Cognizant Attrition High Time, Impacting Revenue

Even as Cognizant has made offers to 28,000 campus hires for onboarding this year, the company’s attrition rate continues to stay very high, compared to those of its Indian peers. Some of the latter are seeing these rates decline, but Cognizant’s has risen in the past two quarters and has hovered in the range of 18%-24% for the past nine quarters.

In the latest quarter, the company’s attrition rose to 21%, translating to about 15,600 employees leaving the firm. It was 19% in the preceding quarter and was 24% in Q2 of last year. In contrast, in the latest quarter, TCS’s attrition was just 7.2%, HCL’s was 9.9%, Wipro’s 12.1%, and Infosys’s 15%.

Cognizant’s voluntary attrition rose to 18%, a 2% increase over the December quarter, despite a series of measures to attract and retain talent. The management said in some cases, commercial opportunities were forgone due to an inability to source talent. “There a tight labour market and as an industry, we are seeing a war for talent,” said Rajesh Nambiar, EVP and chairman of Cognizant India.

Attrition, he said, is a challenge. “We are addressing it in a structured way as we go through the transition and bring in a meritocracy (the company has been undertaking a major restructuring over the past two years). The market for skilled digital talent is intensely competitive and we are competing in a different space compared to the Indian pure plays. Attrition rates are also not comparable between Cognizant and other Indian peers as some firms calculate IT services and BPO attrition separately,” Nambiar said.

FutureTech had reported that Cognizant has set up a $30 million corpus, dubbed as a retention fund, to hold back top performers and digitally skilled employees. The corpus is used when such employees receive offers from competitors.

Kawaljeet Saluja, ‎head of research at Kotak Institutional Equities, wrote that Cognzaint’s voluntary attrition at 18% is at the peak levels seen in 2019. “Apart from Cognizant specific factors, (there are) others such as a supply-demand imbalance in the cloud, data and digital engineering, and competition from captives. Attrition is high in digital talent. Impact of attrition on growth and margins is clearly visible and a worrying trend,” he said.

Cognizant CEO Brian Humphries in the investor call said daily resignations increased through the first quarter, peaking in March. “On a positive note, resignations slowed in April and continued to slow in May. However, given two months’ notice periods in India, we anticipate further sequential increases in attrition in Q2, before a gradual recovery in the second half.”

To woo talent, the company has shifted to a quarterly promotion cycle for billable associates, job rotations, affected fresh salary increases/promotions for hot skills and critical positions. It has expanded its campus recruitment drive from 100 accredited institutes to 300 colleges, including some in tier-2 cities. “Cognizant stands as a magnet for skilled talent especially on campuses. Our campus acceptance rate among India’s top engineering colleges has risen to 80%. The offer to acceptance ratio is the highest in the industry,” Nambiar said.

Related posts

Leave a Comment