Cognizant Technology Solutions Corp., a leading global IT services company, has recently announced the deferral of its annual salary hikes for employees by four months.
Initially scheduled for April 2025, the pay increases will now be implemented in August 2025.
This decision has sparked significant discussion within the industry, with many attributing the move to the pressure on the company’s operating margins.
Reasons Behind Salary Hike Deferral at Cognizant
The primary reason behind Cognizant’s decision to defer salary hikes is the pressure on its operating margins.
Despite a 6.8% increase in its fourth-quarter revenue to $5.1 billion, the company has been grappling with rising costs and a challenging macroeconomic environment.
Cognizant’s full-year revenue for 2024 was $19.7 billion, reflecting a modest 2% year-on-year growth.
However, the company’s operating margin for the year stood at 14.7%, an increase of 80 basis points year-on-year.
Cognizant CEO Ravi Kumar S acknowledged the delay in salary hikes during a recent town hall meeting.
He emphasized that the decision was strategic and aimed at ensuring the company’s financial stability.
“We understand the importance of timely compensation and are working diligently to ensure that our employees are fairly rewarded for their hard work and dedication,” Ravi said.
Impact on Cognizant Employees
The deferral of salary hikes has significant implications for Cognizant’s employees.
The company has assured employees that the promised pay increases will be honored in August 2025.
In the meantime, eligible employees will receive their bonuses as planned, with bonus letters expected to be distributed by March 10.
Despite these assurances, the delay in salary hikes has caused concern among employees.
Cognizant has a substantial workforce in India, with around 254,000 employees based in the country.
Critics have pointed out that the company offers low starting salaries to freshers. Some reports indicate that the annual salary hikes for certain employees were as low as 1%.
This has led to dissatisfaction among employees. They are already grappling with the challenges posed by the ongoing restructuring efforts within the company.
Future Outlook
Looking ahead, Cognizant remains committed to its growth and innovation strategies.
The company continues to invest in cutting-edge technologies. It also expands its service offerings to stay ahead in the competitive IT services market.
By addressing the challenges posed by rising costs and maintaining financial stability, Cognizant aims to ensure long-term success.
For the affected employees, Cognizant’s commitment to honoring the promised salary hikes in August 2025 offers a measure of reassurance.
Meanwhile, the company provides opportunities for career growth and development.
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