US-based software exporter Cognizant has announced that it will be laying off 3,500 employees and also reduce office space as part of the cost cutting measures.
The company has also estimated that its revenues are expected to decline in 2023 as a result of the current distress in the industry and economic downturn as the majority of its revenues come from the US.
For the full year, Cognizant has provided revenue guidance of $19.2 – $19.6 billion. It represents a decline of -1.2 percent to 0.8 percent in reported terms or a growth of -1 percent to 1 percent in constant currency. In constant currency, the company predicts sales of $4.83 – $4.88 billion in the second quarter, a decline of -1.6 percent to -0.6 percent.
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As a result of lower administration costs and higher other income, Cognizant’s first quarter’s net profit increased 3 percent to $580 million. For the three months that ended in March, revenue declined 0.3 percent year on year to $4.81 billion, beating Street expectations of $4.74 billion. On a sequential basis, revenue fell 0.7 percent while profit grew 11.3 percent.
In the IT industry, Cognizant’s margins are among the lowest at 14.6 percent. The company anticipates an adjusted operating margin of 14.2-14.7 percent for the full year.
It beat analyst expectations in the first quarter of FY23, which was the first quarter new CEO Ravi Kumar S was in charge of most of the time. As CEO, he assumed control on January 12 following the “involuntary termination” of former CEO Brian Humphries. A hard time for the industry, which is experiencing multiple headwinds, coincides with the shift in the company’s leadership and chairman of the board.