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Two key executives tasked with helping Cognizant hire talent at scale and lead global delivery for its digital business have resigned, sources familiar with the development told Moneycontrol.
Sources said Suresh Bethavandu, the global head of talent acquisition, and Muthu Kumaran, the Global Delivery Head for Cognizant's Digital Business have resigned, joining a long list of top executives who have been exiting the company in the last couple of years. Both Bethavandu and Muthu are Cognizant veterans and are leaving after a 25-year stint at the company.
Moneycontrol has reviewed a mail that Cognizant's Chief HR Operations Officer Felix Weitzman sent to employees on Bethavandu's exit.
"As the Global Head of Talent Acquisition, Suresh's leadership has been critical to the strength and recent achievements of our recruiting team, including the record numbers of new hires we have brought in the past couple of quarters," the mail said. Bethavandu also spent significant time in London, helping to set up Cognizant worldwide operations while continuing his role in the talent organisation.
When asked about these exits, Cognizant responded with this comment, "Cognizant has recently been named a top employer in India by LinkedIn and continues to be a magnet for highly skilled talent. We are investing in our people’s growth through upskilling, digital training, and higher education programs. Career velocity is being enhanced with salary increases, job rotations, and promotions. Our recruiting efforts were strengthened six months ago with the addition of hundreds of recruiters. As a result, we have record numbers of new hires joining Cognizant, and our plans to hire 100,000 laterals, onboard 30,000 new graduates this year, and 45,000 new graduates in 2022 are on track."
These exits are likely to hurt Cognizant as they come at a time when the company is seeing record attrition and is looking at hiring 1 lakh experienced professionals.
For the April-June quarter, its attrition zoomed to a historic high of 31% of which 29% was voluntary attrition. It has an overall headcount of 301,200. A back-of-the-envelope calculation shows that over 23,300 employees left the company during the quarter, which means an average of 350-380 employees resigned every working day between April-June 2021. A majority of Cognizant's employees are based in India.
"Bethavandu was crucial to Cognizant's plans of hiring 1 lakh, lateral employees. He also has very strong relationships with college campuses and recruitment consulting firms," a person familiar with the development said.
Kumaran, on the other hand, is the second big exit to strike Cognizant's digital business, a segment which it is betting big on and is one of the fastest-growing segments for the industry. Malcolm Frank, the President of the company's digital business and technology practice, announced plans to retire in September this year.
The elevated levels of attrition across levels will limit Cognizant's ability to fulfill existing deals and go after new ones, especially in a market where the demand for outsourcing services is booming, as there is an accelerated shift to digital post-COVID-19.
It's a risk that the CEO highlighted a few months ago when he told analysts that the company had to let go of business due to its inability to hire talent.
Even though Cognizant is Nasdaq-listed and headquartered in the US, it has always been benchmarked with its Indian peers as it has a similar industry and client profile, with a majority of its over 3 lakh employees based here.
For the longest time, it was also a barometer of growth for the Indian IT industry. While the high attrition in hot skills is an industry-wide phenomenon, Cognizant's issues extend beyond the buoyant job market.
It continues to lose leaders who have been at the company for decades. Moneycontrol reported recently that two more senior executives Arun Baid and Dan Smith have left the company, the latest among a raft of key executives who left the company since CEO Brian Humphries took charge in 2019.
Former Cognizant leaders who played key roles in building the company have now become the preferred choice of private equity firms and global IT/BPM services companies.
In the past two years alone, eight companies – Mindtree, Firstsource, Bristlecone (part of Mahindra & Mahindra), Collabera, Hitachi Vantara, Zensar, Qualitest, and Virtusa – have handpicked ex-Cognizant leaders as their CEOs.
Others have joined as managing directors or CEOs of large private equity firms and startups.
Executives Moneycontrol spoke to said this ends up having a multiplier effect. Many leaders who quit to take up bigger roles in other organizations end up picking a lot of their hires from Cognizant.
According to a report by Kotak Institutional Equities published a couple of months ago, Cognizant has also lost market share to peers due to insourcing, with a ransomware attack also impacting service delivery.
So, it may not benefit from vendor consolidation in financial services, which is its biggest industry segment in terms of revenues. It has also not announced large deals such as TCS, Infosys, or Wipro, even as it made a string of acquisitions.