Cognizant Technology Solutions will recruit 20,000 freshers during the current year, as employee utilisation reached 85 per cent in the March quarter, up from 83 per cent a year ago. As freshers join the company, the utilisation will reduce in the next couple of quarters, the company’s Chief Financial Officer Jatin Dalal told India-based newspersons.
The company ended March quarter with 336,300 employees with over 85 per cent of them based in India.
Earlier, speaking to US-based analysts, Cognizant’s CEO S Ravi Kumar said employee utilisation increasing to 85 per cent was a huge lift. “When you do good fulfilment, you also need to build capacity for the future. This year, we are going to hire a lot more freshers because we want to size a pyramid. When you get managed services work, the fixed price work over the last two years has gone up. So, we can actually start a pyramid. But it also comes equally with the overhead of carrying a higher bench at a lower cost and actually offshore,” he said.
“I’m a big fan of intertwining AI productivity, utilisation and rightsizing the pyramid. That’s the next big step we are going to take. There is a little bit of room. But once you feed freshers in, you need some room for utilisation to tick up. We are kind of playing on all three, and we are going to add freshers into the mix this year. That’s how we are approaching our cost of human capital,” said Kumar.
On AI, Kumar said Cognizant has about 1,400 early GenAI engagements compared to 1,200 at the end of the fourth quarter. The development of AI is playing out in three distinct vectors. In the near term, Vector 1 is focused on AI-led productivity as an opportunity for enterprises to address the estimated $2 trillion of technical debt on their balance sheets. In quarter one, AI-written code increased to over 20 per cent for Cognizant and is a pioneering opportunity for the company’s developer communities.
Vector 2 involves industrialising AI as every company needs unique plumbing to successfully adopt AI by localising, customising and integrating it into enterprise technology landscapes. Vector 3 provides the opportunity for agentification, which has the potential to unlock many new labour pools and create a significant multiplier effect on total addressable spend, he said.
Asset sale
In the first quarter, the company realised a gain of $62 million on the sale of an office complex in India.
When asked about the asset sales, Kumar said last month, the company announced plans to establish a 14-acre immersive learning centre in Chennai, where it aims to train 100,000 individuals annually in advanced AI technologies. In India, Cognizant continues to expand into smaller cities. The company expects to inaugurate the latest one in GIFT City, Ahmedabad, shortly. “Over the last 18 months, our Synapse initiative has trained over 400,000 people across the world, putting us well on our way to a goal of training 1 million individuals,” he said.
Large deals
Kumar said in the first quarter Cognizant had four large deals, including a mega deal valued at more than $500 million. The Total Contract Value from large deals was up mid-single-digits year-over-year. On a trailing 12-month basis, bookings grew 3 per cent over the prior year, providing a healthy backlog to support our outlook for this year, he added.
However, first quarter bookings declined 7 per cent year-over-year, driven by a decline in the rest of the world region, which had $200 million plus deals in the prior year period. The mix of new and expansion bookings grew significantly year-over-year and represented more than 50 per cent of our quarterly bookings, he said.
On a trailing 12-month basis, bookings grew 3 per cent year-over-year to $26.7 billion and represented a 1.3x book-to-bill. Our pipeline continues to grow, particularly for large deals, and we have seen healthy demand in applications, AI and cybersecurity, said Dalal.