Cognizant Cut 8,000 Jobs in India, Added Staff in Europe, U.S. in 2017

The number of employees in Cognizant Technology Solutions’ India offices reduced by 8,000 in 2017 while the company added positions in the United States and Europe. Their headcount in the United States grew by 2,900 to 50,400, by 2,300 in Europe to 13,800 and by 2,600 in other locations.

“We had approximately 260,000 employees at the end of 2017, with approximately 50,400 in North America, 13,800 in Europe and 195,800 in various other locations throughout the rest of [the] world, including 180,000 in India,’’ the IT services company said in its annual report filed with the U.S. Securities and Exchange Commission.

The decrease in headcount in India would come as a surprise to industry watchers since the company had been hiring since 2014. In 2014, it added 40,100 people, while the numbers rose by 10,200 in 2015 and 38,500 in 2016. In 2016, the United States-based company had 260,200 employees, with 188,000 workers in India and almost 47,500 jobs located in North America.

Cognizant said in their annual filing at the SEC that “risks relating to legislation and government regulation on immigration may affect our ability to compete for and provide services to customers, which could hamper our growth and cause our revenues to decline.’’

It added: “The ability of foreign nationals to work in the U.S., Europe, Asia Pacific and other regions in which we have customers depends on their and our ability to obtain the necessary visas and work permits for our personnel who need to travel internationally.’’

The statement from the NASDAQ-listed firm added: “If we are unable to obtain such visas or work permits, or if their issuance is delayed or if their length is shortened, we may not be able to provide services to our customers or to continue to provide services on a timely and cost-effective basis, receive revenues as early as expected or manage our delivery centers as efficiently as we otherwise could, any of which could have a material adverse effect on our business, results of operations and financial condition.’’ 

Meanwhile, the company also recorded a net loss of $18 million in Q4 ended Dec. 31, 2017 while it had earned a net profit of $416 million for the same quarter last year. Cognizant paid $36 million for an investigation and legal expenses towards alleged violation of the U.S. Foreign Corrupt Practice Act regarding payments of bribes in India. The IT firm also incurred $53 million in severance costs, including those related to the voluntary separation program.

In response to the new report, Nasscom president R Chandrasekhar told the Economic Times that the IT sector will see an addition of 100,000 jobs in FY19, which is almost similar to FY18. He added that it was time to look at sectors beyond technology services for employment growth.

While India has been seeing job creation in the IT sector for several decades, the protectionist politics in the western world and use of artificial intelligence could lead to a disruption in the future. The shift of jobs to the west shows that strict visa norms are affecting the IT sector in India already.