CHENNAI, INDIA – Cognizant Technology Solutions, a leading IT services and consulting firm, has significantly reduced its annual salary hikes, with some employees receiving increases as low as 1%.
This move comes amid criticism over the company’s lowest starting salaries in a decade for new hires.
Salary hikes reflect tough economic climate
The salary hikes, which range from 1% to 5%, have sparked concern among employees.
According to reports from The Economic Times, employees with a performance rating of 3 have received increases between 1% and 3%. Those with a rating of 4 were granted a 4% hike, while the highest performers, rated 5, received increments of up to 5%.
This is a stark contrast to last year, when Cognizant offered salary hikes ranging from 7% to 11%.
The reduced salary increments come as Cognizant faces scrutiny for offering starting salaries of just ₹2.52 lakh ($3,280) per year, or approximately ₹21,000 ($273) per month, to new hires through an off-campus recruitment drive.
This figure represents the lowest starting salary package the company has offered in over a decade.
Challenges amid global economic strain
Cognizant’s decision to limit salary increases coincides with a broader slowdown in the IT services sector, where clients are tightening budgets due to ongoing global economic pressures.
Despite this, Cognizant reported a 22.2% year-on-year growth in net profit for the second quarter, reaching $566 million, though revenue slightly declined by 0.7% to $4.85 billion.
The company has also seen a reduction in its workforce, with a decrease of 8,100 employees, bringing its total headcount to 336,300. This marks a year-on-year reduction of 9,300 employees.
Despite being one of India’s largest outsourcing firms, Cognizant’s recent actions have drawn criticism, with industry experts noting that the current salary package resembles levels seen in 2002.
Additionally, Cognizant implemented a policy in February requiring employees in India to work from the office three times a week, further signaling a shift in its operational strategy amidst a challenging business environment.
