Cognizant defers annual salary hikes to August 2024 amid low demand in IT sector, says report

Global IT services giant Cognizant Technology Solutions has postponed its annual salary increases for this year by four months to August, the Economic Times reported. It is now scheduled to implement them for eligible employees from August 1, the paper said citing two sources.

Last year, the company, listed on Nasdaq, had granted salary hikes to its employees in April. Confirming the decision, 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 decision to delay the salary hikes coincides with a period of subdued demand for software services exporters and technology firms, the report added. Clients are tightening budgets due to an uncertain and strained macroeconomic situation.

Recent Developments

Responding to email inquiries, the IT major told the paper that the majority of its associates have received four merit increases within three years, with the most recent cycle being on April 1, 2023. It also noted, “The company has also just rewarded annual bonuses to eligible associates globally. This continuity underscores our dedication to consistently acknowledge the contributions of our talented associates.”

In February, Cognizant initiated a policy for 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.

Financial Performance

In the fourth quarter of FY23, ending December, Cognizant's revenue witnessed a year-on-year decline of 1.7 percent to $4.76 billion, marking a likely eight-quarter low due to continued demand weakness. However, its profit increased by 7 percent year-on-year (YoY) to $558 million.

For the full year 2023, Cognizant reported a year-on-year revenue decline of 0.4 percent to $19.4 billion. In constant currency terms, the decline was 0.3 percent.

For the first quarter of FY24, the technology company anticipates revenue between $4.68 billion and $4.76 billion, reflecting a decline of 2.7 percent to 1.2 percent.