The Teaneck, New Jersey-headquartered company’s attrition was over 22% in the second quarter, a rate the company attributed to its stricter performance management moves and increasing global demand for tech talent.
“This one is really targeted towards the senior end of the pyramid. It is not voluntary, this is more involuntary. We are trying to clean up the higher end of the pyramid and allow our associates to grow,” Raj Mehta, president at Cognizant, told ET in an interview. He did not specify the number of senior employees being targeted in this round of layoffs.
He pointed that this was a global exercise and was not focused on a particular region and that the company’s headcount had grown in the quarter. Cognizant’s headcount rose by 7,500 in the second quarter to 2,68,900.
In a post-earnings conference call, Cognizant CFO Karen McLoughlin said the company had split its process for raises and promotions. She said that junior employees would receive their raises and promotions in the third quarter, while senior employees would receive the raises and promotions in the fourth quarter.
Cognizant follows the January to December calendar for its financial year.
Mehta said the company was still going through the appraisal process and did not disclose the average hike the employees could receive. “The good news is that we had a really healthy margin to fund the raises and promotions,” Mehta said.
For the second quarter, Cognizant reported revenue of $4.01billion, up 9.2% from the previous year.
“Revenue of $4.01 billion was slightly below consensus of $4.03 billion. Q2 revenue was ~0.5% below consensus, but stock not priced for perfection,” David Koning, analyst with US brokerage RW Baird, said in a note.
For the full year, Cognizant reiterated its revenue target of between $16.05 billion and $16.30 billion, implying growth of 8-10%. For the third quarter, Cognizant expects revenue of between $4.06 billion and $4.10 billion, implying growth of 1.2-2.2% sequentially.