Cognizant Announced 7000 Lay Offs Over Next Few Quarters
Cognizant, which is one of Facebook's content review contractors, is likely to exit the content moderation business after honouring the remainder of its contract.
Cognizant Technology Solution Corporation announced that it will exit its content moderation business, impacting around 6,000 jobs. The company additionally plans to lay off at least 7,000 mid-senior level employees over the next few quarters.
Cognizant, which is one of Facebook’s content review contractors, is likely to exit the content moderation business after honouring the remainder of its contract.
The decision comes after a few investigations raised questions about the working environment of such moderators and the impact of the work on their mental health.
In a post-earnings call, the company also admitted that the exit from the content moderation business will hurt its financial performance.
Cognizant’s Chief Financial Officer Karen McLoughlin said in a conference call that it will “comply with contractual obligations and determine the best path forward with affected clients”.
The company had about 500 workers in Hyderabad monitoring sensitive topics or profane language in Facebook videos as part of the content moderation business, revealed a Reuters report in May.
Cognizant plans to prune approximately 7,000 additional jobs-mid-senior level employees-in its other two units to invest in other segments such as cloud and internet of things to offset losses in the current setup.
However, the company added that it plans to reskill and redeploy about 5,000 of the total impacted employees.
With the layoffs, the company said it expects to save between $500 million in 2021 and record restructuring charges worth $150-200 million by the end of next year.
The New Jersey-based company’s revenue from financial services rose 1.9 per cent to $1.49 billion while revenue from healthcare services dipped 1.2 per cent to $1.8 billion. It is worth noting that the two segments make up over half of the company’s total revenue.
Cognizant had already said that lower spending by its banking sector clients in the second half of the year is one of the reasons it is looking at other segments.
The company explained that it now expects full-year revenue growth of between 4.6 per cent and 4.9 per cent compared to its earlier guidance of growth between 3.9 per cent and 4.9 per cent.
This is, however, not the first time this year that Cognizant is looking at cutting jobs. In August, the company had announced plans to lay off employees as part of a strategy to cut costs and reduce spending.
There were several reports which indicated that the company was going through a widespread restructuring process under new CEO Brian Humphries.