Cognizant And Capgemini Lead Industry Trend With Over 150,000 Job Cuts - Details

06/05/2024

cognizant and capgemini lead industry trend with over 150,000 job cuts – details

In 2023, major IT players Cognizant and Capgemini witnessed a substantial global decline in cumulative hiring, shedding 151,607 employees compared to the previous year, according to their regulatory filings.

The majority of these firms’ employees are based in India, totaling around 400,000 individuals. In 2022, Cognizant hired 132,000 employees, while Capgemini recruited 140,789, excluding acquisitions. However, in 2023, Cognizant’s hiring dropped to just over 60,000, and Capgemini hired about 61,182. This represents a decrease of 72,000 for Cognizant and 79,607 for Capgemini from the previous year.

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According to The Economic Times report, this trend extended to other top Indian IT service providers like Tata Consultancy Services, Infosys, and Wipro, whose combined headcount dropped by approximately 70,000 in the fiscal year ending March 31.

Peter Bendor-Samuel, CEO of consultancy firm Everest Group, attributed this decline to over-hiring during the COVID-19 pandemic to counter high attrition rates and in anticipation of continued industry growth. However, with the industry contracting, there is now an oversupply of talent, leading these firms to significantly reduce new hiring.

Moreover, macroeconomic uncertainties compounded the issue, as natural attrition failed to alleviate the surplus workforce. Consequently, companies are scaling back on new talent intake.

The report added that the Cognizant, for instance, initiated a program in the second quarter of 2023 aimed at simplifying its operating model, optimizing corporate functions, and aligning office space with the post-pandemic hybrid work environment. This resulted in USD 229 million in employee separation and facility exit costs in 2023.

Pareekh Jain, CEO of EIIRTrend, identified two key factors contributing to the decline in hiring numbers. Firstly, there is an overall slowdown in tech spending, leading IT firms to prioritize inorganic growth over organic growth, as evidenced by increased acquisitions during a period of sluggish hiring. Secondly, in the era of AI and GenAI, companies struggle to find talent with the right skills to meet evolving requirements.

As of the March quarter of FY24, Cognizant’s employee count decreased by 7,100 to 344,400, with approximately 250,000 based in India. Meanwhile, the Capgemini Group’s total headcount dropped to 337,200 as of March 31, 2024, with the offshore workforce representing 57 per cent of the total, down from 58 per cent the previous year. Indians comprised about 66 per cent of Capgemini’s total headcount as of December 31, 2023.

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