Cognizant Technology Solutions will give double-digit salary hikes to its offshore employees in a bid to battle rising attrition. Most of Cognizant's 1.87 lakh employees are based in India.
Cognizant Technology Solutions will give double-digit salary hikes to its offshore employees in a bid to battle rising attrition. Most of Cognizant's 1.87 lakh employees are based in India.
Offshore employees will get roughly 10 per cent hikes, while on-site wage hikes will be in lower single digits. Wage hikes and promotions are effective July 1.
The double-digit hike comes at a time when Cognizant's attrition jumped sequentially to 16.9 per cent in the June quarter from 14.1 per cent in the March quarter, Nomura estimated.
At a post-earnings analyst call on Wednesday, Gordon J. Coburn, president of Cognizant said the company gave salary increments at the higher end of the industry to send a strong message to employees that they can have terrific careers and great growth paths.
"The key things we're doing is a lot of efforts around employee engagement that we started when we saw a spike last year, and that has helped things. We've given healthy increments, which we think will help things," Mr Coburn said. (Read the full transcript here)
Cognizant's attrition rate in the June quarter is well below the 18.7 per cent attrition recorded in the corresponding quarter of 2013, but is still on the higher side, analysts say. Cognizant's bigger rival TCS reported an attrition of just 12 per cent in the June quarter.
Mr Coburn says attrition levels always increase from March to June quarters because some employees quit the company after bonuses are paid out in March. Some employees quit to join higher education, he added.
Cognizant said that the overall attrition rate adjusted for these seasonal factors is going in the direction the company wants.
"Not fully there, but certainly, we've made good progress," Mr Coburn said.
Cognizant's wage hike matches its bigger rival TCS, but is substantially higher than Infosys, which announced a 6-7 per cent hike for offsite employees and 1-2 per hike for onsite employees. TCS, India's biggest outsourcing firm, announced a wage hike of 10 per cent for employees in India and 2-4 per cent for staff in developed markets.
Last year, Cognizant had announced a bonus in excess of 100 per cent for all its employees to tackle rising attrition in the company. (Read the story here)
On Wednesday, Cognizant shares crashed as much as 17 per cent after the US-based outsourcer cut its full-year sales outlook from 16.5 per cent to "at least 14 percent". If Cognizant clocks 14 per cent sales growth in 2014, it will be the slowest full-year sales growth in its 20-year history. (Read full story)
Longer-than-anticipated sales cycles for some large deals had led the company to adopt a more conservative stance for the rest of the year, Chief Executive Francisco D'Souza wrote in a statement.
(With inputs from Reuters)
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