As part of the NextGen programme, the US-based Cognizant Technology Solutions in 2023 incurred $115 million of employee separation costs and $114 million of facility exit and other costs totalling $229 million. It expects to incur total costs of about $300 million, with about $70 million of such costs anticipated in 2024, the company with nearly 90 per cent of its workforce in India said in its 2023 annual report.

In the second quarter of 2023, Cognizant initiated the NextGen programme aimed at simplifying its operating model, optimising corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. The drive for simplification includes operating with fewer layers in an effort to enhance agility and enable faster decision making.

Cognizant while initiating the NextGen programme in May 2023 said, “We expect the personnel-related actions of this program to impact approximately 3,500 employees or approximately 1 per cent of our workforce.”

Expect savings

The company in the 2023 annual report said, “We expect the savings generated by the programme to help fund continued investments in our people, revenue growth opportunities and the modernisation of our office space,” the company said.

The estimates of the charges and expenditures that the company expects to incur in connection with the NextGen programme, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. The company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen programme, the annual report said.

Operating margins

“Our cost management enabled us to achieve an adjusted operating margin performance in 2023 that exceeded our expectations from earlier in the year. We intend to reinvest the majority of our savings into growth opportunities, while continuing to target modest margin expansion in 2024,” Cognizant’s CEO S Ravi Kumar said in the annual report.

For the year ended December 31, 2023, Cognizant finished with 3,47,700 employees compared with 3,55,300 employees for the year ended December 31, 2022. In 2023, voluntary attrition — technology services — was 13.8 per cent compared with 25.6 per cent for the year ended December 31, 2022, the company said.