Info-tech

Cognizant implements merit-based pay hikes, promotions for staff

TE Raja Simhan Chennai | Updated on October 29, 2020

Predicts sequential increases in voluntary attrition in coming quarters with introduction of new model

Cognizant Technology Solutions, the US-based software company with a large offshore presence in India, has begun targeted merit-based increases and promotions from October 1. The model is based on skills, relative contribution and qualities needed to lead transformation and future growth.

“We are creating 2020 bonuses at higher levels than 2019,” said its CEO Brian Humphries.

The move “will hurt our cost structure in 2020 versus the prior year, but is an essential and normalised part of the cost structure in a services business,” he told analysts while discussing the company's financial results for the third quarter ended September 30, 2020.

Also read: Cognizant wins trade secret case in US court against Syntel

Cognizant’s net employee addition increased by 1,900 to 283,100 at the end of the September quarter as against 281,200 at the end of the June quarter.

“We anticipate some sequential increases in voluntary attrition in the coming quarters after this forthcoming merit-based promotions and salary increase cycle. We continue to prioritise the health and safety of all our associates and remain in a work from home and restricted travel posture with only limited exceptions,” Humphries said.

Voluntary attrition

Some employees usually resign after appraisals or getting their increments, said a company spokesperson on the CEO’s remarks on anticipated increase in voluntary attrition.

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Pleased with the employee engagement, Humphries told analysts, “Voluntary attrition is down for the fifth quarter in a row, notwithstanding that we're really pushing a meritocracy and performance culture these days. We have seen a big bifurcation between voluntary versus involuntary attrition, and we do expect voluntary attrition to pick up a little bit in the coming quarters as we go through the merit-based promotion and salary cycle we're going through.”

Also read: Cognizant reports 30 per cent decline in Q3 profit

Meanwhile, Cognizant reported a 30 per cent decline in net profit to $348 million for the third quarter ended September 30, 2020, against $497 million in the same quarter last year, and $361 million in the June quarter this year.

Revenue of $4.2 billion was down 0.1 per cent, including a negative 130 basis points impact from the exit of certain content services.

For fiscal 2020 the revenue is expected to be at the high end of the previously guided range at approximately $16.7 billion, said a company press release.

Published on October 29, 2020

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