Cognizant Delays Employee Salary Hike to Curb Attrition: Here’s What the Company Said

For the second year in a row, employees of Cognizant Technology Solutions Corp will have to wait for their annual salary increments. The Nasdaq-listed company plans to roll out salary hikes in August this year, about five months later than its usual cycle, reported Mint.

The delay was announced by Cognizant CEO S. Ravi Kumar during a town hall at the company's newly refurbished Kolkata office on February 27, the report said. He told workers that their revised salaries would be rolled out from August 1.

Meanwhile, in an internal memo, the company has said that eligible employees will receive their bonuses starting March 10, the report said.

Cognizant also delayed salary hikes last year, offering up to a 5% raise to staff in August. This trend began after the current CEO, Ravi Kumar, took over.

In a statement on Tuesday, the company said, "Merit increases for eligible associates will be awarded in August, exactly one year after the prior cycle. In fact, with the August 2025 cycle, the majority of our associates will receive five merit increases within the past four years."

Hike Delay to Stop Talent Exodus

According to the report, the salary increment delay is likely aimed at curbing the high attrition the company is facing. During the fourth quarter of 2024, voluntary attrition in its Tech Services arm rose to 15.9% on a twelve-month basis, compared to 13.8% in the period ending December 31, 2023.

The firm's total headcount as of December 31, 2024, was 336,800.

Cognizant is not alone in facing high employee exodus. As of December 2024, Tata Consultancy Services (13%), Infosys (13.7%), and HCL Technologies (13.2%) all reported high attrition rates.

"I'm also pleased to share that we have 13,000 current employees who have returned to Cognizant," CEO Kumar told analysts during the recent quarterly earnings call.

He was brought in to turn the company around following a revenue decline in 2023. Cognizant reported a 1.98% revenue growth to $19.74 billion in 2024, with most of this growth coming from acquisitions, including Belcan and Thirdera. In fact, excluding acquisitions, the company's business declined last year.

Cognizant's high attrition rates are partly blamed on Kumar's policy of eliminating redundancies, which led to the layoff of 3,500 employees in 2023.

In 2024, the annual salary hike is expected to disappoint employees at top Indian IT services giants like Infosys, TCS, Wipro, and HCL Tech. Infosys employees received an average hike of 5%-7% this year. TCS plans to provide an average hike of 4%-8% at the end of March. Most HCL Tech employees reportedly received increments of only 1-2% in FY25. Wipro implemented merit-based salary hikes in September for FY25.