AUGUST 22, 2022
Bengaluru-based IT bellwether Infosys has slashed the average variable payout of employees to about 70 per cent for June quarter given lower margins and higher employee costs. Employees have also been informed about the same. The company maintained a margin guidance at 21-23 per cent but said it will be at the lower end of the outlook as higher employee benefit expenses, sub-contracting costs and travel expenses shot up overall costs for the IT behemoth.
Compensation hikes have impacted margins by 160 basis points and utilisation dipped due to new freshers coming in. Infosys Chief Financial Officer (CFO) Nilanjan Roy in the Q1 earnings statement said the company is fuelling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions.
He was quoted as saying by news agency PTI, “While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth.” Infosys asserted that these were more like “investments” given a strong demand scenario, while adding it will look at cost cutting measures like better utilization and more automation.
Infosys, however,is not the only IT firm to reduce employees’ pay. Rishad Premji-led Wipro and Mumbai-headquartered Tata Consultancy Services (TCS) have also either held back or delayed employees’ performance bonuses and variable payments for Q1FY23.
Wipro sent an email to its C band employees and above (mid-level and senior) employees saying they will not get any variable pay but those in A and B bands will receive 70 per cent of the target payout. Compensation of sales team employees was also impacted.
Wipro held back employees’ variable pay due to pressure on margins, inefficiency in its talent supply chains and investment in technology.
TCS has also delayed the performance bonuses for employees belonging to C3A, C3B, C4 and equivalent grades by almost a month. Employees belonging to these grades are assistant consultants, associate consultants and consultants.