IT and consultancy services major, Cognizant had to let go of dozens of staff in Switzerland as UBS brings the entire IT department back in-house. UBS and Credit Suisse, Swiss banks, are long-standing customers for Cognizant.
UBS paid Cognizant 330 million USD every year for IT services and business process outsourcing as per media reports. On the other hand, credit Suisse spends 220 million USD per year for services to Cognizant, out of that 100 million USD in Switzerland.
Major IT outsourcing and consultancy companies get a major part of revenues from the finance sector. For example, Cognizant, one of the top global IT companies, has sales of 5.6 billion USD to the finance industry, a third of its total turnover.
Cognizant and UBS business relations have been turning frosty in recent years, and in Switzerland, there has been falling out. Last year, UBS decided not to renew the company’s service contract with effect from the end of April. The end of service contract will cost Cognizant a loss of half business with UBS around 60 million USD.
Therefore, Cognizant cut off 70 to 80 consultants working for UBS. It had 200 employees under contract to UBS. However, the bank took on one-third of them, and Epam and Infosys took another third. There is no formal announcement by both the firms on the matter.
Ransomware Attack on Cognizant –
In May 2020, Cognizant systems had a ransomware attack that wrecked its efforts to provide IT services from home offices. As a result, UBS ended its IT services contract globally from the end of April this year, citing security concerns. In addition, UBS, under its policy, took IT services back in-house.
The bank ended its partnership with Cognizant in India in 2018. It sold its Service centre here with 200 employees to Cognizant in 2009, and at the same time, a service contract for several years was signed, which was not extended and then cancelled.
Mike Dargan, CIO of UBS, reversed the bank’s outsourcing policy due to accelerated innovation and digitalization in the finance sector, which led to the policy of an in-house IT department.
The step-wise ending of the Vendor contracts and in-house strategy are done under the policies of CEO Ralph Hamers.
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