Cognizant may cut jobs after slashing growth forecasts by half
1 min read . Updated: 06 May 2019, 12:06 PM IST- Cognizant forecast 2019 revenue growth in the range of 3.6% and 5.1% in constant currency, compared with between 7% and 9% earlier
- Revenue in Cognizant's financial services unit fell 1.7% to $1.44 billion in the first quarter
New Jersey-based Cognizant, which has most of its employees working out of India, is considering job cuts, after the IT company’s first-quarter earnings missed analysts’ estimates. Cognizant, which announced earnings last week, also nearly halved its 2019 revenue expectations after missing first-quarter results, as the IT services and outsourcing company faces sluggish demand in its financial and healthcare businesses. Cognizant follows a January-December financial year.
“As part of our realignment program, management is currently evaluating various strategies, including additional employee separation programs," Cognizant said.
The company forecast 2019 revenue growth in the range of 3.6% and 5.1% in constant currency, compared with between 7% and 9% earlier, underscoring the challenges ahead for chief executive officer Brian Humphries, who took over on 1 April from Francisco D’Souza.
Under D’Souza’s watch, revenue of the New Jersey-based company surged more than 11-fold to $16.1 billion in his 12 years.
The company's reliance on financial services sector has been weighing on its overall revenue growth in the past few quarters. Chief Financial Officer Karen McLoughlin on the call said the company was seeing some cautiousness in the banking sector around levels of spending in the second half of the year.
Revenue in its financial services unit fell 1.7% to $1.44 billion in the first quarter, while healthcare services revenue rose nearly 4% to $1.17 billion but missed the $1.20 billion forecast by three analysts polled by Refinitiv. The financial services unit accounts for more than one-third of its total revenues.
Total revenue rose to $4.11 billion, but came in below the company and Wall Street expectations.
Cognizant expects current-quarter revenue in the range of $4.16 billion and $4.20 billion in constant currency. Analysts were expecting a revenue of $4.29 billion.
The company has turned to cloud computing, cybersecurity and analytics as it looks to cut down dependence on IT services, where margins are being squeezed by clients demanding more work at lower costs. (With Agency Inputs)
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