Cognizant’s latest earnings have a silver lining for Indian IT majors TCS, Infosys and Wipro

• US-based IT services company Cognizant reported a healthy growth in revenue and profit for the March quarter, beating analyst expectations.
• However, it’s the attrition rates that is one of the key takeaways from the company’s earnings.
• Cognizant reported a decline in attrition rates to 26% from 31% in the previous quarter, and this could be a sign of things to come for Indian IT giants struggling to retain their employees.

Nasdaq-listed Cognizant’s March quarter net profit for March quarter grew 11.5% on year to $563 million along with 10.9% increase in constant currency revenue growth. The company follows a January to December accounting year.

While Cognizant’s earnings beat analyst expectations, the company made a downward revision in its revenue guidance.

Cognizant’s revenue guidance came down marginally as now it expects full year 2022 revenue to grow 9%-11% in constant currency terms as compared to 8.5%-11.5% guided earlier.

On the bright side, its attrition rate fell down to 26% from 31% in the previous quarter, and this could be a silver lining for Indian IT majors TCS, Infosys and Wipro.

“Thanks to our talented employees, we delivered on our first quarter commitments in what is an intensely competitive global labor market,” said Brian Humphries, chief executive officer in a quarterly release.

“While the economic backdrop is uncertain, we remain optimistic about the demand outlook for our solutions,” he added.

Despite the volatility in the employment situation in the US, Cognizant managed to bring down its attrition rates in the March quarter.
“While we made sequential progress reducing voluntary attrition for the second consecutive quarter, we anticipate attrition will remain elevated for the full year and will increase in the second quarter, reflecting seasonality,” Humphries reportedly said in the earnings call.

As the attrition rates came down, the company added less number of employees i.e 9,800 on a quarterly basis in Jan-Mar as against 12,200 in the previous quarter.

On a yearly basis, Cognizant added 43,900 employees, which is way less than any of the Indian IT peers and less than half of that TCS hired in 12 months.

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