Cognizant CEO Brian Humphries warns of a tough 2020— plans to hire 20,000 freshers this year
- The tech major expects a $50 million to $70 million hit in the ongoing quarter due to the ransomware attack.
- The management projected margins to remain below 16-17% in 2020.
- Cognizant shares are down 17.80% from the recent peak on February 6. They have under-performed the Nasdaq which is down 0.66% year to date.
AdvertisementIT major Cognizant has reported a 16.7% drop in its March quarter net income at $367 million, and said it expects a challenging demand environment throughout 2020 amid the coronavirus pandemic. Cognizant follows January-December as financial year. Its net profit was at $441 million in the March 2019 quarter.
In 2020, the company plans to continue investments in developing digital skills and wants to hire about 20,000 entry-level hires to adjust the employee cost structure. 41% of the first-quarter revenue came from digital services and they grew by 19% compared to the same time last year.
SEE ALSO: The Cognizant Maze ransomware saga will show its full impact for many months to come
The US-headquartered company, which has about 2 lakh employees based in India, had previously withdrawn its FY20 guidance amid uncertainties on account of COVID-19 pandemic. Cognizant shares are down 17.80% from the recent peak on February 6. They have under-performed the Nasdaq which is down 0.66% year to date.
The quarterly revenue was at $4.2 billion, up 2.8% (3.5% rise in constant currency) from the year-ago period. "We executed well in what was a challenging quarter, and posted our strongest quarterly signings since 2017,"
The company projected margins to remain below 16-17% in 2020. The second quarter (April-June 2020) including a $50-70 million impact due to the Maze ransomware attack, apart from business demand uncertainty and increased costs due to the COVID-19 pandemic. "Since becoming aware of the attack, the company has taken decisive actions to remediate the threat while keeping clients regularly informed. The company believes these measures enabled it to continue its operations in a timely and secure manner," it said.
Cognizant noted that since over 60% of its business is in financial services and healthcare, it is less exposed to some of the hardest hit industries, including travel, hospitality, retail and automotive. Coronavirus-related disruptions reduced revenue in March, reflecting delays in project fulfillment as Cognizant rapidly enabled the shift to work-from-home capabilities across its delivery teams.
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