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We have modified the definition of digital: Cognizant India CMD Nambiar

Rajesh Nambiar, EVP and president, digital business and technology, and chairman, Cognizant India, spoke about its revenue outlook and how it plans to navigate challenges related to attrition. Excerpts:
Cognizant has narrowed its growth forecast to 9% from 11% for the 2022 fiscal due to currency headwinds and lower contribution from acquisitions….
The organic growth is enhanced by 0.5%, but we are taking our inorganic down by 100 bps because we have been strategic in the way we pursue our M&A. We didn’t acquire any company in the first quarter as it must make sense to fit into our portfolio. We have been disciplined in the way we execute our M&A. The guidance reflects the improved organic revenue growth partially offset by a lower expectation of inorganic growth that we expect to contribute 100 basis points to full year growth versus 200 basis points previously.
You modified the definition of digital to reflect digital skills, growth priorities and pricing. Under the new definition, digital comprised 48% of Cognizant’s revenue in the 2021 fiscal. If you would stick to the older definition, would you have touched the 50% mark for the March quarter?
We utilised skill-based assessment and the reason why we need to do it occasionally is because when we do M&As and add more digital capabilities, we are resetting it. Under the older definition, digital would have grown over 18% and it would have represented 48% of the business.
Annualised attrition is at 31%. Involuntary attrition is 5%, especially in a tight labour market. How long will it hold up at these levels?
Voluntary attrition is what we worry about and it’s at 26%. We are down 5% sequentially. It’s good news. Involuntary attrition is not just about asking people to leave. There are many other factors why they don’t make it after background verification, and they will have to leave eventually. We find attrition in junior to mid levels. It continues to be an industry phenomenon. We are investing in career mapping, learning and development and competitive compensation. We have tripled job promotions in 2021 compared to 2020. We have facilitated tens of thousands of job rotations for our associates in 40 countries and we are investing in total rewards looking at it more broadly along with skilling and advancements. We trained 100,000 people in 2021 alone around the new digital capabilities. This is paying off. We are hiring 50,000 people this year compared to 33,000 previously.
How are clients responding to pricing premium for digital-led deals. Are they willing to pay more towards cost-of-living adjustment (COLA) benefits?
Demand supply constraints, labour cost and attrition have made pricing very topical and this has facilitated pricing discussion with clients. We see pricing as an opportunity for margin expansion in the medium to long term. We’ve had meaningful discussion with clients on pricing and we continue to sell outcomes, we have industrialised our delivery and onsite, nearshore and offshore mix is a part of the broader conversation around pricing.
Are you rethinking your return to office strategy as some employees are reluctant to get back?
We opened our offices in April. However, the uptake is not high. Many employees continue to work from home. From next year, we will have employees returning to the office on some days of the week. When they will work from the office and when they will work from home depends on client requirements. We don’t want to make it mandatory for people to come to the office. We are rethinking our strategy on real estate.

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