Infosys goes TCS way, announces 95% variable pay, highest in past nine quarters

 BusinessToday.in        Last Updated: January 15, 2018  | 14:53 IST
Infosys goes TCS way, announces 95% variable pay, the highest in 9 quarters

The Indian IT sector, long synonymous with pink slips and spiralling attrition is seeing a new trend of late: increasing reliance on variable pay to reward the workforce. Two days ago, news reports claimed that Tata Consultancy Services, India's largest IT services company, had declared 100% of the target variable pay to all its India employees for the third quarter of this financial year. And now rival Infosys has followed suit.

According to The Economic Times, India's second-largest IT player has given 95% of variable pay in the December quarter-the highest level of payout in the past nine quarters. As incentives for top performers go, this move may not be in the same league as bagging an iPhone - former CEO Vishal Sikka had gifted the iPhone 6 to 3,000 of the firm's best employees in an effort to stem the high attrition rate back in December 2014 - but employees are reportedly welcoming it as "a great morale booster" all the same.

In last year's appraisal cycle, Infosys deferred salary hikes for employees to July, or to subsequent quarters in the case of senior executives. The latest payout - which is markedly higher than the firm's usual quarterly variable payout, hovering around 75% - reportedly coincides with compensation increases to its middle and senior management in various geographies in the December quarter. The latter, in the words of Pravin Rao, Chief Operating Officer, has been a "very good quarter across multiple dimensions".

If revenues grew year-on-year by 5.8% in constant currency terms, net profit stood at $ 796 million, y-o-y growth of 45.4%. "During the quarter, we provided compensation increases and higher variable payouts to our employees. Our investments in employees continues to deliver results as reflected in lower attrition," he added. This has resulted in Infy's attrition rate coming down from 17.2% during the September quarter to 15.8% in the December quarter.

The latest payout might push down the figure further in the next quarter. According to the daily, these huge payouts come at a time when Indian IT firms fear slower offtake of traditional services as more clients migrate to digital platforms such as social media, mobile devices, analytics, and cloud computing.

 

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