IT services major Cognizant Technology Solution Corporation’s net profit fell 39% to US$395 million for the fourth quarter to the of December 2019, because of factors like restructuring charges. The US-based company, which has a large chunk of its workforce in India, had posted a net profit of $648 million in the same quarter a year earlier.
The company also witnessed a top-level shake-up with one of its co-founders Francisco D’Souza, an Indian-American entrepreneur, quitting the board. D’Souza founded the company with Kumar Mahadeva, a Sri Lankan American, in 1994. D’Souza also served as Cognizant’s chief executive from January 2007 through to March 2019.
The company also announced the appointment of Vinita Bali, the former chief executive of food products major Britannia Industries, to its board as a new independent director. Bali headed Britannia from 2005 to 2014 and previously served in senior positions at The Coca-Cola Company and Cadbury Schweppes Plc.
Bali is also on the boards of NYSE-listed Bunge Ltd, an agribusiness and food company, and Smith & Nephew Plc, a global medical technology business and CRISIL Ltd, an analytics company. She will join Cognizant, which has its headquarters in New Jersey, on February 24.
Cognizant’s revenue grew 3.8% to $4.3 billion during the fourth quarter from $4.1 billion in the fourth quarter in 2018.
The company’s net profit for the full year (2019) was down 12.38% to $1.8 billion, while revenue was rose 4.1% to $16.8 billion. Revenue from its key verticals – financial services (34.3% of revenues) and healthcare (28.5%) grew only marginally for the fourth quarter. Financial services revenue grew 1.2% year-on-year, driven primarily by insurance.
Revenues from products and resources (22.4% of revenues) grew 8.1% year-on-year, driven by broad-based growth across industries. Communications, media and technology (14.8%) revenue grew 8% year-on-year. But revenue growth in technology was negatively impacted by the group’s previously announced decision to exit certain portions in its content services business.
Last October, the company announced that it was exiting the content review services for social media platforms after honoring the remainder of its contract. Its clients included Facebook and Google and the company used to earn close to $250 million a year from this business. This decision was expected to impact around 6,000 jobs, but the company said that after some investigation it found that the nature of the work was affecting the mental health of content moderators.
The company also announced plans to lay off at least 7,000 mid-to-senior level employees over the next few quarters to invest in other segments, such as cloud and the Internet of Things. However, it said it plans to reskill and redeploy about 5,000 of the total employees affected. The company employs 281,000 people, nearly 200,000 of them based in India.
Cognizant also plans to acquire the French operations of EI-Technologies, a Paris-based, privately-held digital technology consulting firm. It is carrying out negotiations and the proposed acquisition will help Cognizant expand its client resources in Europe.