Cognizant, the Nasdaq listed IT services major with majority of its employees based in India, will reduce the variable component in the compensation package across all levels as the company adjusts itself to a growth environment in single digits. Cognizant, which employs around 2.6 lakh people globally with around 72% based in India, will be substantially reducing the variable component, which is a major part of the employee compensation, sources indicated. It is understood that the variable payout for the employees based on the performance of 2016 will be in the range of 95%, 75% and 50%. This would mean that it would be much different from the past where the company has paid in excess of 100% and some years it has also gone up to 200%.
In response to a e-mail query from FE, a statement from Cognizant said, “Cognizant has a performance-based culture and our variable payout is a function of company and individual performance. In previous years where we outperformed our goals, we paid significantly above the target payout. In 2016, we missed our original goals and our variable payout is reflective of that.”
Cognizant reported revenue of $13.49 billion for 2016 calendar year with an annual growth of 8.6%. For the current year, it has provided a revenue growth guidance in the range of 8-10%. In the year 2016, Cognizant consistently brought down its earlier stated revenue guidance in the range of 10-14%. Cognizant is also planning to downsize its headcount by around 6,000 people as part of its annual appraisal exercise which ends in March.
The company in a statement said, “The company conducts regular performance reviews to ensure it has the right employee skill sets necessary to meet client needs and achieve its business goals.”
It also stated, “This process results in changes, including some employees transitioning out of the company. Any actions, as a result of this process, are performance-based and generally consistent with those we’ve made in previous years. In any given year, the numbers may bounce a percentage here and there, but resizing our employee base is a part of our standard practice.”