Cognizant Rewards Employees With Bigger Bonus After Strong Q3

New Jersey-based IT major Cognizant Technology Solutions announced higher bonuses for its 2.19 lakh employees after reporting its biggest jump in quarterly revenue in three years. Cognizant, whose two-third employees are based in India, also raised its annual sales guidance for the third straight quarter on Wednesday. "I'm sending a note out to our entire company right after this call, saying that because of what they've delivered on revenue growth, what they've delivered on operational performance, we're going to share those rewards and pay out bonuses well above last year," Cognizant President Gordon James Coburn told analysts in an earnings call. Cognizant expects its revenues to rise to $12.41 billion in 2015, up from August forecast of $12.33 billion. Cognizant raised its guidance at a time when its India-based rivals such as Infosys are predicting muted growth in the December and March quarters. Cognizant's Q3 revenue of $3.19 billion was up 3.3 per cent over Q2, while operating margin of 19.4 per cent was within the target range, said CEO Francisco D'Souza. Cognizant's operational numbers were strong, but employee attrition remained high at 20 per cent. During the quarter, Cognizant added just 1,300 net employees. Cognizant said attrition was above "desired level", but added that high churn in the IT sector was an industry-wide problem. Offshore utilization increased by almost 300 basis points sequentially to approximately 76 per cent; excluding trainees, utilization was approximately 81 per cent, Cognizant said. Cognizant said its brand has never been stronger and has been validated by the success seen in global campus recruiting program this year. "In India this year we saw tremendous success in our campus hiring across premium engineering campuses. On campuses where students receive multiple offers from Cognizant and other tier 1 companies, on average 75 per cent of those students chose Cognizant over others," Mr Coburn said. Huge Lead Over TCS, Infosys Cognizant is likely to post a 21 per cent year-on-year rise in annual sales in 2015, which will be at least 500 basis points higher than the best-performing frontline IT company in India, according to Girish Pai of Nirmal Bang Securities. Infosys expects revenues to grow by 10-12 per cent in the year to March 2016. TCS does not give a sales guidance. Cognizant's rapid growth has been aided by its $2.7 billion acquisition of TriZetto Corp last year and the implementation of Obamacare in the US. Revenue from the company's healthcare division rose about 43 per cent to $940 million in the September quarter, accounting for about 30 per cent of total revenue. Revenue from the company's financial services business, its biggest, rose 18.6 per cent to $1.28 billion in the September quarter, Cognizant said. Up to Tuesday's close, Nasdaq-listed Cognizant shares had risen about 30 per cent this year, compared with an 8 per cent increase in the S&P 500 IT Services index. Cognizant shares closed 2 per cent lower at $66.82 on Wednesday on the management's "subdued" commentary about 2016 growth. (With inputs from Reuters)

Cognizant Rewards Employees With Bigger Bonus After Strong Q3

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