IT Giant Cites Macroeconomic Challenges as Reason for Salary Adjustment
Cognizant, the Nasdaq-listed IT services firm, has announced a postponement in its annual salary hike cycle, with eligible employees set to receive raises from August 1, as per sources familiar with the matter. This decision reflects a delay of approximately four months compared to previous years, highlighting the company’s response to prevailing macroeconomic conditions impacting the IT sector.
The Teaneck-based company, which boasts a global workforce exceeding 347,000 employees, confirmed the deferred salary adjustments to Moneycontrol, emphasizing its commitment to recognizing employees’ contributions despite the challenging economic landscape.
In a statement to Moneycontrol, Cognizant stated, “We are committed to recognizing the hard work and dedication of our associates through annual merit increases and bonuses. As part of this commitment, the merit increases for eligible associates will be awarded this year on August 1.”
The company highlighted that the majority of its associates have already received four merit increases within a span of three years, with the last cycle occurring on April 1, 2023. Additionally, Cognizant recently disbursed annual bonuses to eligible employees worldwide, reaffirming its dedication to acknowledging employee contributions consistently.
The adjustment in salary hike timelines aligns with Cognizant’s cautious approach amid a weak demand environment, echoing similar sentiments expressed by other players in the IT industry. The company’s recent financial performance, including a 1.7% decline in revenue to $4.76 billion year-on-year for the October-December quarter, underscores the prevailing challenges faced by IT service providers.
Despite these challenges, Cognizant reported a net profit increase of over seven percent to $558 million year-on-year in the fourth quarter, reflecting its resilience amidst market headwinds. However, the company has issued a guidance of $4.68-$4.76 billion for Q1FY24, indicating a potential decline in revenue.
The decision by Cognizant to defer salary hikes comes amidst varying strategies within the IT sector, with Infosys indicating no immediate campus hiring requirements in January, while Tata Consultancy Services has initiated its campus recruitment process for FY2024-25. These moves highlight the sector’s dynamic response to evolving market dynamics and economic uncertainties.
