Cognizant defers salary hikes by four months to August 1, says report

Cognizant said that the majority of its associates have seen four merit increases within 3 years, with the last cycle being April 1, 2023

Global IT services giant Cognizant will implement salary hikes for "eligible" employees starting August 1, a delay of four months from the previous April 2023 cycle, according to a report by Moneycontrol.

“We are committed to recognising the hard work and dedication of our associates through annual merit increases and bonuses. As part of this commitment, the merit increase for eligible associates will be awarded this year on August 1. Importantly, the majority of our associates have seen four merit increases within three years, with the last cycle being April 1, 2023,” Cognizant said in an official statement.

The statement also mentioned that the Nasdaq-listed company has recently rewarded annual bonuses to “eligible associates globally”.

“This continuity underscores our dedication to consistently acknowledging the contributions of our talented associates," the release added.

Since 2021, a majority of Cognizant employees have received three pay hikes, which were given in October 2021, October 2022, and April 2023. Consequently, the latest salary increase will be their fourth since then.

Why is Cognizant deferring salary hikes?

In February, Cognizant implemented a new policy requiring its employees in India to work from the office three times a week. The company, headquartered in Teaneck, has a global workforce of over 347,700 employees, with approximately 254,000 based in India.

The delay in the hike comes at a challenging juncture for software services exporters and technology firms. They are currently facing subdued demand, as clients are tightening their budgets due to the uncertain and strained macroeconomic situation.

In the fourth quarter of FY23 ending in December, Cognizant saw a 1.7 per cent Year-on-Year (YoY) decline in revenue, dropping to $4.76 billion. This marks a likely eight-quarter low, primarily due to continued weakness in demand.

Cognizant's profit, however, increased by 7 per cent YoY to $558 million.

For the full year 2023, Cognizant reported a 0.4 per cent YoY decline in revenue to $19.4 billion. In constant currency terms, the decline was 0.3 per cent.

Cognizant expects first-quarter revenue for FY24 to be between $4.68 billion and $4.76 billion, reflecting a decline of 2.7 per cent to 1.2 per cent, or a decline of 3.0 per cent to 1.5 per cent in constant currency terms.