BENGALURU: Nasdaq-listed IT services company Cognizant has introduced two merit cycles for employees. This move is to reduce attrition level in the company. In an email to employees, Cognizant CEO Brian Humphries said, “We will move up next year’s merit cycle to take effect April 1, 2023. That means eligible associates at levels up to Associate Director will have two merit increases in the space of six months.”
For levels up to Associate Director, there will be two merit increases- October 1, 2022 and April 1, 2023. For directors and above, the company will increase merit effective January 1, 2023 and April 1, 2024. The longer timeframe between increases is a one-time occurrence till they align the cycles.
The company’s trailing 12-month voluntary attrition for the September quarter stood at 29%, which is less than the previous quarter’s 32%. Cognizant has reported a 15.6% increase in net profit to $629 million for the third quarter ended September 2022, compared to USD 544 million in the year-ago period. The company follows the calendar year. Its revenues in the September quarter stood at $4.9 billion.
For the second time, the company has revised its 2022 revenue guidance. It revises full-year 2022 revenue growth guidance to 4.5%, or 7.0% in constant currency. This is lower than its previous guidance- 8.5-9.5%. The CEO said, “We underperformed on two important dimensions: Revenue and bookings... we are finally seeing sustained reductions in resignations across the globe. This will lead to significant reductions in voluntary attrition in Q4, which, building on Q3 reductions, will help us drive growth acceleration.”
Humphries also said that the primary driver of revenue shortfall was a reduction in US onshore billable resources in recent quarters. Its Q4 revenue guidance is expected to be $4.72-$4.77 bn, a decline of 0.2%-1.2%. The company’s operating margin and adjusted operating margin stood at 16.4%, an increase of 100 and 60 basis points YoY, respectively.
Company has revised 2022 revenue guidance
For the second time, the company has revised its 2022 revenue guidance. It revises full-year 2022 revenue growth guidance to 4.5%, or 7.0% in constant currency. This is lower than its previous guidance- 8.5-9.5%. The company follows the calendar year. Its revenues in the September quarter stood at $4.9 billion.