Cognizant attrition at 29%; to hire 30,000 in India – Times of India
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BENGALURU: Cognizant‘s quarterly annualised voluntary attrition surged to a record 29% in the second quarter, from 18% in the previous quarter, as the company continues to struggle with the departure of thousands of employees at the junior and mid-senior levels in India. This means that the company lost 331 employees each day on average in the last quarter. Including involuntary attrition (those asked to go), the rate was 31%.
Attrition has spiked among all IT services companies as demand for engineering and programming talent – and especially those armed with digital skills – soars. That war for talent is expected to continue for the rest of the year. But Cognizant’s numbers have surpassed that of all its peers by a wide range.
“This macro demand backdrop has also created a demand-supply imbalance in key skills and has meaningfully increased industry attrition. As we noted in last quarter’s remarks, we expected attrition to go up sequentially in Q2, and it did,” chief executive Brian Humphries said in a conference call with analysts. The attrition has been most acute in India, where almost two-thirds of the company’s employees are based, and Humphries termed the country as one of the “hottest market we have seen or our team has seen over the last 10-plus years.”
“Everybody is hiring from each other. We are managing attrition with lateral hires, making sure the customers are not impacted. Our margins are higher than they used to be,” said Rajesh Nambiar, president of digital business and technology at Cognizant.
Cognizant’s attrition number has been more than 20% for the last two years under Humphries. The company said in the first quarter it lost some deals because there weren’t enough employees. Attrition at TCS, Infosys and Wipro has also risen, but are lower than Cognizant’s at 8.6%, 13.9% and 15.5% respectively on a trailing twelvemonth basis.
Cognizant said it is putting in measures to plug attrition. “Annual merit-based increases have been announced here in the last few weeks. They’re effective October 1. That’s on top of a whole host of other ad hoc measures: out-ofcycle increases, promotion, retention dollars. We’ve announced a shift in the last few months to quarterly promotion cycles for billable resources,” said Humphries.
To counter the impact, the company expects to hire 100,000 laterals this year and train another 100,000 associates. “We expect to onboard approximately 30,000 new graduates in 2021 and make 45,000 offers to new graduates in India for 2022 onboarding,” the company said.
However, Kawaljeet Saluja, head of research at Kotak Institutional Equities, said the company’s attrition goes beyond the demand for hot skills. “The company has little choice but to go full throttle on laterals to fulfill buoyant demand. High attrition backfill using laterals entails risks to margins (higher cost of laterals, lower utilisation) and execution,” he wrote in a note.
Hansa Iyengar, principal analyst – IT strategy (enterprise IT), Omdia, said even though Cognizant increased its revenue guidance and is hiring close to 30,000 fresh graduates, a 31% attrition rate would impact its ability to provide high-quality undisrupted services to customers.
Attrition has spiked among all IT services companies as demand for engineering and programming talent – and especially those armed with digital skills – soars. That war for talent is expected to continue for the rest of the year. But Cognizant’s numbers have surpassed that of all its peers by a wide range.
“This macro demand backdrop has also created a demand-supply imbalance in key skills and has meaningfully increased industry attrition. As we noted in last quarter’s remarks, we expected attrition to go up sequentially in Q2, and it did,” chief executive Brian Humphries said in a conference call with analysts. The attrition has been most acute in India, where almost two-thirds of the company’s employees are based, and Humphries termed the country as one of the “hottest market we have seen or our team has seen over the last 10-plus years.”
“Everybody is hiring from each other. We are managing attrition with lateral hires, making sure the customers are not impacted. Our margins are higher than they used to be,” said Rajesh Nambiar, president of digital business and technology at Cognizant.
Cognizant’s attrition number has been more than 20% for the last two years under Humphries. The company said in the first quarter it lost some deals because there weren’t enough employees. Attrition at TCS, Infosys and Wipro has also risen, but are lower than Cognizant’s at 8.6%, 13.9% and 15.5% respectively on a trailing twelvemonth basis.
Cognizant said it is putting in measures to plug attrition. “Annual merit-based increases have been announced here in the last few weeks. They’re effective October 1. That’s on top of a whole host of other ad hoc measures: out-ofcycle increases, promotion, retention dollars. We’ve announced a shift in the last few months to quarterly promotion cycles for billable resources,” said Humphries.
To counter the impact, the company expects to hire 100,000 laterals this year and train another 100,000 associates. “We expect to onboard approximately 30,000 new graduates in 2021 and make 45,000 offers to new graduates in India for 2022 onboarding,” the company said.
However, Kawaljeet Saluja, head of research at Kotak Institutional Equities, said the company’s attrition goes beyond the demand for hot skills. “The company has little choice but to go full throttle on laterals to fulfill buoyant demand. High attrition backfill using laterals entails risks to margins (higher cost of laterals, lower utilisation) and execution,” he wrote in a note.
Hansa Iyengar, principal analyst – IT strategy (enterprise IT), Omdia, said even though Cognizant increased its revenue guidance and is hiring close to 30,000 fresh graduates, a 31% attrition rate would impact its ability to provide high-quality undisrupted services to customers.
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