Cognizant revenues grow 2.4% in March quarter; attrition rises – Times of India

CHENNAI: IT major Cognizant beat street estimates posting a revenue growth of 4.2% year-over-year (2.4% in constant currency CC terms) for the January-March quarter (Q1). At $4.4 billion, revenue grew marginally from the quarter ended December 2020 when the company’s revenues declined 2% at $4.2 billion.
Net income stood at $505 million in Q1- up from $367 million in the same quarter last year and from $316 million in profits it posted in December. Cognizant follows the calendar year as its fiscal year.
The quarter’s performance was driven by the healthcare sector as revenues in the vertical grew almost 7% in constant currency.
Digital revenues at Cognizant were up by around 15% year-on-year and digital now makes up 44% of the total revenue, up from 39% in the prior year period.
On the back of improved performance in the quarter, the company also raised its revenue outlook for fiscal 2021. Cognizant now expects full year 2021 revenue to clock at around $17.8-$18.1 billion- representing 5.5%-7.5% growth in CC terms compared to the 4%-7% range it guided last quarter.
“In the first quarter, we successfully executed our strategy of embracing digital, investing in international expansion and repositioning the Cognizant brand. Cloud migration and digital adoption create a significant opportunity for Cognizant in the coming years,” Brian Humphries, CEO, Cognizant, said.
“The ongoing humanitarian crisis, especially in India, is deeply concerning. We have made a series of investments to support India in this time of need and continue to prioritize the health and safety of our associates while we serve our clients,” he added.
Financial services, which holds the biggest share of the revenue pie for the IT giant, continues to lag, as revenues declined 1.7% year-on-year with the sector continuing cost optimization efforts.
Attrition continues to be a cause for concern at the tech company as total attrition (quarterly annualized) in Q1 stood at 21% compared to 19% in the previous quarter.
Voluntary attrition -signifying employees who left voluntarily- also climbed to 18% from 16% in the December 2020 period. As of March 31, Cognizant employs 296,500 employees globally with over 90% of staff in India.
“Our first-quarter performance reflects solid revenue growth in our digital services and consistent execution of our strategy,” Jan Siegmund, CFO, Cognizant, said. “To support our commercial momentum, we are increasing our investments in recruiting and talent,” he said.