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Cognizant top employees offered voluntary separation option
The writing on the wall is clear with IT services giant USD 13.49 billion Cognizant readying its senior management team to opt for Voluntary Separation Programme (VSP), as part of its efforts to accelerate its digital strides.
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Applicable for Directors and Senior VPs (active in India or US payroll) with at least one year tenure at Cognizant, the scorching heat of this summer could impact hundreds in these levels. Using the ‘social’ umbrella to roll-out the programme, the time-bound VSP will force the decision-makers to take a call in less than a fortnight. May 12 is when they decide whether to pursue their association with their employer or choose the VSP.
“If you wish to participate in the programme you must opt in by May 12, 2017, midnight IST,” says the contents of an internal mail that DTNext was privy to being quoted. This is the first such programme introduced in the Nasdaq-listed Cognizant, that is bound to send shock waves in the IT industry. This, when it seemed that the debate about the number of people being shown the door from Cognizant was dying. It may be recalled that this newspaper broke the news about Cognizant embarking on large-scale rationalisation of workforce in March this year.
Noting that the VSP has been ‘designed’ for senior leaders who wished to contribute to the larger cause of society or pursue their passion outside Cognizant, the unusual ‘phenomenon’ was communicated by mail. While the emphasis is on ‘voluntary’ and the choice of participation one of free will, opting for the programme will mean a ‘packaged’ exit for these senior level people. Nine months gross salary as a lump sum payment (calculated from the last working day), additional week’s salary for every completed year of service beyond five years and cash equivalent of equity vesting through December 31, 2017 are some of the components of a comprehensive benefit package designed for the VSP.
A Cognizant spokesperson’s response, to a question on the number of people impacted in this exercise, was, “As part of plan to accelerate our shift to digital, we are taking steps to ensure that our workforce is appropriately aligned to deliver sustained growth. We continue to recruit across all of our practices and are expanding facilities globally, ensuring that we have the right expertise to help our clients.”
Catch-22 for CTS top execs facing separation
IT services major Cognizant on Tuesday dropped a bombshell of sorts after it asked its senior management team to prepare itself for a Voluntary Separation Program (VSP).
On the rationale of this “unforeseen” move, Cognizant spokesperson’s response was “the VSP is related to our overall company strategy to accelerate our shift to digital and to deliver high-quality, sustainable growth. We’re focused on making sure that we have the team, capabilities and IP to serve our clients in the digital era. Doing so will make Cognizant even stronger and we are confident we are well-positioned to drive long-term shareholder value as we continue investing in our employees and in exciting new areas of growth for Cognizant and our clients around the world.”
Asked about the impact in different geographies, as the rules governing in the US would be different than the one in India, the spokesperson said “this voluntary initiative is being communicated to management-level associates— from Director-level to Senior Vice President—and eligibility is at the discretion of Cognizant leadership. Details of the incentive are not being disclosed, but we believe it provides a fair and positive experience for those choosing to leave.”
An employee, on condition of anonymity, said already the company had aligned some of its ‘M’ level associates with upgraded portfolios, citing upgradation of skills as the reason. This is part of the “optimisation” strategy to achieve the 2020 step-by-step mission of Cognizant, the individual added. It is learnt that the VSP’s eligibility criteria cover associates who joined prior to May 1, 2016. It does not cover those who are on the verge of retirement from April to December this year, associates who have got earnouts from acquisitions, among others.
There is also no guarantee that those who choose the VSP will be selected as Cognizant reserves its “right, in its sole and exclusive discretion, to decline certain associates from taking part in this program.” The basis for such a decision includes lack of redundancy in current role or skillset and contractual commitment to a client program.
While lauding the senior leaders for their “important contributions,” it is explicitly stated that non-adherence to the timeline would mean exclusion from the program. Those opting for VSP will get notified formally by June 1, this year. “If you are accepted into the program, you will be required to sign a Voluntary Separation Agreement on June 15, 2017. June 30,2017 will be your last working day,” notes a part of the mail content.
That the whole thing has been comprehensively spelt out is visible with a FAQ listing out every aspect of the VSP. Whether it is form 16 in the context of Income Tax returns or the eligibility of stocks that are “vesting in June, September and December,” have been methodically explained, leaving no room for ambiguity.
Even the superannuation and gratuity-related issues have been addressed with Associates given the choice of transferring the fund to their future employer or keep the fund dormant if they did not have such an option available. Entitlements for those quitting and rejoining after a break had also been clearly specified. A question on the possibility of rejoining after opting for the program was “you may be eligible for rehire after one year in a staff or contractor role with executive approval.”
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