Cognizant’s latest earnings have a silver lining for Indian IT majors TCS, Infosys and Wipro

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  • US IT services company Cognizant reported healthy revenue and profit growth for the March quarter, beating analysts’ expectations.
  • However, it’s the attrition rates that are one of the biggest takeaways from the company’s earnings.
  • Cognizant reported a decline in attrition rates to 26% from 31% in the prior quarter, which could be a sign of things to come for India’s IT giants struggling to retain employees.

Nasdaq-listed Cognizant’s March quarter net income rose 11.5% year-over-year to $563 million, along with a 10.9% increase in revenue growth in constant currency. The company follows an accounting year from January to December.

As Cognizant’s earnings beat analysts’ expectations, the company lowered its revenue forecast.

Cognizant’s revenue forecast has fallen slightly as it now expects full-year 2022 revenue to grow 9% to 11% in constant currency terms, down from 8.5% to 11.5% previously .

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On the bright side, its attrition rate fell to 26% from 31% in the previous quarter, and that could be a silver lining for Indian IT majors TCS, Infosys and Wipro.

“Thanks to our talented employees, we delivered on our first quarter commitments in a fiercely competitive global job market,” Brian Humphries, CEO, said in a quarterly statement.

“While the economic backdrop is uncertain, we remain optimistic about the demand outlook for our solutions,” he added.

Despite the volatile employment situation in the United States, Cognizant managed to lower its attrition rates in the March quarter.

Cognizant's latest earnings have a silver lining for Indian IT majors TCS, Infosys and Wipro

“While we made sequential progress in reducing voluntary attrition for the second consecutive quarter, we expect attrition to remain elevated throughout the year and to increase in the second quarter, reflecting seasonality,” Humphries said. would have said in the earnings call.

As attrition rates declined, the company added fewer employees, ie 9,800 on a quarterly basis in January-March compared to 12,200 in the previous quarter.

On a yearly basis, Cognizant added 43,900 employees, which is far less than any of its Indian IT peers and less than half of that TCS hired in 12 months.

Indian IT peers Addition of employees in fiscal year 22 Total number of employees in March 2022
CDS 1,03,000 6,000,000
Infosys 85,000 $3.14 million
Wipro 45,416 2.43,000,000
Competent 43,900 3.40 lakh

$NIFTYIT.NSE is in a downtrend. It is better to avoid this unitary sector because it fills the breakaway gap towards 33,000 to 34,000. Breakout gaps occur when price breaks above the trading range or congestion zone. Here, it was 8 months of consolidation. A price above the gap would be the first sign of a mid-term trend change. The only bright spot is that $TCS.NSE is holding ground with just 13% down from the 52-week high versus the industry average of 32%.

— (@Raj_Sharma) May 05, 2022

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