committed to build that out. We continue to build out our capabilities with evergreen skills and build upon our capabilities such that we can reduce utilisation.”

On moving to 9-hour policy, a company spokesperson said that aligning employee policies with market standards is key to the company’s competitiveness.

New leave policy

Cognizant has also enhanced its leave policy and increased the number of paid leaves annually to 36 from 26. “These changes will help the company level the field with competitors in fulfilling client expectations of agile and accelerated development, while significantly improving employee work-life balance,” the spokesperson said.

So, how does moving to a 9-hour workday reduce utilisation? Kamal Karanth, Co-Founder, Xpheno, a specialist staffing solutions company, says that’s a popular and debatable arithmetic tweak in calculating and reporting utilisation rates of teams and businesses. An arithmetic reduction in utilisation rates can be achieved either by reducing billable hours (numerator value) or increasing the available hours (denominator value). While the former carries no commercial incentive, the latter is resorted to where and when possible. In other words, Utilisation Rate = Total Billable Hours / Total Available Hours.

Moving into a 9-hour workday model would essentially increase the denominator value and cause a drop in the utilisation rate. “Along with a longer workday implementation, if enterprises allot additional hours to initiatives of employee engagement, and learning and development, the net effect will be an even lower utilisation rate of the workforce,” he said.

Published on February 8, 2021