The US-based Cognizant Technology Solutions (CTS) has rung the warning bell for around 12,000 of its employees for the proposed cost reduction in the company. Its execution is expected to end in retrenchment of around 10,000 to 12,000 employees. With 75% of the CTS workforce in India, the threat of loss of jobs in India looms large.
The company has decided to reduce cost to increase the investment in the four future areas namely data, digital engineering, cloud and IoT. It is planning to take the easy way of accumulating investment by retrenching its employees even after the Q3 results have shown an increase in profit by 4.2% from the year-ago quarter.
CLOSURE OF CONTENT MODERATION BUSINESS
The company has also decided to end the content moderation business, which it has been doing for Facebook Inc. The BBC quoted the firm as stating, “We have determined that certain content work in our digital operations practice is not in line with our strategic vision for the company and we intend to exit this work over time. Our other content-related work will continue. In the meantime, we will honour our existing obligations to the small number of clients affected and will transition, over time, as those commitments begin to wind down. In some cases, that may happen over 2020, but some contracts may take longer.”
A report by The Verge based on the content moderators of CTS for Facebook exposed how they were subjected to pathetic working conditions and given paltry pay. The decision of exiting from the content moderation business is partially attributed to this expose and is expected to result in around 6,000 job cuts. There are workers in US, India, Europe and Latin America working for Cognizant’s content moderation.
ALLOCATION FOR SEVERANCE
The company has also stated that it shall incur $150-200 million towards severance and facility exit costs. The plan to execute the ‘2020 Fit for Growth Plan’ will focus on optimising its core portfolio while investing in the digital journeys which require investments in technologies along with sales and marketing, talent reskilling, acquisitions and partnerships, as per the statement of the company posted on the website.
Brian Humphries, chief executive officer, CTS, was quoted as saying, “Today, we are announcing a simplification of our operating model and a cost reduction program, which will allow us to fund investments in growth. Looking ahead, we see a clear path to unlock the organisation's full growth potential, win in our key digital battlegrounds, and return Cognizant to its historical position of being the bellwether of the IT services industry.”
The Union of IT and ITES Employees (UNITE) condemned the move by the company, calling it ‘unjustified’. In a press statement, UNITE has stated that the proposed act of mass retrenchment of its employees, despite a strong quarter result, aims at profit-maximisation, ignoring the life of its employees and their family.
SAVING THROUGH RETRENCHMENTS
The company expects the results of rate cutting to be $500-550 million by 2021, while it expects the optimisation of cost structure to end by 2020.
Alagunambi Welkin, general secretary of UNITE, told NewsClick, “The decision to retrench the workers is cruel on the part of the company. The initiative to retrench employees even when the company continues to make profit exposes the intention of the company. The net income of the company in Q3 alone is $497 million and they are looking for investments by retrenching their employees which is truly inhuman.”
Chief Financial Officer Karen McLoughlin was quoted as saying, “We remain on track to achieve our revised full year revenue guidance. However, to continue to invest in our growth initiatives, we must move quickly to improve our cost structure.”
With the four business segments of CTS: financial services, healthcare, products and resource, communication, media and technology registering steady revenue growths, the company has decided to mobilise investments through retrenchment.
While India has been a preferred destination of corporate giants owing to the cheap labour and the so-called ease of doing business, the working class continues to be neglected and be deprived of job security by the profit-hungry corporates. The successive central governments, too, have invested little time in concentrating on these core issues.