Information technology services and consulting company, Cognizant Technology Solutions Corp. has announced historic high attrition of 36 percent (combining Voluntary & Involuntary Attrition) in the second quarter, ending on June 30, 2022.
Currently, the company’s headcount stands at 341,000 employees globally. Almost 1.2 Lakh employees resigned from the company in the last 1 year.
|Quarter||Total Headcount||Attrition||Employees Left|
Total Employees left in the last one year- 1,15,450 close to 1.2 Lakh.
Attrition Includes – Total Quarterly Voluntarily and Involuntarily Attrition.
Commenting on the attrition and number of employees left in the last one year the company told to SightsIn Plus, “Cognizant’s employment is at the highest in its history – 341,000 employees strong. Year-on-year, the company has nearly 40,000 more employees than at this time last year, and continues to grow larger each quarter, as Cognizant has become a talent magnet across the IT industry.”
“Cognizant is the most transparent and inclusive in its attrition disclosures in the industry. Our methodology to calculate attrition rates includes voluntary and involuntary attrition, the entire company IT + BPO, including trainees and corporate associates. This methodology differs from other industry peers.” The company added.
The company further told, “Cognizant invests not just in total rewards, but also in employees’ skilling and career advancement. We have always been known for our investment in our people, and in the last year we have built on this legacy with accelerated skilling and enhancements to our promotion framework.”
“In 2021 alone, Cognizant trained over 150,000 associates in digital skills such as Cloud, AI, ML, IoT, analytics, and automation. We’ve rewarded our current Cognizant associates with 33,000 internal job moves and with 90% of the global team receiving a raise in the past 12 months.” The company further added.
Wedbush Securities’ Note
According to various media reports, US-based wealth management and investment banking services firm Wedbush Securities has advised the board of Cognizant to observe the company’s underperformance, and possibly even consider replacing the incumbent boss, Brian Humphries.
Wedbush Securities said in a report, “there is an inevitable, imminent urgency of addressing these points” as Cognizant’s current “technique of avoiding/not competing” for large deals is “unprecedented” since every IT services firm is competing for multi-year multi-million work from Fortune 500 clients.
Moshe Katri, Managing Director, Equity Research, Wedbush Securities mentioned, “We maintain our Outperform rating on CTSH despite a host of ongoing execution challenges, leading to the company’s significant relative underperformance (growth rates) vis-a-vis its peers.
“During a time which some would categorize as the best IT spending environment since Y2K, as we believe, that ultimately The Company’s Board is bound to act upon these issues, leading to leadership changes at the helm”, Moshe Katri wrote in a note dated July 29.
This is an uncommon rebuke from the analyst who has lined the data expertise providers sector for over 20 years.
Moshe Katri has mentioned a few points, “At its current form, Cognizant is probably one of the most under-appreciated platforms in the sector. During the past few years, and under the leadership of Brian Humphries (since April 2019).”
“We witnessed a number of troubling trends, including:
- The loss of important senior personnel.
- An inability to recruit senior personnel formerly with technology/growth companies.
- The decision to stay away from large deals/transactions.
- An inability to appropriately staff its bench, depressing revenue growth and likely resulting in competitive losses.
- Significant, relative underperformance in growth rates vis-a-vis Tier I offshore and global peers (INFY, TCS, Accenture). 3 years into the incoming CEO’s so-called restructuring plan, we believe The Board will address these ongoing execution/strategy challenges.”
According to an Economic Times report, Cognizant told ET that the assertions described in Wedbush’s report were “speculations at best.”
The company further said, “The report neglected how Cognizant was executing on its strategy, and several large deals – Zurich Insurance in Germany, National Insurance Company in India, and AXA, UK & Ireland – it had announced recently.”
Cognizant further added, “We have an industry-leading book-to-bill ratio of 1.2x, reinforcing our revenue growth expectations. We have expanded margins by 30 basis points year-over-year, and 50 bps sequential improvement, at a time when many of our peers are experiencing margin decline. Additionally, we returned more than $1 billion to shareholders through the first half of the year,”
IT services firm Cognizant on July 28, 2022 reported a net profit of $577 million for the second quarter ended June 30, up 12.7 per cent from the year-ago period. The company’s attrition was highest compared to peers.
Revenue was at $4.9 billion, up 9.5 per cent in constant currency on a year-on-year (YoY) basis.
Tech Mahindra added 6,862 new employees in Q1 with a total headcount that stood at 158,035. Attrition dropped to 22% compared to 24% in the previous quarter as the company started seeing synergies from its small-town campus strategy.
Infosys has reached a total headcount of 3,35,186 employees in Q1FY23, with a net addition of 21,171 people in the first quarter ending on June 30. The company’s attrition rate has increased to 28.4% in Q1FY23 expanding by 70 basis points from 27.7% in Q4FY22.
Wipro added 15,000 employees in the first quarter of this fiscal with a total headcount of 258,574 employees on June 30, 2022. The company has reported an attrition rate of 23.3 percent, slightly lower than the previous quarter’s 23.8 percent, but significantly higher than 15.5 percent during the corresponding quarter last year.
HCL added 2,089 employees and its attrition rate rose to 23.8 percent as compared to 21.9 percent in the previous quarter.
TCS added 14,136 employees in the April to June quarter with a total workforce of 6,06,331 employees globally and women account for 35.5 percent of the TCS workforce. Its attrition rate climbed up from 17.4 percent in the last quarter of the previous fiscal to 19.7 percent in the reporting quarter.