Cognizant looks to raise headcount to spur digital revenue

Information technology services major Cognizant is looking at increasing the headcount in its sales division, as the US-based firm pushes hard to strengthen the front-end client mining team and improve the share of digital services segment to its overall revenues.

The move comes at a time when the company is optimising its employee pyramid apart from rationalising its selling, general and administration (SG&A) expenses.

“The pivot to digital requires us to rethink many aspects of our company. We will need more consultative selling skills, more digital talents, more targeted sales compensation programmes and more intellectual property and thought leadership aligned by industry vertical,” said Brian Humphries, CEO at Cognizant.

“In a way, Cognizant is following the model of Accenture, IBM and Capgemini which are focussing more on consulting-led sales. This is also an implicit admission that the market is tough and you need to spend more on sales, which will be key differentiator in the market," said Pareekh Jain, a IT outsourcing advisor and founder of Pareekh Consulting. “It also indicates a shift in business strategy under which the company wants to focus more on revenue growth than looking at the margins.”

The Teaneck, New Jersey-headquartered software services major is looking at hiring over 500 employees in its sales team who would be working in the customer-facing and sales support. The new hires would help the IT services firm to expand its existing accounts apart from serving new clients.

Cognizant is also planning to increase the variable component in salaries of sales executives to align it with the growth in digital revenues.

"We will overhaul our sales commission plans for the new fiscal year, which will have a greater mix of variable compensation, ensuring better alignment with the company's strategic direction," the Cognizant CEO said.

The company is implementing a new operating model in its biggest verticalbanking, financial services and insurance (BFSI), which accounts for around 36 per cent of its total revenue. As part of this new model, the IT firm has now established dedicated teams for new BFSI clients. "We've recently implemented a new operating model, which includes a team solely focused on new logos; a team dedicated to the platinum accounts which are a subset of our largest global clients and a banking practice & solutions team for better alignment with key partners," Humphries added.

However, the new CEO, who took over the role from April this year, also said that the IT firm would further reduce its overall costs in the second half of this year through slow hiring. "Headcount growth on a full year basis will align to our full year constant currency revenue guidance," he said during an analysts' call. In the just ended quarter, Cognizant added 2,400 employees on net basis as compared to 7,100 staff added in corresponding period last year.

For the whole year, the IT firm has guided for revenue growth in the range of 3.9-4.9 per cent in constant currency terms, which was lower than its previous guidance of 3.6-5.1 per cent issued in May. During the last quarter, Cognizant posted a growth of 11.6 per cent in its net profit to $509 million while the revenue grew 4.7 per cent at $4.14 billion.