Cognizant offering "voluntary separation" package

Cognizant Technology Solutions is offering a "voluntary separation" package to US-based employees who are not working on active, revenue-generating projects. The package includes two months' salary and an extension of selected benefits including health benefits, according to a CNBC report on May 27.

While employees have the choice of whether to take the package and leave, or to stay on, the company has imposed conditions for those who stay. If they are unable to get deployed on a project between May 1 and August 31, they will have to leave the company without any separation package. The separation offer reportedly focuses on US employees for now, as their pay and benefits are comparatively higher than in the other geographies where Cognizant has offices.

The company confirmed the voluntary separation offers this week, saying: "In a people-intensive business like ours, effectively managing workforce utilisation is a key element of aligning our cost structure with revenue. We routinely manage supply and demand with a bench of unutilised employees. We are enhancing our bench policy by offering additional cash and extended health benefits to those who are or will become unutilised and for whom we unfortunately do not foresee future opportunities. As always, we will treat any employees exiting the business with fairness and dignity."

The final number of affected employees is uncertain, but Cognizant currently has approximately 46,000 employees in North America. It has been gradually reducing its North American workforce for the last few years while dramatically increasing its headcount in Europe and India.

This latest move to decrease US headcount comes despite Cognizant having pursued a strategy of expansion and acquisition for the last few months, and is most likely driven by cost pressures as Cognizant's clients cut their own spending due to the COVID-19 pandemic.