Cognizant to Impose Global Workforce Reduction of 12,000 to 15,000 Positions

Cognizant Weighs Heavy Workforce Reduction Amid Industry Shift

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. The company employs over 357,000 people, with more than 250,000 based in India, where the average annual salary is around Rs 15 lakh. According to industry executives, clients are increasingly moving away from traditional pyramid-heavy staffing models, with customers no longer willing to fund training for freshers.

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 estimated impact alone could run into about 12,000 to 13,000 employees, while in higher-cost geographies such as the United States, the cost per employee rises to around $50,000, meaning fewer employees can be impacted for the same level of provisioning.

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The final number of job losses could vary depending on how the restructuring is executed, with Cognizant's Project Leap expected to incur between $230 million and $320 million in severance costs. Industry executives pointed out that the company's clients are increasingly moving towards a broader and shorter pyramid, combining digital labour and human labour.

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. This is not Cognizant's first cost reset, as 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. Other companies in the industry, such as TCS, Accenture, HCLTech, and Oracle, have also carried out restructuring in the last year.