Cognizant worried about its India attrition

IT services firm taking series of measures to contain the problem, says CFO

Nasdaq-listed information technology (IT) services company Cognizant, which has been seeing an increase in employee attrition rate in the past couple of quarters, said this was primarily happening in India, where a major chunk of its workforce is located.

The US-headquartered company, which fiercely competes with large Indian players like TCS and Infosys, said it was taking a number of employee-friendly measures, including providing right career growth opportunities, rotation of roles, various kinds of client engagements and giving international exposure, said Karen McLoughlin, chief financial officer of Cognizant.

“…it’s been a little higher than we would have liked it to be in the last two quarters in particular. Attrition for us continues to mainly be at the junior levels. And because most of our workforce is in India, that’s where the vast majority of our attrition happens,” said McLoughlin during a Credit Suisse conference call on Wednesday.

In the quarter ended September 30, 2015, Cognizant had reported a 100 basis points spike in attrition to 20 per cent, one of the highest in the industry. Infosys, which has seen high attrition, managed to tame it to certain extent after Vishal Sikka took charge as CEO in August last year.

McLoughlin said attrition was going up, as there was a fairly high demand environment because of which people were changing jobs. Besides, there are a lot of opportunities opening up for tech employees in India. “You have other high-tech firms who have moved into India with big development centres and so forth. Investment banks are now big in India. So there’s a lot more opportunities for folks who would have looked for a firm like Cognizant.”

On the measures the company was taking to curb rising attrition, the CFO said while the company wanted to retain its best talent with better compensation, wage increases has become less of an issue as compared to the overall package. This includes providing the right development opportunities, career rotation opportunities and providing opportunities to work on a number of client engagements and improving promotional prospects. “So you know you really focus on making sure you’re doing the right things for people and taking care of them and it’s more than just a pay package. And that’s what we’re focused on.”

Among the offshore-centric IT services companies, Cognizant reported one of the best quarters in the July-September period of 2015, while upping its revenue guidance for the full year by 90 basis points to 21 per cent. “We had a very strong year this year, so that allows us to really increase our variable compensation accruals. And we will share the benefits that the company has generated with our employees when it comes trying for bonuses and that will certainly help,” he said.