Cognizant Laying Off 200 Top Execs: How Ethical Is The “Clean-Up” Spree?

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What can be the price that any top wing has to pay to bring in jobs for young talent into a company? Their own jobs, it seems!

IT services major Cognizant Technology (NASDAQ: CTSHreportedly fired about 200 employees from the top pyramid this year, in a bid to bolster the intake of fresh junior talent into the company. It has trimmed the senior-level headcount, firing up severance costs for three to four months, up to $35 million for the company.

This move, obliquely, refers to the paradigm shift in which the younger generation is deemed necessary than the older ones – Blame it on their adaptability to change or earnestness to serve!

Letting Young Talent Grow; At the Ruins of Top-Pyramid!

Evident through reports, Cognizant went ahead by offering a ‘voluntary separation scheme‘ to nearly 400 of its employees, sitting at the top-level of the pyramid.

However, the employees who were asked to leave claimed that it wasn’t voluntary. They were under a compulsion to sign forms which instead stated that the leave was on “voluntary basis” and no charges could be further pressed against the management.

The New Jersey-headquartered company, Cognizant’s attrition rate was over 22% in the second quarter. This has been credited to the strict performance management measures and the increase in demand for tech talent all over the world. Cognizant has already decreased headcount by as much as 6,0000 last year.

The company has also distributed the standards of their process, both for raises as well as promotions.  Apparently, junior employees will receive promotions and other benefits in the second quarter while the same will be provided to senior employees by the fourth quarter.

Is Cognizant Being a Cold Fish Towards Senior Execs?

“This one is really targeted towards the senior end of the pyramid. It is not voluntary, this is more involuntary. We are trying to cleanup the higher end of the pyramid and allow our associates to grow” – Raj Mehta, President, Cognizant

One might take a note here that the senior employees, that have been referred to an ample amount of times by now, aren’t people in their late 50’s slate. In fact, these employees are in their early to late thirty and have more than 20 years of full productive work life ahead. People with family and other expenditure to take care off shouldn’t be dismissed just like that.

Additionally, one thing that is still under shade is that although senior employees will undergo this layoff, it doesn’t guarantee that young talent won’t ever be exploited for hours together, that too at a lower pay.

When 22 per cent of employees left Cognizant in the second quarter, stats still displayed how the headcount for the company rose by 7,500 to reach 268,900 in the same quarter.

To follow up words of Raj Mehta, he exclaims his desire to clean the top level of the pyramid. Why companies cannot take mutual consent options like voluntary retirement scheme, instead of laying off the senior execs with different reasons?

The Grilled Scenario of IT Companies:

One may argue that Restructuring is not one really smooth and swift decision. Cognizant has been in the restructuring phase and has been taking time for the same. It still holds the reputation of laying off a good number of people at the associate level and is hence, now moving the upper ladder. However, whatever the reason is, the land of law has been aloof.

The worst news here is that along with Cognizant, many other IT majors are on a layoff spree. A significant number of firings have been made public for companies like IBM, Wipro, Tech Mahindra, etc.

Looks like the estimation made last year by McKinsey and Co. has been paving its way to being true. Reportedly, more than 58,000 IT professionals will be laid off and more than 6,00,000 IT professionals will be elbowed out of IT majors in the upcoming three years.


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