Cognizant Technology Solutions has initiated a NextGen program aimed at simplifying its operating model, optimising corporate functions and consolidating and realigning office space to reflect the post-pandemic hybrid work environment. “We expect the personnel-related actions of this program to impact approximately 3,500 employees or approximately 1 per cent of our workforce,” says a company release.

“The impact will be on the non-billable workforce,” the company’s CEO S Ravi Kumar told newspersons. Employees’ presence in smaller cities will be important. They will remain in tier-II and III cities, he added.

The total employee headcount at the end of the first quarter was 3,51,500, a decrease of 3,800 from the previous quarter 2022 and an increase of 11,100 from Q1 2022.

Also read: Many Cognizant employees to receive a third merit increase in 18 months

“Our drive for simplification will include operating with fewer layers in an effort to enhance agility and enable faster decision-making. The company expects savings generated by the program to help fund continued investments in people, revenue growth opportunities, and the modernisation of office space,” the release said.

Under the NextGen program, Cognizant expects to record costs of approximately $400 million with approximately $350 million of such costs anticipated in 2023 and approximately $50 million in 2024. This consists of approximately $200 million of employee severance and other costs primarily related to non-billable and corporate personnel, which the company expect to mostly incur in 2023, and approximately $200 million of costs related to the consolidation of office space, with approximately $150 million in 2023 and $50 million in 2024.

“We do not expect the NextGen program to drive meaningful cost savings until the second half of 2023 and the real estate actions will not begin to generate savings until 2024. By 2025, we expect to reduce our annual real estate costs by approximately $100 million versus 2022. This reduction in real estate costs is net of investments to expand our real estate footprint in smaller cities, primarily in India, in support of our hybrid work strategy,” the release said.

Blue Bolt to tap innovation

Meanwhile, to tap into the creativity of our more than 3,50,000 associates,Cognizant has launched Blue Bolt, a grassroot innovation movement as the company’s CEO believes innovative ideas can come from everyone.

This program encourages and celebrates the thousands of flashes of inspiration that associates have every day as they innovate for clients. Over the coming months, Cognizant plans to train more than 20,000 additional project leads in innovation methods and generate over 100,000 ideas for clients to use rapid prototyping and the identification of new opportunities, Kumar told analysts.

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