Cognizant Delays Salary Hikes to August 2024 Amid IT Sector's Low Demand

Global IT services giant Cognizant has deferred its annual appraisals for the year by four months to August 1. The New-Jersey-based firm, which has over 347,700 employees globally, rolled out salary hikes in April last year. The development was confirmed via email to NDTV Profit. The delay in hikes comes amid a decline in demand for IT firms across the globe due to uncertain economic growth.

"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 Aug 1," Cognizant said in an email statement.

The IT major clarified that most of its associates have already received four merit increases within three years, with the last cycle being April 1, 2023. It added that the company has also rewarded bonuses to eligible associates across the globe.

Tough Times for IT Firms?

Software services exporters and technology firms are currently facing a subdued demand with clients tightening their budgets due to uncertain and strained macroeconomic conditions.

For Cognizant, the company ended the fourth quarter of FY23 ending December, with a 1.7% decline in revenue on a year-on-year (YoY) basis. The reported $4.76 billion revenue was a likely eight-quarter low, owing to continued weakness in demand, the Economic Times reported. For the year 2023, Cognizant posted a slight decline of 0.4% YoY in revenue to $19.4 billion.

The majority of Cognizant’s fourth-quarter revenue, about $3.53 billion or 74%, came from North America. The firm's revenue from the region dropped by 2% compared to the previous three months. Cognizant also reported a 5% sequential drop in revenues in Europe as well.

Cognizant had previously predicted weak revenues for 2024 as well. In a February post-earnings call with analysts, the company said it may end the year with a revenue of $19 billion, against $19.8 billion estimated by analysts.

“We see this as a period of uncertainty and change,” Cognizant chief executive S. Ravi Kumar said at the time, Live Mint reported.

Tech and IT Layoffs Amid Strained Economic Conditions

Tech layoffs in 2024 have reached record levels with thousands of employees losing jobs. A total of 237 tech companies have laid off 58,499 employees so far in 2024 according to data from Layoffs.fyi. Companies like Apple, Microsoft, Dell, and more have undertaken restructuring exercises impacting thousands of workers across the globe.

A fresh round of layoffs was kicked off this month with Apple letting go of 614 employees in California after abandoning its electric car project. Last month, tech major, Dell cut about about 6,000 jobs, according to a 10-K SEC filing which also revealed that the company had laid off 13,000 employees last year, Tech Crunch reported.

In February, popular social media platform, Snap announced plans to reduce its workforce by 10% to “reduce hierarchy”, impacting roughly 500-plus employees. As for Cognizant, the firm reduced its headcount by 7,600 employees to 347,700 in 2023, Times Now reported.