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Cognizant Might Drop off Market Share As the Growth Advise for CY21 lags Indian IT Peers; Attrition Rates Spike at Its Peak.

Cognizant Technology Solutions recorded much higher growth than anticipated during the March quarter earnings. The revenue related to the constant currency notion grew around 2.4%, bolstered by the ramping up to its healthcare system. The company, unlike many others, follows its annual revenues under the calendar year. Although the company has documented upheaving profits for the March quarter, Cognizant’s attrition woes have hampered nemesis recently.

The inability to hiring professional experts and technical mind bonkers has coerced the company to shut down its businesses. Momentarily, the closure has created havoc across the shareholders, and it is uncertain whether the company would record the anticipated results the following quarter. Cognizant CEO Brian Humphries analyzed the company’s perpetuated growth against expectations during the March quarter.

He further conducted a call with the analysts to discuss the software’s significant growth. Humphries said,” Revenue hoisting has been limited from the previous year due to the spiraled attrition, embarking on the extremely competitive market . Although we have delivered against our expectations, the tables have not turned upside down. The slashing revenues caused mounting pressure on salaries as rows erupted by the newly recruited contingent workforce. We have to bypass the stumbling block and fabricate a way out as discussed during the course of the last earning call.”

He instructed that the company is resorting to addressing the menace of the repetitive constraints and is looking to improve the situation by increasing investments in their people’s development by integrating training and job rotations to bolster their career growth opportunities. The company’s attrition rate is among the highest in the world, compared to those of its Indian peers. The staggering attrition rise to 21% in the latest quarter pressurized around 15,600 employees leave the firm on the back of uncertain salaries and impotent structure of growth.

Even though the inability to hire exclusive talent has got highlighted long, the scenario showcased some positive signs for the company. The company’s revenues got driven by the healthcare sector as it grew around 7 percent in constant currency. Net profit rose to $505 million in the January-March quarter against the $367 million during the same period last year. The calendar year gets followed to be the fiscal year by Cognizant.

The year-on-year rise in the digital revenues popped up to surprising numbers as it recorded a 15% rise. Over the past few years, Cognizant’s majority proportion of the earnings gets stacked from the digital avenue, and that’s why the company is comprehending to investing more in hiring professional and digital experts. Previously, during the last year company embodied around 39% in digital revenue, and the whereabouts have spiked up to 44% in the latest report about the recent quarter.

The remnant of the previous year has been declining on the back of improved performance in the quarter. In response to a bolstering start to the year, the company has diverted to an optimistic outlook for FY2021. Cognizant expects the inception of growth on the annual revenue, contemplating a rise of 5.5-7.5 percent in constant currency terms compared to the range it gauged last year.

The IT giant has been prospering its abutment to India in the dire state of affairs and has given significant backing to their allies. CEO Brian Humphries in a statement; asserted that the health and safety of their associates is the utmost priority, and the company is working towards following the coronavirus protocols strictly. He conveyed his underpinning to India amid the ongoing humanitarian crisis across the nation. He has got lauded by his Indian associates for the humankind gesture.

cognizant

COGNIZANT CRUMBLED DUE TO HIGH PEER PRESSURE ARISING FROM VOLUNTARY ATTRITION

Financial crumbling has stuck by the company over the past year as it lags upswing to progress and has propagated a decline of 1.7% year-on-year revenue. The company hasn’t been able to diagnose the repercussions of the voluntary attrition, which has hampered a delay in their working execution. It has fringed profoundly, leaving no scope of heave in the foreseeable future.

In contrast to the other tech giants’ attrition rates, TCS stood at 7.2%, HCL’s was 9.9%, while Wipro’s attrition stood at 12.1%. Enfeebling has become a compelling challenge to overcome for Cognizant technology solutions as voluntary attrition rates have reached sky-high figures over the preceding year.

Cognizant voluntary attrition rose to 18%, a 2% growth over the December quarter, despite a series of perpetual events to retain digital talent. The management has audaciously grudged on its stance about the ability to hire talented professionals. The storyline contradicts the present scenario as some management authorities have come to face the underlying reality of employees being left stranded. Rajesh Nambiar, EVP and Chairman of Cognizant India, said, “There a tight labour market and as an industry, we are perceiving a war of talent.”

Cognizant CEO Brian Humphries


However, the company’s rates have been high Indian IT peers reported low figures amid the long-standing repercussions of the coronavirus pandemic. The analysts in India believe that the decline in rates is a short-term melody for Cognizant, is likely to increase with the opening of businesses after the temporary lockdown gets taken down. Substantially, the company is trying to combat the peer pressure from higher stated attrition rates by setting up a $30 million corpus. The corpus would get integrated as a retention fund as a backfiring slash to the competitors allegedly offering their employees huge benefits. It would vent a pathway for Cognizant to hold back immaculate performers and digitally prowess employees in the system.

A study got reviewed by the analysts at the Kotak Institutional Equities in which they prudently asserted three challenges for the IT giants. The prolonged challenges have stayed in retention with the company, and as it sights the targets for the next quarter, the defiance standstills momentarily. Kawaljeet Saluja, ‎head of research at Kotak Institutional Equities, the voluntary attrition levels have been at their pinnacle for the first time since April 2019. She further said that the attrition rise in the digital industry has its impact on the industry. It is visible in the hastenings of the growth prospectus and could a fretful trend going ahead.

Apart from the organized growth in specific factors during the Q1 of Calendar year 2021, there is an imbalance in the supply-demand impetus across cloud, data, and digital engineering. The company is rigorously working to find a way out of the stumbling block, as directed by Rajesh Nambiar, the chairman of Cognizant India.

The company is addressing the issue through a comprehensive groundwork about job rotations and personnel training. Over the past two years, it has been going through a transition period with a goal to bring in a meritocracy. Attrition rates of other companies are slightly on the downward spiral, and it is causing weathering peer pressure within the company’s ranks.

 

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