Cognizant has begun distributing bonus letters to eligible employees, offering payouts ranging from 85% to 115%—the highest bonus allocation in three years. The move comes as part of the company's commitment to rewarding performance, with the majority of employees expected to benefit from the incentive.

The company has opted for an electronic distribution process, issuing e-letters to employees regarding their 2024 bonus payouts. The disbursements will be made in March and April, aligning with payroll schedules in different countries. This substantial bonus distribution reflects Cognizant’s financial health and its strategy to retain and motivate talent in an increasingly competitive IT job market.

Alongside the bonuses, Cognizant has confirmed that merit-based salary hikes will take effect from August 1, 2025. The announcement ensures employees will receive performance-based increments, scheduled exactly one year after the last salary revision. This decision underscores the company's structured approach to employee compensation, rewarding those who contribute significantly to its growth.

While Cognizant has yet to reveal the detailed framework for these salary hikes, industry peers like Infosys have already implemented performance-based salary structures.

Infosys recently introduced a tiered salary hike system based on employee performance, which could provide insights into how Cognizant might structure its increments. The Infosys salary hike categories are:

• Met expectations: 5-7% increase

• Commendable performance: 7-10% increase

• Outstanding performers: 10-20% increase

• Needs improvement: No salary revision

Most Infosys employees received a 5-8% salary hike, while top performers enjoyed significantly higher raises. The revisions applied to two key job levels:

• Job Level 5 (team leaders and below): Wage increase applied retroactively from January 1, 2024

• Job Level 6 (managers below VP level): Revised wages effective April 1, 2024

If Cognizant follows a similar pattern, employees can expect performance-driven raises that differentiate top talent from average performers.

Cognizant's move to offer higher bonuses and structured salary hikes aligns with broader industry trends, where IT firms are increasingly focusing on performance-linked rewards. With talent retention becoming a major challenge in the sector, such financial incentives are crucial for keeping skilled employees engaged.

The combination of substantial bonuses and scheduled salary hikes suggests that Cognizant is positioning itself as an attractive employer, ensuring that high-performing employees are recognized and rewarded. As the IT industry continues to evolve, competitive compensation strategies like these will play a pivotal role in workforce stability and business growth.