In a bid to tackle the rate of high attrition, Cognizant in an unusual move has set up a corpus of $ 30 million that has been dubbed as one of the retention funds. This has been done to hold back the digitally skilled employees and also the top performers. The corpus is generally used when such employees are offered jobs from competitors. According to sources, Cognizant is going to match the offers made by the competitors.
The annualized attrition rate of the company in the quarter for December was 19% and this i9s one of the highest among the big IT companies. The overall rate of attrition spiked up by just 1% in comparison to just the previous quarter, as part of voluntary attrition, there has been a big spike as employees are leaving for some other opportunities. This has risen to 16% from just 10%.
As the MD and Chairman of Cognizant India, Rajesh Nambiar has been speaking to the media regarding the fund, he has said that they have spoken on their latest earnings call there is an intensely competitive market for skilled digital talent as a demand-supply imbalance has been created for certain skills. More open areas are there in key digital areas than there are qualified persons who are going to fill up those positions. The company is therefore very much focused on maintaining an appealing and competitive employment environment where all the persons are rewarded for their contributions, driven to perform, and inspired to achieve.
He also went on to say that one of the vital aspects of this is going for sustained investment in underscoring the value position of the employee and engaging with high-performing talents, enhancing their approach for pay-for-performance and the career path opportunities are reinforced created by the growing momentum of the company.
Hansa Iyengar from Omdia is an analyst from a London-based IT advisory has said that a lot of the attrition has stemmed from the restructuring that has taken place in Cognizant and it has shifted to a more diverse, and dispersed digital work that is very much talent-centric and not at all location-specific.
However, she has said that they have not heard about any major client-related issues with the ability of Cognizant to service them and there has not been any significant impact on the quality and delivery time.
Cognizant has been undergoing a major restructuring and getting rid of some of the business under Brian Humphries, the CEO who joined in the year 2019.
MD of Wedbush Securities, Moshe Katri, has said that when management changes are undertaken in Infosys and there was a turmoil, the rate of attrition in the company spike up to a high level of 20% and it has prompted the management to adopt aggressive measures of retention. He also said that the rates of high attrition did not impact the ability of Cognizant to service its book.