Cognizant's revenue grew 10 percent in 2017 even as its headcount fell by 200 from the previous year, for the first time in its history, a performance that experts said the rest of the IT sector is working hard to emulate.IT companies, whose growth typically marches hand-in-hand with headcount growth, have been talking about decoupling the two for years but Cognizant is the first to show success over an entire reporting annual reporting period. The Teaneck, New Jersey-headquartered firm reports results for the calendar year, while Indian-listed IT services companies follow an April-March reporting period."As the industry moves from the labour arbitrage factory model to the technology-based digital model, the revenue per person rises and fewer people are needed," said Peter Bendor-Samuel, CEO of IT consultancy Everest Research. "Cognizant is one of many firms which is driving hard into the new digital marketplace and this effort is showing results both in their increased growth and the improved revenue per person and falling headcount," he said.At the end of 2017, Cognizant's headcount stood at 2,60,000 employees.Indian IT companies such as Infosys, Wipro and Tata Consultancy Services have shown contractions in their headcount numbers, but their annual figures will be available only in April.Over the past three quarters, Infosys, TCS and Wipro have shown sequential declines in their headcount along with marginal increases in their revenue. "What we are finally starting to see with IT companies, and the service provider community more generally, are the signs of a transition away from legacy delivery models," Oliver O'Donoghue, director of IT services research, at HFS Research, said.

"On the face of it, one of the biggest measurable factors is the decoupling of headcount growth with revenue growth, as FTE (full-time equivalent) numbers are becoming less important for engagements."Even as overall headcount fell, Cognizant hired 6,000 US workers, implying the axe is falling disproportionately in India. IT equity analysts said this trend is likely to accelerate in the future. "The parts of the pyramid most amenable to automation are the lowest levels, which have historically been placed offshore.

Any cuts will be felt here and we are already seeing that," said an analyst with a Mumbaibased brokerage, who did not wish to be identified.IT companies have publicly discussed their plans to boost headcount in the US, their largest market. Infosys has said it expects to increase the number of US employees by 10,000 in the next two years. Cognizant said it wants to increase its US workers by at least 25,000 in the next five years. – Bull Fax 


 

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