BENGALURU: Cognizant said its quarterly annualized attrition surged to a record 31% in the second quarter, from 21% sequentially, as the company continues to struggle with the departure of thousands of employees at the junior and mid-senior level in India.
Attrition has spiked among all IT services companies for the quarter ended June as demand for engineering talent – and especially those armed with digital skills – soars creating a demand and supply imbalance. That war for talent is expected to continue for the rest of the year. But Cognizant’s numbers have surpassed all its peers by a wide range.
“This macro demand backdrop has also created a demand-supply imbalance in key skills and has meaningfully increased industry attrition. As we noted in last quarter's remarks, we expected attrition to go up sequentially in Q2, and it did,” chief executive Brian Humphries said in a conference call with analysts.
The departure has been at its worst in India, where almost two-thirds of the company’s employees are based and Humphries termed the country as one of the “hottest market we have seen or our team has seen over the last 10-plus years.”
Cognizant’s attrition numbers has been a headwind, which has continued to remain at elevated levels – more than 20% - for the last two years under Humphries. It said in the first quarter it lost some deals because there were not employees on board.
In comparison, attrition at TCS, Infosys and Wipro, in spite of spiking, have remained at 8.6%, 13.9% and 15.5% on a trailing twelve-month basis.
Cognizant said it was putting in measures to plug attrition. “Annual merit-based increases have been announced here in the last few weeks. They're effective October 1. That's on top of a whole host of ad hoc measures we played through in the course of the last year: out-of-cycle increases, promotion, retention dollars. We've announced a shift in the last few months to quarterly promotion cycles for billable resources,” added Humphries.
To counter the impact, the company expects to hire 100,000 laterals this year and train another 100,000 associates. “We expect to onboard approximately 30,000 new graduates in 2021 and make 45,000 offers to new graduates in India for 2022 onboarding.”
