Cognizant expects revenue to dip 2% in 2020 amid Covid-19 crisis

IT services major Cognizant said it was expecting its revenues in 2020 to see a dip of 0.5-2 per cent (on constant currency basis), even though the Nasdaq-listed firm witnessed 14 per cent jump in order bookings in the first half of the year on a year-on-year (YoY) basis. With the world staring down the barrel of a Covid-19 pandemic, company has suspended giving revenue guidance, like its larger Indian peers — Infosys and Wipro.

In the June quarter, Cognizant saw its net profit decline 29 per cent at $361 million, compared to $509 million, while it fell 1.63 per cent sequentially. The revenue for the quarter saw a decline of 3.4 per cent at $4 billion on a YoY basis, primarily ow­ing to the exit from the content service business and the impact of the ransomware attack. In sequential terms, net profit declined 5.21 per cent.

In comparison, rival Tata Consult­ancy Services saw 6.3 per cent drop in revenue in the June quarter, while Infosys posted 1.5 per cent rise in its top line in constant currency terms on YoY basis. In sequential terms, it dec­lined 2 per cent. “The revenue across our business segments was impacted by the pandemic and the ransomware attack, primarily in Apr­il,” the firm said, adding, “Reve­nue and bookings improved sequentially through May and June.” 

“We made progress against our cost structure initiative, allowing us to fund investments aligned to our long-term growth strategy,” said Karen McLoughlin, chief financial officer, Cognizant. The firm said it was looking at reducing its headcount by 15,000 under its ‘Fit for Growth Plan’ programme, of which 5,000 have been reskilled, while others have been released.

Cognizant has announced the appointment of a new CFO as incumbent McLoughlin has decided to retire after 17 years of service. Jan Siegmund, who previously served as CFO of automatic data processing, has been appointed new CFO, effective September 1, it added.