Info-tech

Cognizant expects $50-70 million revenue hit in Q2 due to ransomware attack

TE Raja Simhan Chennai | Updated on May 08, 2020 Published on May 08, 2020

Cognizant Technology Solutions anticipates revenue and margin impact to be in the range of $50-70 million for the second quarter ending June 30, 2020, due to a ransomware attack in April. Additionally, it will incur certain legal, consulting and other costs associated with the investigation, service restoration and remediation of the breach, the company’s CFO Karen McLoughlin told analysts while discussing the first-quarter (March quarter) financial results.

Cognizant’s CEO Brian Humphries said the ransomware attack, which occured before the company enabling work from home (WFH) due to the Covid-19 pandemic, will negatively impact the Q2 results for two reasons. First, the attack encrypted the company’s internal systems, effectively disabling them, and the company proactively took other systems offline. This disruption included both select systems supporting WFH enabling such as virtual desktop infrastructure (VDI) and the provisioning of laptops that have been expected to further increase the WFH capabilities in April.

Read: Cognizant Q1 net profit drops 17 per cent to $367 million

“Second, some clients opted to suspend our access to their networks. Billing was therefore impacted for a period of time, yet the cost of staffing these projects remained on the books,” Humphries said.

“We expect the vast majority of revenue and margin impact from the ransomware attack to be in the second quarter. However, ongoing remediation costs will ensue through subsequent quarters. We will disclose the financial impact to you on a quarterly basis to ensure appropriate visibility,” he said.

“Ransomware attacks are becoming all too frequent across industries. We are using this experience as an opportunity to refresh and strengthen our approach to security. We are already applying what we’ve learned to further harden and strengthen our security environments and we are further leveraging our external security experts to help inform and guide our long-term security strategy. Cybersecurity will continue to be a top priority for us in the years ahead,” he added.

Published on May 08, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.