BENGALURU: Cognizant’s sluggish performance in the September quarter has many brokerages lowering price targets. In an interaction with TOI, Rajesh Nambiar, chairman and MD of Cognizant India, spoke of the opportunities and challenges before Cognizant. Excerpts:
It’s another disappointing quarter, and the third consecutive quarter of guidance being lowered. This performance comes at a time when some of your peers are growing in double-digits.
Revenue wasn’t as much as we wanted it to be. The challenges on revenue included many factors – uncertain macroeconomic environment, reduction in US onshore billable resources. Onsite attrition in the US is higher than what we anticipated. Reduction in visa travel and inability to send people onsite from India was another factor. Covid has induced a shift to nearshore and offshore centres, and most of the growth came from the India centre.
What’s leading to higher attrition in the US?
It’s a challenging market and our ability to ensure we are attracting the right set of markets in the US and the ability for us to retain in some challenging areas is lower than what we liked it to be. However, our talent retention rate has improved. We are increasing subcontractors in the US.
Your lower guidance means revenue will be lower by $600 million.
There’s lower inorganic contribution this year. Normally, we have a high level of inorganic contributions. We have acquired a couple of practices from OneSource. I see this as a margin quarter rather than a revenue quarter. The headcount challenges may take 2-3 months before it gets corrected.
With higher attrition in North America, what is the hiring target for India?
Attrition has reduced. Demand is strong and we continue to hire in India. We are one of the largest campus hirers with 55,000 freshers in the last 12 months. We are also going to make significant lateral additions this year.
Despite several interventions, you are still battling higher attrition, including a 6% involuntary attrition?
Interventions have added value. Sequentially, there is a reduction in attrition. The absolute number is not apples to apples comparison. We have taken a much liberal view of attrition. We don’t eliminate BPO, we don’t eliminate freshers out of the numbers. Most companies do that. There was involuntary attrition due to failed background checks after we onboard them – they don’t have the right background to continue in that role. We have no tolerance for anyone who doesn’t clear background checks.
You’ve advanced the merit cycle to the September quarter of 2023, so will employees get two increments in a span of 6 months?
It’s a one-time correction from Q4 to Q2. It’s very important to align it with the performance, bonus cycles and visible commitment to investment in our talent pool.
Is involuntary attrition also because of action against moonlighting?
No. Moonlighting is a violation of the contract and unethical. However, moonlighting should be distinguished from gig working. We are ensuring background checks, aligning with our code of conduct.
It’s another disappointing quarter, and the third consecutive quarter of guidance being lowered. This performance comes at a time when some of your peers are growing in double-digits.
Revenue wasn’t as much as we wanted it to be. The challenges on revenue included many factors – uncertain macroeconomic environment, reduction in US onshore billable resources. Onsite attrition in the US is higher than what we anticipated. Reduction in visa travel and inability to send people onsite from India was another factor. Covid has induced a shift to nearshore and offshore centres, and most of the growth came from the India centre.
What’s leading to higher attrition in the US?
It’s a challenging market and our ability to ensure we are attracting the right set of markets in the US and the ability for us to retain in some challenging areas is lower than what we liked it to be. However, our talent retention rate has improved. We are increasing subcontractors in the US.
Your lower guidance means revenue will be lower by $600 million.
There’s lower inorganic contribution this year. Normally, we have a high level of inorganic contributions. We have acquired a couple of practices from OneSource. I see this as a margin quarter rather than a revenue quarter. The headcount challenges may take 2-3 months before it gets corrected.
With higher attrition in North America, what is the hiring target for India?
Attrition has reduced. Demand is strong and we continue to hire in India. We are one of the largest campus hirers with 55,000 freshers in the last 12 months. We are also going to make significant lateral additions this year.
Despite several interventions, you are still battling higher attrition, including a 6% involuntary attrition?
Interventions have added value. Sequentially, there is a reduction in attrition. The absolute number is not apples to apples comparison. We have taken a much liberal view of attrition. We don’t eliminate BPO, we don’t eliminate freshers out of the numbers. Most companies do that. There was involuntary attrition due to failed background checks after we onboard them – they don’t have the right background to continue in that role. We have no tolerance for anyone who doesn’t clear background checks.
You’ve advanced the merit cycle to the September quarter of 2023, so will employees get two increments in a span of 6 months?
It’s a one-time correction from Q4 to Q2. It’s very important to align it with the performance, bonus cycles and visible commitment to investment in our talent pool.
Is involuntary attrition also because of action against moonlighting?
No. Moonlighting is a violation of the contract and unethical. However, moonlighting should be distinguished from gig working. We are ensuring background checks, aligning with our code of conduct.