Cognizant Will Spend Rs 230 Crore To Retain Top Performers; These Skills Will Be Paid Higher Salaries
Cognizant created a $30 million budget to address its attrition issues. Internally called the ‘retention fund’, Cognizant aims to tackle the 19% attrition rate reported in December.
19% is high enough to set it apart from its peers, being one of the highest attrition rates in the entire IT industry. A big amount of this can be attributed to voluntary attrition where employees make their own decision to leave the firm in pursuit of better career prospects or return to education. While this rate was just 10% in the past, it has now grown to 16%.
Rush to Hire Digital Talent
Citing “intense competition” for digitally-skilled talent, Rajesh Nambiar, Chairman and MD of Cognizant India, attempted to justify the creation of the fund, which at $30 million is nearly Rs 230 crore. The skewed demand-supply for digital skills as a result, means while there are many seeking out and employing such talent- the people available to fulfil them is in short supply.
How Cognizant Will Use The Fund
The firm also said it is trying to build a “competitive and appealing employee environment” in a bid to attract talent and to reassure them of rewards based on performance, contribution and achievement.
Nambiar further explained that the firm wants to invest in its plans to engage top performers, build up their pay-for-performance approach and to “reinforce the career path opportunities created by the company’s growing momentum.”
Although Cognizant has a lot going for it in terms of its capabilities to service clients and unaffected delivery time and quality, employees are still leaving since it has taken a turn toward more digital work and a workforce that is more heterogeneous and dispersed, i.e. focus on talent over location.
Infosys’ Own Attrition Woes
While undergoing changes at management level Infosys also experienced attrition rates in the 20s levels, also pushing it to adopt some talent retention measures. The difference is that Cognizant has issues with retaining people specialising in digital “hot skills”.
However it has been predicted that if Cognizant can manage to make a turnaround in about half a year’s time, the attrition rate and the firm’s stock valuation and performance will follow suit.
It is worth noting that Cognizant has seen a couple of big developments for its Indian workforce. It has both added an extra hour a day and also added 10 leaves to its original 26. These moves have been interpreted as an attempt to boost its growth and margins, because it saw a revenue decline for the first time in 2020.
Cognizant hopes to reach the same level as its rivals in terms of servicing client expectations of speedy development, while enhancing work life balance of its workforce.
Cognizant Enforces 9-Hour Work Day For All 3 Lakh Indian Employees, learn more.