In highest-ever attrition, Cognizant loses over 11,000 employees in June quarter
The $17-billion Cognizant Technology Solutions lost over 11,000 employees (net) in the June quarter — the highest ever net employee attrition in a single quarter for the company, said sources.The US-based company is the second largest software company in India after Tata Consultancy Services. At the end of March quarter, the company had 2,91,700 employees but the number declined sharply to 2,80,000 — of which nearly 2,00,000 are in India.Cognizant’s net headcount declined 2.5 per cent year-on-year, including the roughly 7,000 associates exited under the Fit for Growth plan, said the company’s CFO Karen McLoughlin, who incidentally has also quit and her departure was announced by the company on Thursday. She is the third senior-level executive after Ramkumar Ramamoorthy, CMD of Cognizant India, and Pradeep Shilige, Head of Global Delivery, to leave the company in the last one month.“Employee right sizing at Cognizant was all over the news earlier too as the new CEO is making delivery more agile. It is not unprecedented for IT service to witness reduction in people, but yes the quantum is large compared to earlier times,” said Yugal Joshi, Vice-President at the research firm Everest Group.Decline in profitMeanwhile, Cognizant reported a 29 per cent decline in net profit to $361 million for the second quarter ended June 30, as against $509 million for the same period last year. Revenue was $4 billion, down 3.4 per cent, including a negative 210 basis points impact from the exit of certain non-strategic content services business announced in Q3 2019 (Cognizant has now fully exited this subset of services), and the ransomware attack, said a press release.Brian Humphries, CEO, Cognizant, told analysts that the company executed well in the June quarter despite the unprecedented challenges of a global pandemic and a ransomware attack.In the first half of 2020, bookings increased by 14 per cent. Full year 2020, the company expects revenue to be in the range of $16.4-16.7 billion, the release said.Cognizant did outperform peers such as TCS and Wipro, whose sales declined 7.8 per cent and 7.2 per cent year-to-year in USD, respectively, in Q220. However, Cognizant fell short compared to Infosys, which benefited from the durability of its Navigate Your Next strategy, which has laid a strong foundation enabled by digital-related services and led by cloud and led to relatively flat performance during the quarter, said an analyst of the US-based research firm TBR.According to Joshi , Cognizant has done somewhat better than peers, especially in Europe that was probably driven by the acquisition of Zenith Technologies. Unlike say TCS, Cognizant also focusses on inorganic route to build capabilities and grow.