Knowing Minimal Salary Increases in Light of New Hiring Concerns
Important player in the global IT services market, Cognizant Technology Solutions is under fire for enforcing yearly wage increases as low as 1% for some staff members. Based on a report in The Economic Times, the New Jersey-based company delayed salary increases by four months before making these small adjustments.
Reduced Salary Hikes Create Problems.
Professionals in the sector as well as staff members have questioned the most recent salary hikes, which run from about 1% to a maximum of 5%. A 3 performance level meant a raise between 1% and 3%; a 4 rating got a 4%. Employees receiving a five experienced salary increases of up to five percent. Conversely, the increases of last year were more notable—between 7% and 11%.
Moreover driving the discussion is Cognizant’s decision to give its lowest starting pay in almost ten years. Fresh graduates hired off-campus by the corporation are getting a package of ₹2.52 lakh yearly, almost ₹21,000 per month. Given the present economic situation, when employment markets are tightening and inflation is rising, this action has created debate especially.
Change in Employee Morale and Market Opinion
With over 254,000 employees—70% of Cognizant’s total headcount—its workforce in India is rather large. But the company claimed in the quarter ending in June that its entire workforce declined by 8,101,000, therefore lowering the overall employment to 336,300. From the same period prior year, this represents a 9,300 employee decline.
Although Cognizant is a large outsourcing firm with a global presence, its decision to return to pay rates reminiscent of those observed in 2002 begs more questions about its approach for attracting and retaining people in a competitive industry. Many are concerned if such low pay packages could affect staff morale and long-term corporate performance of the company.
Looking ahead: Industry analysis and future developments
Cognizant reported in the second quarter ended in June with a 22.2% year-on-year increase in net profit—$566 million. Still, its quarter-wise income was $4.85 billion, a little down from year before at 0.7%. Although the company’s financial status is currently strong, the growing discontent regarding pay rises and starting packages could have long-lasting effects on its reputation and potential to attract top candidates.
Industry watchers think Cognizant may have to modify its pay structure as the argument against it keeps running. Maintaining competitiveness could depend mostly on matching wages with industry expectations and addressing the rising cost of living. Since Cognizant has not responded to the criticism thus far, many people question how it would handle these challenges moving ahead.
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