Cognizant attrition soars to 31% to hire 100,000 this year
Cognizant employees attrition rate soars to 31% thus making the company to work on its hiring plans to fill the gap.
While Cognizant's revenues for the June 2021 quarter came in at the top of its guidance and it also raised its revenue guidance for 2021 to 9-10%, attrition stood out as a key concern, reflecting its weak footing amidst the war for talent.
Its attrition during the same period zoomed to a historic high of 31%, of which 29% was voluntary attrition. Cognizant has an overall headcount of 301,200. Calculation shows that over 23,300 employees left the company during the quarter, which means an average of 350-380 employees resigned every working day between April-June 2021. A majority of Cognizant's employees are based in India and Humphries said the attrition was primarily in the more junior levels of the organisation or mid-levels in India.
"We now expect to hire approximately 100,000 laterals in 2021 and to train close to 100,000 associates. In addition, we expect to onboard approximately 30,000 new graduates in 2021 and make 45,000 offers to new graduates in India for 2022 onboarding," Cognizant CEO Brian Humphries told analysts after the company posted strong earnings for the second quarter ended June.
The elevated attrition will limit Cognizant's ability to fulfil existing deals and go after new ones, especially in a market where the demand for outsourcing services is booming, as there is an accelerated shift to digital post-Covid-19.
Cognizant CFO Jan Siegmund said these costs will weigh on its results for the next several quarters as the management remains focussed on addressing its higher attrition levels through a comprehensive set of initiatives.
Humphries said attrition was higher because it uses a different method to report it. "As you can imagine, voluntary attrition in the quarter was 29%. But on a trailing 12-month basis, which is more how the industry tends to look at it, it was 18%. It's really one of the hottest markets we've seen or our team has seen over the last 10-plus years. So we're all dealing with it," he said.
For the quarter ended June, TCS, Infosys, Wipro, and HCL Tech's attrition stood at 8.6%, 13.9%, 15.5%, and 11.8%, respectively. Even if one were to go by the trailing 12-month method, 18% is significantly higher than its peers. In fact, for the same quarter last year, Cognizant had voluntary attrition of 11%.