Cognizant gets some respite as employee churn ebbs

On Hiring Binge

- US-based IT major, which has 70% of its workforce (240,000 associates) in India, to hire 50,000 freshers

- Its global headcount rose to over 340,000 now from 289,500 in 2020

- Revenues rise 9.65% to $4.82 bn in March qtr from $4.4 bn in previous corresponding period

- Q4 net up 11.48% to $563 mn on rising digital revenues

Bengaluru: After reeling under high employee attrition for the last one year, Cognizant has begun to witness some moderation as reflected in the first quarter results announced Wednesday.

The US-headquartered company which has its origin from India follows January-December financial year cycle.

In the first quarter ended March 2022, Cognizant attrition came down to 26 per cent from 31 per cent reported in December quarter and 33 per cent in the September quarter of 2021. In the last one year, this number was the lowest for Cognizant, which had also seen supply-side pressure impacting in revenues in last quarters.

"Thanks to our talented employees, we delivered on our first quarter commitments in what is an intensely competitive global labour market," said Brian Humphries, CEO of Cognizant said.

Among the large Indian IT companies, Infosys had one of the highest employee attrition numbers for the March quarter. The Bengaluru-headquartered firm reported an attrition of 27.7 per cent, while it was 23.8 per cent for Wipro. Tata Consultancy Services (TCS) reported an attrition of 17.4 per cent for the March quarter.

During this period, utilization level of Cognizant stood at 82 per cent. "We have been working very hard to mitigate attrition. But the reality is the market is red hot behind certain skills and try as we might, and we track the data when we promote people or when we give them salary increases. We know how long it mitigates attrition before it picks up again. So, I just think this industry is perhaps at a different curve than it was in the last 15 to 20 years," Humphries told analysts at the post results conference call.

He, however, said that return to office might lead to less attrition this year. Though Cognizant's Q1 earnings exceeded street expectations, the company revised its annual revenue guidance marginally. The company now expects its revenue to grow 9-11 per cent in constant currency terms as compared to 8.5-11.5 per cent guided earlier.

"For the full year, we are increasing the organic growth outlook assumption in our guidance, reflecting strong performance in our digital portfolio and a healthy demand backdrop. However, we are tightening our constant currency outlook at both ends of the range, which reflects our improved organic revenue growth. This is partially offset by a lower expectation of inorganic growth, which we now expect to contribute approximately 100 basis points to full year growth versus 200 basis points previously," the CEO said.

For 2022, Cognizant expects its annual revenue to be in the range of $19.8 billion to $20.2 billion.