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Raja Simhan T.E.

Chennai , Nov. 5

Cognizant Technology Solutions saw employee attrition level increase to about 20 per cent in the third quarter of this year. This was four percentage points higher than in third quarter of 2005, according to Mr Francisco D'Souza, COO.

The annualised attrition of 13.2 per cent in the first half was two percentage points below the company's annualised attrition of 15.3 per cent for the first half of 2005.

However, the company saw a reversal of the positive attrition trends from earlier this year, he told analysts during a conference call to discuss the company's third quarter financial results.

"Our October numbers show lower attrition rates than the third quarter and we will continue to closely monitor the trend. Attrition has not impacted the company's delivery to clients."

Historically, Cognizant has experienced increase in attrition during the third quarter as employees returning to graduate school leave the company.

However, the increase last quarter was certainly higher than the company expected or desired.

"Based on our extensive exit interview process, higher education ranks highly but no single factor accounts for the increase," he said.

"We are committed to returning attrition to its normal level and ensuring that our employees have world-class opportunities to develop their talents and careers within Cognizant"

The Nasdaq-listed company provides e-business solutions and IT application management services to Fortune 500 and blue chip companies in the US and Europe. Out of the 35,000 people it employs globally, around 27,000 are in India.

Mr Lakshmi Narayanan, President and CEO, said that employee turnover continues to be predominantly at people who are under two years in the organisation.

The turnover at senior and mid levels continues to be consistent with the prior quarter, and there is no significant increase.

"As we have stepped up the hiring of college graduates, we see a slight uptick in the attrition rates there."

On expansion in tier II cities, Mr Narayanan said that it was found that attrition was lower in locations like Coimbatore, Hyderabad and Pune.

These University towns, which produce many engineering and business school graduates, will help Cognizant hire increased numbers and keep the attrition low, he said.

Mr Gordon Coburn, CFO, said that the company carries a deep bench and has been successful in meeting recruiting targets.

"Are we disappointed that it (attrition) went up in Q3? Yes. Are we addressing it directly and making sure that we manage it to where we want? The answer is yes to that as well."

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