Cognizant Announces Broad Global Restructuring, Including Potential Layoffs of 12,000-15,000 Employees

Cognizant Weighs Large Workforce Reduction

IT services major Cognizant is considering a significant reduction in workforce that could impact 12,000-15,000 employees worldwide, with the majority of layoffs expected in India, according to multiple sources.

The Nasdaq-listed company announced on April 29 that it expects to incur between $230 million and $320 million in severance costs under its newly announced Project Leap, without disclosing the number of potential job losses. Cognizant employs more than 357,000 people, with the majority, over 250,000, based in India.

Industry executives point out that clients are increasingly shifting away from traditional pyramid-heavy staffing models. This structural shift in how IT services are being delivered is driven by customers who are not willing to fund the training of freshers and are instead opting for more flexible and cost-effective models.

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The estimate of 12,000-15,000 job losses is based on back of the envelope calculations using typical salary and severance assumptions across geographies. In India, the average annual salary is assumed to be around Rs 15 lakh, with severance typically ranging around six months of pay, translating to roughly Rs 7.5 lakh per employee. Applying this to a significant portion of the restructuring outlay suggests that the India impact alone could run into about 12,000 to 13,000 employees.

In contrast, higher-cost geographies such as the United States have average salaries of around $100,000 annually, with severance ranging between four to six months, resulting in a cost per employee of roughly $50,000. This means that fewer employees can be impacted for the same level of provisioning.

Combining these assumptions across regions yields a global estimate in the range of 12,000 to 15,000 employees. However, sources note that these calculations are indicative and based on broad assumptions around salary, tenure, and geographic mix, and the final number could vary depending on how the restructuring is executed.

The expected cuts come at a time when large IT services firms are restructuring their workforce in response to slower discretionary spending, increased automation, and growing adoption of AI-led delivery models. Companies like Cognizant, which have significant exposure to traditional application development and maintenance work, are under pressure to improve utilisation and margins.

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This is not Cognizant's first cost reset. Its NextGen programme in 2023-24 saw the company cut roughly 3,500 jobs and exit about 11 million square feet of office space. The development highlights a broader trend across the IT services industry, where companies are increasingly relying on productivity gains and automation to manage costs, even as hiring slows and bench sizes remain elevated.