In a recent development, global IT services giant Cognizant announced a deferral in salary hikes for "eligible" employees until August 1. This delay of four months from the previous April 2023 cycle has garnered attention and raised questions about the company's decision-making process and the broader implications for its workforce. 

Cognizant, known for its significant presence in the IT industry, has cited several reasons for the delay. According to a report by Moneycontrol, the company stated, "We are committed to recognising the hard work and dedication of our associates through annual merit increases and bonuses." 

The decision to defer the salary hike was positioned as part of this commitment, with the majority of associates having seen four merit increases within three years, the last being on April 1, 2023. 

Furthermore, the company emphasised its recent distribution of annual bonuses to "eligible associates globally." This move was portrayed as a continuation of Cognizant's dedication to consistently acknowledging the contributions of its talented workforce. 

However, the decision to delay salary hikes comes amidst a series of challenges faced by the company and the broader technology industry. In February, Cognizant implemented a new policy requiring its employees in India to work from the office three times a week. 

With a global workforce of over 347,700 employees, approximately 254,000 of whom are based in India, this policy shift has undoubtedly impacted the company's operational dynamics. 

Moreover, the current macroeconomic landscape poses additional hurdles for software services exporters and technology firms. Subdued demand and tightened client budgets have contributed to a strained business environment, prompting companies like Cognizant to reevaluate their strategies and expenditure. 

In the fourth quarter of FY23 ending in December, Cognizant witnessed a 1.7 per cent year-on-year decline in revenue, dropping to $4.76 billion. This decline, marking a likely eight-quarter low, can be attributed to continued weakness in demand across various sectors. 

Despite the revenue decline, Cognizant's profit saw a 7 per cent year-on-year increase to $558 million, indicating resilience and effective cost management strategies. However, the company's full-year 2023 revenue reported a 0.4 per cent year-on-year decline to $19.4 billion. 

In constant currency terms, the decline was slightly lower at 0.3 per cent. Looking ahead, Cognizant expects first-quarter revenue for FY24 to be between $4.68 billion and $4.76 billion, reflecting a decline of 2.7 per cent to 1.2 per cent, or a decline of 3.0 per cent to 1.5 per cent in constant currency terms. 

These projections underscore the ongoing challenges and uncertainties in the market, prompting companies to adopt cautious approaches to financial planning and resource allocation.