Cognizant shakes IT market with subdued future outlook
It started with Infosys declaring zero wage increase followed by Wipro with flat outlook and shaky growth results. Now Cognizant Technologies has come out loud and clear that IT market globally is not increasing enough to continue with their growth stories.
IT employees in India who in general were a pampered lot would be very soon staring at a not so bright future which had almost a free run for last two decades barring a brief period during dot com bust and 2007 recession.
“ IT employees in India who in general were a pampered lot would be very soon staring at a not so bright future which had almost a free run for last two decades …”
Most of the mid and small scale companies who have been struggling to keep employees ranks intact and have been plagued with average of 25% attrition rate are already looking at lower attrition. Moreover several companies have also started taking action by letting go several of their employees who were on bench.
Infosys and Wipro had already taken such measures apart from holding salary increase. Almost all companies have experienced more than average business loss where customers have moved out due to reasons like budget cut, getting a better deal or even opting out for their own captive company in India.
Coming times over next 12 to 18 months will have clear path for most of the IT sector where focus on retaining the customer would be prime rather than acquiring new customers. This would essentially mean that luring the customers into continuing doing business by passing discounts or doing a lot of free work or even pay per use model to mitigate the risks even further.
All this is also going to end up in lower cash flow and higher cost of retaining the customer and straining profitability even further. All this would mean that employees of IT companies will have to be satisfied with low or no pay increase for some more time to come. On more cautious side, retaining job would be a matter of good luck in such a choppy situation because once lost; getting a new job would be even more challenging.
The only bright spot with IT export would be the high cost of USD which is giving sufficient cushion as of now, but banking on such uncontrollable factors would be the last thing for matured IT industries.
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