Cognizant Posts Weakest Growth In Its History; But CEO Earns 421 Times More Than An Average Employee!

The New-Jersey based IT company, Cognizant hasn’t been quite on the better side of the books lately and there is not just one reason to say so. In the following article, we have listed down three major calamities Cognizant has allowed itself to be a part of. These are essential to put it out to the world, as the tech giant is humungous not only in India but everywhere around the world. Its massive population of employees forms up 50,000 in North America, around 18,300 in Europe, 2.1 lakh around the world, where India alone contributes to 1.9 lakh of this strength.

1. Cognizant Reflects Catastrophic Growth:

As a consequence of what is believed to have adopted a wrong strategy model in November 2016, Cognizant depicts an 18% drop in the net profit, from 15.2% last year and came down to $114 million in the first quarter, on 31^st March 2019, which last year was $520 million. This decline was reported primarily due to the provision of $117 million Cognizant made to the Indian authorities due to an unfavorable court verdict, leading to the company’s operating margin declining to 13.1% from 16.8% by the end of the December quarter.

Cognizant generates maximum revenue from the financial and healthcare sectors, whose revenue dramatically reduced by 1.7% year-on-year.

Cognizant has been following this path of torpid momentum since the past three years, slipping its growth to the lowest. Bad enough for Cognizant, its rivals Accenture, Infosys, Wipro, and TCS have been taking advantage of this and have been outperforming themselves. Accenture scored $4.72 billion incremental revenue, followed by $4.059 billion by TCS.

Cognizant has also been facing threats from the proliferation of newer technologies like automation software, cloud computing, and artificial intelligence-powered platforms, which are outdating the older approach of outsourcing engineers to handle IT solutions for companies.

2. 412:1 Gap Between CEO and Employee Pay

What’s more horrific than a sluggish growth in one of the major IT giants of the world, is the uncomprehended and widely abominable difference in the paycheck of the CEO and an employee of the company. The ratio of Cognizant’s CEO pay to the worldwide median employee pay has expanded from 390:1 to 412:1.

To understand better in numeral notation, CEO compensation in late 2018 was $14,094,531, while the median employee compensation was $34,183. This not only creates debris but also raises a sense of dismay among the employees. This CEO-worker ratio came down to 271:1 in 2016, which now is light years away from the 59:1 ratio when the company was formed in 1994.

3. Here Comes the Lawsuit on Bribery:

It comes as no spoiler when we hear about IT giants undergoing lawsuit filings. TCS recently was a victim of such an episode. The shocker here is that despite such a downhill performance of Cognizant, it still can stroll around clouds of Lawsuit under bribery. The suit filed last month is charged by a US pension fund, alleging that Cognizant executives had misled shareholders about audits conducted into its anti-corruption practices.

This is not the first time Cognizant is being a part of such litigation. In September 2016, two senior executives of Cognizant were filed by the Department of Justice, for bribing an Indian government official with $2 million. Cognizant has since then paid $25 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA).

Amidst a thick air of low growth in revenue, such instances of bribery and the abominable gap in the employer-worker ratio bring a defamed name to such a reputed IT giant all the around the globe. This could bring some serious consequences to the IT crowd of India, as the country pays homage to most of the techies in its humongous population.