Cognizant announced a 41.8% increase in its net profit for the June quarter to $ 512 million (around 3,801.7 crore), and said it plans to hire around a lakh this year as the IT major seeks to stop the high attrition rates in the company.
The US-based company, which posted net income of $ 361 million in the June 2020 quarter, also raised its revenue growth forecast for fiscal 2021 to 10.2-11.2 for cent (9-10 percent in constant currency) thanks to a strong reservation. momentum.
Cognizant’s revenue increased 14.6% (12% in constant currencies) to $ 4.6 billion in the quarter under review, from $ 4 billion a year earlier. This figure is higher than the company’s forecast of revenue growth of 10.5-11.5% for the June 2021 quarter.
Cognizant – which has around 2 lakh of employees based in India – monitors the January-December fiscal year.
âWe had a solid second quarter. Through targeted investments, we have shifted our portfolio to faster growing market segments while expanding our capabilities and partnerships to help clients build modern businesses. I see a stronger, more competitive Cognizant emerging, with dynamic business growth, âsaid Brian Humphries, CEO of Cognizant.
“Cognizant is optimistic about the industry and its prospects within it,” he added.
The company said it expects its third-quarter revenue to be between $ 4.69 billion and $ 4.74 billion, a growth of 10.6 to 11.6 percent (10 to 11% in constant currency).
The turnover for the year 2021 is expected to be between 18.4 and 18.5 billion dollars, which translates into growth of 10.2 to 11.2% (9 to 10% in constant currency) . He had previously guided revenue growth of 7-9% for 2021 ($ 17.8-18.1 billion).
âThe first second quarter results exceeded our expectations, driven by improved demand for our services and our digital revenue momentum, and we increased our revenue growth for the year 2021 to 10.2-11.2%, âsaid Jan Siegmund, Chief Financial Officer of Cognizant.
âTo meet the strong demand for customer services, Cognizant has continued to develop its recruiting capabilities and invest in its staff,â added Siegmund.
In a call to investors, Humphries said that given the strong demand on its bullish outlook in the industry, the company has committed to “significantly” increase its workforce in the coming quarters.
“However, this macro demand environment also created an imbalance between supply and demand in key skills and significantly increased attrition in industry … Voluntary attrition in the second quarter reached 29% over on an annualized basis or 18% on a rolling 12-month basis, “he said.
Cognizant’s attrition metric captures the entire enterprise, including interns and enterprises across IT departments and BPO. The company had over 3 lakh of employees at the end of the June quarter.
âIn this context, we continue to take a series of measures to reduce attrition, including compensation adjustments, job rotations, retraining and promotions and a host of associated engagement activities … close 100,000 associates, âsaid Humphries.
In addition, Cognizant plans to welcome approximately 30,000 new graduates in 2021 and to make 45,000 offers to new graduates in India for integration in 2022.
The senior manager noted that attrition is mostly at the more junior levels of the organization or the middle levels in India, but it is also a global phenomenon.
âThis truly is one of the hottest markets that we have seen or that our team has seen in the last 10+ years. So we all face itâ¦ annual merit based increases have been announced. here for the last few weeks, they come into effect on October 1. This is in addition to a whole host of ad hoc measures that we have implemented over the past year: off-cycle increases, promotions, dollars. retention, âhe said.
Humphries added that the company has announced in recent months a change to quarterly promotion cycles for billable resources as well as accelerated job rotations and retraining initiatives across the organization. He noted that bookings growth accelerated to 12% year-on-year in the second quarter, and that its orders-to-billing ratio is now 1.2 on a rolling 12-month basis.
âThe qualified pipeline is growing significantly, and our success rates are also up to date since the start of the year, which positions us well for the continued momentum in reservations. Digital revenue growth accelerated to 20% year over year during the quarter, âhe added.
Since 2019, the company has invested more than $ 2 billion in mergers and acquisitions to accelerate its digital capabilities.
âThese investments have changed Cognizant’s growth profile by shifting our business to higher growth categories and reducing our exposure to non-digital categories which have declined in recent years,â said Humphries.