Cognizant planning salary hikes for most employees in H2 2025
What's the story
Cognizant, a leading IT services firm, intends to implement salary hikes for the majority of its employees during the second half of the current year. This intention was discussed by Jatin Dalal, Chief Financial Officer (CFO) of the New Jersey-based company. However, he noted that no firm timeline has been decided yet due to prevailing macroeconomic uncertainties.
Industry trend
Stance mirrors industry trends
Cognizant's decision to delay salary hikes is in line with other major players in the IT services sector. Companies such as Tata Consultancy Services (TCS), HCLTech, Wipro, and Persistent Systems have all taken similar stances amid current economic conditions. Infosys is the only Tier-I IT company that has announced a wage hike for FY25 so far.
Increment schedule
Delay in salary increment process
Traditionally, Cognizant initiates its salary increment season on August 1. However, this year the company has indicated a possible delay in the process. Dalal said at an earnings conference, "Given the macro environment at play and the uncertainty around it, we have not yet taken a decision on salary increase." He added that they hope to cover most employees in H2 of the current year when they finalize their decision.
Information
Global IT sector grappling with macroeconomic challenges
The global IT industry is currently grappling with several macroeconomic challenges. These include trade tensions and economic uncertainties that could disrupt global trade and make it difficult for clients to finalize their tech budget plans.
Workforce update
Steady headcount growth for Cognizant
Despite the economic challenges, Cognizant has witnessed steady headcount growth. The company added some 7,500 employees sequentially in Q2CY25, taking its total employee count to 343,800. Its attrition rate also fell to 15.2% on a last 12 months basis, down by 60 basis points from the previous quarter. The company plans to hire some 15,000-20,000 freshers in 2025 as well.
Financial performance
Revenue growth boosts guidance for 2025
Cognizant's Q2 earnings surpassed market expectations with an 8.1% year-on-year (YoY) revenue growth to $5.25 billion, driven by strong deal bookings. This marks the fourth consecutive quarter of revenue growth for the company. The net profit also grew by 14% on a yearly basis to $645 million. In light of this performance, Cognizant has raised its 2025 constant currency revenue growth guidance to 4-6%.