It is also planning to double down on acquisitions in the coming year to bolster its capabilities, a top executive of the New Jersey, US-based software services firm told ET. The company spent around $1 billion on seven acquisitions in 2021.
Cognizant India chairman Rajesh Nambiar said the company is seeing a “very strong momentum” in the market. “When we look at our outlook for 2022, we’re going to be a $20-20.5 billion (revenue) company with growth of 8.5-11.5% year on year,” he said in an interview to ET on Thursday.
The company, which has seen its attrition shoot up with one in three employees quitting, will also look to hire over 50,000 freshers this year, significantly higher than the 33,000 freshers it took on board last year, as a means to address the massive talent crunch impacting the overall industry.
The company reported revenue growth of 10% in constant currency for financial year 2021, with revenues topping $18.5 billion. For the fourth quarter ended December, it reported revenue of $4.8 billion, up 14.2% on a year-on-year basis. Cognizant said this is the first time since 2015 it reported double-digit revenue growth.
Digital revenue bolstered the total revenue — it represented 44% of total revenue in FY21, up from 42% the prior year.
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“When you look at the future, it (digital revenue) has the potential to go up to 55-60% of our revenue,” Nambiar said. “We see a lot of opportunity around working with the hyperscalers, along with the SaaS vendors around the industry clouds, shortening our customers’ innovation cycle by truly leveraging the hyperscaler platform,” he added.
Hyperscalers provide cloud, networking, and Internet services at scale by offering organisations access to infrastructure via an infrastructure-as-a-service model. Examples of hyperscalers include Google, Microsoft, Facebook, Alibaba and Amazon.
He said Cognizant will continue with its M&A strategy as it believes it will add a lot more value to its clients.
Cognizant chief executive Brian Humphries said the company saw 22% bookings growth in the fourth quarter and in mid-teens for the full year.
“And it’s driven obviously by the strong demand that we see in the market. It’s supported by the investments that we made into our market organisation with incremental sales capabilities and solution capabilities. And it’s aided by a broadening solution set that we’re developing ourselves as well as our M&A that is contributing to this. So, we are optimistic about maintaining a book-to-bill ratio that is similar to where we are,” he said, while answering questions from analysts on a post-earnings call.
“Elevated attrition in key digital scales is, however, a direct consequence of this, creating revenue fulfilment challenges and cost pressure that need to be carefully navigated,” he said.
As the industry continues to witness a massive talent war, IT service companies are ramping up their fresher intake plans to manage the demand. Cognizant currently employees 3,30,600 people, and most of them are based in India.
While attrition remained at a very high percentage for the company, Nambiar said the number has reduced in the last quarter. The company reported an attrition rate of 31% in the December quarter compared with 33% in the previous quarter. All Indian rivals like Infosys (25.5%), Tech Mahindra (24%) and Wipro (22.7%) have reported high attrition rates in the past few quarters.
Senior-level exits were not a concern; however, it is attrition at the lower experience level that the company is concerned about, Nambiar said. In addition, he said, lateral hires were harder for the company to get on board than campus hires in the current environment.
“It’s actually coming down (attrition) as opposed to many of our other peers for whom it’s actually going up,” he said. “But yes, it’s still at a high level. Attrition is going to be an industry phenomenon. There’s always going to be pressure for talent. This unprecedented competition for talent is not going to go away soon. It will give a supply-demand imbalance. And we are not immune to it in any means, but I think we managed it better.”
Nambiar also said the Indian market is one that Cognizant will be looking at more closely. He said the company has “big plans” for India and will be looking to capitalise on opportunities.
“We do have a thriving domestic business,” he said. “It is small, but it’s still very robust and it’s grown pretty well in the last couple of quarters. So, I’m very bullish about that piece of our business. When we look at the budget and then the economic growth that the country is going to have, we cannot ignore that.”
