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Cognizant's Future-Focused Cost Strategy: Reinvesting for Growth, Margin Optimization

1/ Cognizant's CEO Ravi Kumar S implements a $400-million cost-saving plan, aka NextGen - cutting 3,500 non-billable roles, ~1% of the workforce. ๐Ÿ’ฐ๐Ÿ”ง

2/ Real estate costs will rationalise, with 80,000 seats (~8 Mn. Sq Ft. Area) being given up as part of office space consolidation. ๐Ÿข๐Ÿ“

Estimated Cost Savings per annum: $ 400 million in two years. ~50% from office space consolidation ๐Ÿ’ฐ๐Ÿ’ฐ

Cost Optimisation Impact:

1/ Cognizant anticipates 20-40 basis points margin expansion in 2024 due to the NextGen plan. ๐Ÿ“ˆ๐Ÿ’ผ

2/ Cognizant's share price on Nasdaq surged by 7% following NextGenโ€™s cost-cutting plan announcement. ๐Ÿ’น๐Ÿ“ˆ

3/ Revenue saved from Cost-saving measures will be reinvested to boost the companyโ€™s lagging growth. ๐Ÿ“Š๐Ÿ“ˆ๐Ÿ’ช

4/ Layoffs can lead to a loss of skilled and experienced employees, a decline in productivity, and a negative impact on team spirit. It can weaken the company's reputation and employeesโ€™ loyalty. Attracting and retaining top talent in the future may also become a formidable challenge. โ›”๐Ÿ”ง๐Ÿ‘ฅ

Country: United States of America ๐Ÿ‡บ๐Ÿ‡ธ

Company: Cognizant Technology Solutions Corporation ๐Ÿ’ผ๐Ÿข

Industry: Information technology ๐Ÿ’ป๐ŸŒ

Cost Element: Employee Benefit Expenses and Lease Rent ๐Ÿ’ธ๐Ÿ”ง

Nature: Opex + Capex ๐Ÿ’ผ๐Ÿ’ฐ

Cost Classification: Variable Cost / Semi-Variable Cost + Direct Employees Cost / Operations Overheads / Administrative Overheads / Marketing Overheads๐Ÿ”„๐Ÿ’ผ๐Ÿ“ˆ๐Ÿ“Š๐Ÿ“ฃ

Source: May 18, 2023 |Firstpost |



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Partner, Chandra Wadhwa & Co. (Cost Accountants) | B.Com, FCMA, ACA, DISA | Certified SAP-CO Consultant | Executive Program on Management and Finance (IIM, Ahmedabad)

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