33% Cognizant Employee Quit In 90 Days: Big Bonuses Announced To Retain Employees
We human beings are always looking to optimize the available resources. We want to make the most out of them. But what if these resources are limited and the number of interested parties is high? Obviously, there will be a war between all the interested parties. A metaphoric one or a real one. But war will be there for sure. An exact similar situation is being experienced in the IT industry.
Pandemic-induced increase in demand for IT services remains robust. It has caused demand for skilled labor to skyrocket. Because of this high attrition rates remain a top concern for IT firms.
Cognizant witnessed an attrition rate of 33% in the last quarter
IT services giant Cognizant Technology Solutions reported the highest attrition among its peers at 33%. To reign in the increasing attrition rate, the company has decided to allocate higher bonuses to retain employees amid a war for talent across the tech industry.
Cognizant CEO Brian Humphries told analysts that the company will give out bonuses that are higher than last year and will also implement targeted merit increases and promotions in the fourth quarter.
According to the CEO, even though this will hurt the cost structure for 2021 versus the prior year, it was an essential and normalized part of costs in the services business.
The attrition rate at tech companies is increasing exponentially
The step to curb attrition come at the time when the company reported voluntary annualized attrition at 33%. Even though this is lower than 37% in the previous quarter, it is more than its Indian counterparts TCS with 11.9%, Infosys with 20.1%. Notably, the company added 17,200 new employees in the July-September quarter taking the total headcount to 3.18 lakh.
The increased majors being taken by the IT companies to retain the talent will lead to an increase in the average increment of the overall IT sector.
In 2019, the IT sector had witnessed an average increment of 9.5%. In next year, the pandemic had pushed employees to the wall and had affected the increment rate severely. In 2020, the attrition rate was merely 5.2%. In 2021, that rate jumped back to 8.8% and now in 2022, it is being forecasted at 9% to 11%.
It should be noted that the company follows the accounting calendar starting from January to December.