Software services firm Cognizant Technologies intends to sell its office assets in Hyderabad and Bengaluru as part of its strategy to become asset-light and capitalise on non-core real estate.
The company plans to divest its 10-acre campus in Gachibowli, Hyderabad, and a 14-acre campus in Siruseri, Chennai, aligning with its cost-cutting restructuring plan to save $400 million over two years, including vacating 11 million square feet of office space.
“Cognizant is re-evaluating its entire real estate portfolio and has given up rented properties in some geographies. In some cases, the company has renegotiated the rent and downsized the assets too,” said multiple people aware of the transaction.
The campus occupies about 2.5 lakh sq. ft. of office space on 10 acres land in Hyderabad, which was the government gave for exclusive use, later bought by the company.
The Chennai land was given by the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) on lease and has a 600,000 sq ft built-up area that houses the company’s largest facility globally.
Separately, Cognizant has also renegotiated the lease from 1.5 million sq ft to 1 million sq ft in Hyderabad for its upcoming property that it took pre-Covid.
“Cognizant has started fitout now for the Hyderabad property and is yet to occupy. The rental was renegotiated at around Rs 57 per square foot with GAR, the landlord,” said two people aware of the terms of the lease.
In April, the US-based multinational IT services and consulting firm, recently gave up 1.15 million square feet of office space in Chennai.
“We have previously announced our plans to rationalise the workspaces across the world, and especially in India, by redistributing some real estate and expanding to Tier 2 cities. This endeavour is aimed at building the enterprise of the future by simplifying our business operations, realigning our workforce to a post-pandemic era of hybrid and redistributed work, and encouraging a growth mindset. This enables us to invest in collaboration spaces in Tier 2 cities while creating structural savings for the future that we can invest in our people and growth opportunities,” Cognizant said in response to ET’s request for comment.
Specifically, Cognizant has vacated 500,000 square feet in the DLF Cybercity SEZ as well as 650,000 square feet in the Ramanujan IT SEZ, both located in Chennai.
Cognizant had a 6 percent involuntary attrition rate between July and September 2022, globally. The total company headcount at the end of the fourth quarter stood at 355,300 globally.
Software and IT firms, facing financial strain and aiming to preserve funds, are relinquishing office spaces. Major tech players like Meta, Accenture, Amazon, Microsoft, and Alphabet (Google’s parent company) have globally downsized, impacting their office footprint in India.
According to industry estimates, the technology sector’s share of Indian office space decreased from 40% in Q2 2022 to 26% in Q2 2023, yet it retained its dominant position. However, the demand is now replaced by the Global Capability Centres and the financial services sector, and engineering companies looking to expand their portfolios.
