Slowdown? Cognizant to promote, hike employees' salaries

Amidst gloom in the IT sector, there is a section that’s smiling- employees of software services firm Cognizant. At a time when other top ITplayers have frozen promotions, Cognizant seems to have bucked the trend. The Nasdaq-listed company has sent a mail, stating that it has kicked off the process to promote and hike salaries for employees across levels, which will be effective from October this year. Cognizant’s president and managing director R Chandrasekaran confirmed the development and attributed the promotions to the company’s better than industry performance. Despite an economically challenging environment, Cognizant outperformed the industry and grew by 32% in 2008, surging ahead of Nasscom’s estimate of 16-17% for the industry. It has guided to grow by at least 10% for 2009-10, at a time when its peers in the industry say they expect revenues to shrink thanks to lower demand. “99% of our growth has been organic and we want to recognise people who have contributed towards that. Since we continue to maintain industry-leading growth, this year also we wanted to recognise outstanding contribution from our associates and that’s the reason for the announcement on promotions,” Mr Chandrasekaran said. A performance review process has already begun to select employees eligible for promotion. ET has a copy of the e-mail, which was sent out to the company’s 63,700 employees on Tuesday. The opening lines of the mail reads, “We are pleased to announce the initiation of the next round of promotions, which will be effective from October 1, 2009. It wasn’t long ago that we shared the results of our industry-leading performance with you by way of good incentives for the year 2008. With this round of promotions, we are set to buck the trend, yet again.” The incentive being referred to is the company’s bonus payouts to its employees some months back. The mail further says that since the headcount growth has slowed down in recent year, the number of promotions will also be lower than the past. “The promotions will happen across the board. We don’t want to be segregating people within the company, so this will be applicable at every level. Those who are moving up as part of promotions, will see a raise in their salaries, but its too soon to determine a range,” Mr Chandrasekaran added. But sources within the company said the increment range could be anywhere between 7-10%. Also, there will be no differentiation on how employees would be assessed onsite and offshore. Cognizant has a 75:25 offshore-onsite ratio. News of imminent promotion has spread cheer on Cognizant’s campus but the question is whether the over two million IT/BPO employees in India can take this as a sign and expect something similar. Probably not, because Cognizant stated that it has rewarded employees not because it sees better demand in the market place but because it has been growing faster than the industry. “Given that we have been doing reasonably well, we want to pass on the benefit to our associates. There is nothing different that we are seeing in the market than what we saw three or four months ago,” Mr Chandrasekaran said.