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In a significant strategic shift, Cognizant Technologies, a renowned software services firm, has announced plans to sell its office properties in Hyderabad and Chennai. This move forms a core part of the company's broader initiative to streamline operations and reduce costs, targeting savings of $400 million over two years.
At the heart of this real estate divestment are Cognizant's campuses in Gachibowli, Hyderabad, spanning 10 acres, and in Siruseri, Chennai, covering 14 acres. These sales are in line with the company's asset-light strategy, aimed at shedding non-core real estate holdings.
Cognizant's Hyderabad campus, a significant 2.5 lakh sq. ft. office space situated on land originally allocated by the government, has been a cornerstone of the company's operations in the region. Meanwhile, the Chennai property, leased from the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), boasts a 600,000 sq ft built-up area and is noted as Cognizant's largest global facility.
In addition to these sales, Cognizant has been actively restructuring its real estate footprint. This includes relinquishing and renegotiating leases and reducing office space across various locations. Notably, the company has scaled back an upcoming lease in Hyderabad from 1.5 million sq ft to 1 million sq ft, with revised rental terms.
This restructuring extends beyond property sales. In April, the US-based multinational surrendered 1.15 million square feet of office space in Chennai, as part of its plan to rationalize workspaces globally. This move aligns with a strategic interest towards Tier 2 cities and a focus on hybrid and redistributed work environments post-pandemic.
Cognizant's decision reflects a broader trend in the software and IT sector, where companies are re-evaluating their physical office needs in response to financial pressures and the evolving nature of work. Leading tech companies, including Meta, Accenture, Amazon, Microsoft, and Alphabet, have similarly downsized their office spaces, impacting their Indian operations as well.
While the technology sector's share of Indian office space has declined from 40% in Q2 2022 to 26% in Q2 2023, it remains a dominant player. The slack is being taken up by Global Capability Centres (GCCs), the financial services sector, and engineering firms, all of which are expanding their footprints.
Cognizant's latest move is a clear indication of the changing dynamics in the tech industry, where optimization and agility are becoming key to remaining competitive. As the company embarks on this significant transition, it stands to redefine its operational strategy while adapting to the new norms of a post-pandemic business environment. By embracing an asset-light approach and reinvesting in new, flexible workspaces, Cognizant is positioning itself for sustained growth and innovation in the rapidly changing tech landscape.
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