After IT major Wipro and India’s largest IT services company Tata Consultancy Services (TCS) have delayed variable pay for select employees, another IT company Infosys has cut the average variable payout of employees to about 70 per cent for the June 2022 quarter amid margin squeeze and high employee costs, according to a PTI report. It added that the employees have been informed about the payout cut.
In the case of TCS, the bonus and variable compensation payout will now be paid by August-end now, against its scheduled due date in July. These employees include assistant consultant, associate consultant, and consultant levels.
Last month, Infosys reported a lower-than-estimated 3.2 per cent rise in the June 2022 quarter net profit amid escalating costs. However, the company raised its full-year revenue growth outlook to 14-16 per cent citing strong demand and a robust deal pipeline. It maintained the margin guidance at 21-23 per cent but made it clear that with the increase in cost environment, it will be at the lower end of the margin outlook. Infosys’ operating margins were at about 20 per cent in Q1 FY23.
Meanwhile, Indian information technology companies are struggling with high attrition rates over the past few quarters, with more numbers of employees leaving their jobs. To address this, companies including Wipro, Infosys, TCS and HCL Technologies have announced salary hikes and bonus to retain employees, among other measures. Wipro salary hike for employees will be implemented from September.
IT major Infosys’ attrition rate also remains high. It is also raising salaries, and net hiring may also be increased which might impact the firm’s near-term margins. The company believes that it will bring down the attrition rate, which rose to 28.4 per cent during the June 2022 quarter as compared with 27.7 per cent in the previous quarter.
Infosys Chief Financial Officer Nilanjan Roy has said, “We are fueling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions. While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth. We continue to optimize various cost levers to drive efficiency in operations.”
Tata Consultancy Services plans to give a 5-8 per cent salary hike to its employees, after the company recorded a high attrition rate of 19.7 per cent during the first quarter of the current financial year.
TCS chief HR office Milind Lakkad has said that the company has increased salary by up to 8 per cent. “Following our annual compensation review, employees received salary increases of 5-8 per cent, with top performers getting even bigger hikes. Our empowering, performance-driven work culture is helping us attract local talent across all our key markets.”