Information technology services and consulting company, Cognizant Technology Solutions Corp. has announced a historic high Attrion of 36 percent in the second quarter, ending on June 30, 2022.
This is now under the spotlight after one analyst has demanded from the board of Cognizant to investigate the company’s underperformance, and possibly even consider replacing the incumbent boss, Brian Humphries.
Wedbush Securities, a privately held investment firm based in Los Angeles said: “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 in a notice dated 29 July 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 added.
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:
1. The loss of important senior personnel.
2. An inability to recruit senior personnel formerly with technology/growth companies.
3. The decision to stay away from large deals/transactions.
4. An inability to appropriately staff its bench, depressing revenue growth and likely resulting in competitive losses.
5. 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.
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.
Cognizant headcount expanded to over 341,000 employees globally in Q2 amid an intensely competitive labour market. Attrition of 36 percent is the second-worst quarter in the company’s history. It is indicating strong demand for tech talent across the industry.
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 the 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.