Cognizant net income up 11.5%, to hire 50K from campuses this year

Nasdaq-listed Cognizant reported year-on-year (YoY) revenue growth of 10.9 per cent in constant currency to $4.8 billion for the first quarter ended March 31.

Its net income for the quarter increased 11.5 per cent YoY to $563 million, but dropped sequentially. When compared to peers TCS and Infosys, the company's performance was weaker. TCS reported revenue growth of 14.3 per cent YoY and Infosys clocked 21 per cent YoY growth.

But Rajesh Nambiar, chairman and managing director (CMD) of Cognizant India and president Digital Business and Technology, said the Q1 CY22 results were all about consistency. “This is our fourth consecutive quarter of double-digit growth. It has been a while since we have had this level of consistent performance and execution. But our biggest confidence comes from our order bookings, which grew 4 per cent YoY, resulting in trailing 12 months booking of $23.4 billion. A book-to-bill ratio of 1.2x,” he said.

One of the biggest concerns over the past few quarters at Cognizant has been rising attrition. Though attrition has inched up for Q1 as well, on a quarterly basis, the company has seen a second quarter of drop in attrition from the highs of 33 per cent in Q3CY21.   

Nambiar said the hiring engine of the company, along with the retention measures that had been taken, was finally showing results, but the biggest driver was growth. For CY22, he said, the company would hire 50,000-55,000 through campuses globally. India will see the majority of this hiring.

Rather Brian Humphries, chief executive officer of Cognizant, said at the analyst call that bringing down attrition was not just about salary increase but a complete overhaul of employee benefits. “We substantially overspent our allocated budget last year for compensation and promotions because we wanted to invest in our talent, try to mitigate attrition, and make sure we capture the market opportunity. But this is above and beyond simply financial measures. It’s total rewards, vacation policy, 401(k) policy, stock purchase price policy, et cetera, within total awards. And on top of that then, there’s a significant amount that we’ve been doing around investing in our employees, whether that is skilling or indeed enabling career path advancements,” he said.

Humphries highlighted the point that hiring more freshers has meant a significant shift in the structure of the company. “Three years ago, the bottom of the pyramid was light. But we have been aggressively hiring from campuses. We started with 17,000 a few years ago, boarded 33,000 freshers last year, and this year we are aiming for 50,000. This is not just India, it is happening across the globe. We have started campus programmes in North America, Europe, and other geographies,” Humphries said.

The other milestone that the company achieved this quarter was digital revenue, which is now 50 per cent of its revenue and grew 20 per cent YoY. “Digital for us has been shifted to a fast-growing market segment. All our investments, including $3 billion we have spent on acquisition, has made our digital portfolio strong,” Nambiar said.

He stated that with the current macro uncertainty and the inflation pressure, the reimagining of Cognizant as a digital-first company, along with the scale, has positioned it well to capture growth from both traditional as well as Cloud and digital deals.