Attrition Soars To 36% At Cognizant; 2nd Worst Quarter Ever In Terms Of Attrition [Updated]
Cognizant reported a historic high attrition of 36 percent in the second quarter ending June 30.
Attrition Highest Among IT Companies
36 percent is the second-worst quarter in the company’s history.
It is also significantly above its Indian peers such as Infosys (28.4 percent), TCS (19.7 percent), Wipro (23.3 percent), and HCL Tech (23.8 percent).
This is also the company’s fifth straight quarter of seeing attrition levels above 30 percent.
Performance Under Scrutiny
Things are so bad that one analyst has demanded from the board to investigate the company’s underperformance, and possibly even consider replacing the incumbent boss, Brian Humphries.
Investment firm Wedbush Securities said that Cognizant’s current approach of avoiding/not competing for large deals is “unprecedented” since every IT services firm is competing for multi-year multi-million dollar work from Fortune 500 clients.
MD Moshe Katri said that “ongoing execution challenges” has been behind the company’s significant relative underperformance vis-a-vis its peers.
He noted some troubling trends, including:
- The loss of important senior personnel
- An inability to recruit senior personnel formerly with technology/growth companies
- The decision to stay away from large deals/transactions
- An inability to appropriately staff its bench, depressing revenue growth and likely resulting in competitive losses
- Significant, relative underperformance in growth rates compared to global peers (INFY, TCS, Accenture)
On July 28 the firm reported a net profit of $577 million for the second quarter ended June 30.
This is a growth of 12.7 per cent from the year-ago period.
Revenue was at $4.9 billion, up 9.5 per cent in constant currency on a year-on-year (YoY) basis.
Its headcount now stands at 3,41,300 after a modest addition of 900 employees sequentially.
In comparison Tech Mahindra added 6,862 new employees in Q1 with a total headcount that stood at 158,035.
Attrition dropped to 22% compared to 24% in the previous quarter thanks to its small-town campus strategy.
Infosys has reached a total headcount of 3,35,186 employees in Q1FY23.
It made a net addition of 21,171 people in the first quarter ending on June 30.
Attrition rate has increased to 28.4%.
Wipro added 15,000 employees in the first quarter of this fiscal.
This takes its total headcount to 258,574 employees as on June 30.
Attrition rate stood at 23.3 percent, slightly lower than the previous quarter’s 23.8 percent but still much higher than 15.5 percent during the corresponding quarter last year.
HCL added 2,089 employees.
Its attrition rate rose to 23.8 percent as compared to 21.9 percent in the previous quarter.
It added 14,136 employees in the April to June quarter, taking the total workforce to 6,06,331 employees globally.
Women account for 35.5 percent of the workforce.
Attrition rate grew from 17.4 percent in the last quarter of the previous fiscal to 19.7 percent in the reporting quarter.
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