US based IT giant, Cognizant Technology Solutions reported a decrease in its workforce during the December ending quarter, Q4FY24.
However, IT giant expects to resume hiring in every quarter of 2025, reflecting a positive outlook due to improving demand.
The company, which follows a January-to-December fiscal year, announced its fourth-quarter earnings on Thursday, followed by a press conference to discuss its performance.
Workforce Decline in Q4 2024
In the fourth quarter of 2024, Cognizant workforce dropped by 10,700 employees compared to the same period last year and by 3,300 compared to the previous quarter.
This brought the total headcount to 336,800 as of December 31, 2024.
Commenting on this, CFO Jatin Dalal stated, “As we look forward, we feel that we will add headcount as we need to grow and as we grow during the course of 2025. And that’s what is at play and nothing beyond that.”
Rising Attrition Rates
Cognizant experienced an increase in employee attrition, which rose by 2.1 percentage points to 15.9% on a trailing twelve-month basis.
This trend aligns with what has been observed across other Indian IT firms in recent quarters. Dalal explained that this rise in attrition is linked to slightly better market demand, which has allowed the company to hire to meet its growth needs.
The company’s utilization rate dropped by 2 percentage points, reaching 82% in the fourth quarter. Despite this, Cognizant’s management noted significant improvements in utilization throughout 2024.
Employee Rehiring Efforts
While facing these workforce challenges, Cognizant has managed to bring back 13,000 former employees, with an additional 10,000 expressing interest in returning to the company.
CEO Ravi Kumar S claims this as a sign of the company’s strong appeal to its workforce.
Financial Performance
Cognizant reported fourth-quarter revenue of $5.1 billion, representing a 6.8% increase compared to the same period last year (6.7% in constant currency).
This figure was at the higher end of the company’s guidance range. For the full year of 2024, Cognizant’s revenue stood at $19.7 billion, marking a 2% year-over-year increase (1.9% in constant currency).
The company’s operating margin improved to 14.7% for the full year, up by 80 basis points from the previous year. Additionally, the adjusted operating margin rose by 20 basis points to 15.3%.
Cognizant is heavily investing in artificial intelligence, with efforts to develop AI-driven platforms and expand its capabilities through acquisitions, including Thirdera and Belcan.
CEO Kumar S emphasized that the company’s focus on customer needs, flexibility, and technology is driving the adoption of enterprise-level generative AI.
Comparison with Industry Peers
Cognizant’s workforce reduction contrasts with competitor Accenture, which added 24,697 employees during its December quarter, marking its third consecutive quarter of net hiring. Accenture operates on a September-to-August fiscal year.
In India, the top five IT services firms; TCS, Infosys, HCLTech, Wipro, and Tech Mahindra reported a combined net decline of 2,587 employees in Q3 FY24 (October-December 2024).
This decrease was attributed to seasonal factors such as furloughs and reduced hiring activity. This followed a strong September quarter, during which these firms collectively added 15,033 employees.
Cognizant remains optimistic about its future growth, with plans to expand its workforce in 2025 despite recent workforce reductions and rising attrition.
The company’s investments in AI and technology, coupled with its steady financial performance, position it for continued growth in the coming year.
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