With 400 employees accepting the Voluntary Separation Package, Cognizant likely to save $60 million

Close to 400 people in the senior level have opted for the Voluntary Separation Package with the company. The package includes paying the interested employees 9-months salary on separation, which in turn proves to be profitable for the company. The annual attrition rate of Cognizant stood at 23.6 per cent, including BPO and trainees, during the June quarter from 17.1 per cent in the year-ago period.

It has been reported that close to 400 employees have opted for the Voluntary Separation Package, designed by the US-based company, to help save close to $60 million annually. The package was launched by the company in May, which offered some of its top executives 9-months of salary in the US and India. Out of the 2.56 lakh workforce that the company boasts of, a significant chunk of it belongs to India. However, the company was restrained in its revelation of the number of people from India who opted for the same.

Cognizant's headcount had a considerable decrease in the month of June from 10,800 to 4,400. However, there will be no dearth of hiring when it comes to critical skillsets in the digital business.

During an investor's call, Cognizant CFO Karen McLoughlin said, "Of the $39 million of realignment charges, $35 million was for the roughly 400 associates who accepted our VSP. We expect approximately $60 million of annualised savings as a result of the VSP." She further pointed that Cognizant is likely to incur additional costs related to the advisory fees, severence, facility consolidation costs and lease termination in the remaining part of 2017. 

It has been revealed that teh company has also made a great headway in the June quarter of driving utilisation rates. McLoughlin said that the company has lowered the hiring pace and improved resources alignment to its re-skilling and multi-skilling programmes. These are likely to improve the company's profitability. 

The annual attrition rate of Cognizant stood at 23.6 per cent, including BPO and trainees, during the June quarter from 17.1 per cent in the year-ago period. McLoughlin reportedly said, "...we expect attrition to decline in the coming months."

The over $13 billion has also raised the lower end of the revenue outlook for the year and now expects its topline to grow 9-10 per cent, instead of 8-10 per cent growth expected earlier. Meanwhile, Cognizant President Rajeev Mehta said that the company is investing  "tens of millions of dollars" to deepen and broaden skills in analytics, artificial intelligence, data science, and digital security.