Modifications have been made to para 9 of this report. A clarification has also been issued at the end.
Infosys Technologies, India’s second-largest IT services company, is reaching out to its employees who are said to be unhappy over its decision of keeping their wage hike on hold.
Sources say the company’s decision has led to a lot of discontent among its employees, many of whom are said to have expressed their unhappiness on the company’s intranet portal and ‘bulletin board’.
On being asked if the company had revisited its decision, a company spokesperson said this is not “accurate” but “the management is talking with the employees”.
However, the salary hike rumours floating in and out of the company seem to have created disenchantment among employees. “There is an (email) notification saying the company might freeze the salary hike. I don’t know what it means, since they have not stated by when,” said an Infosys employee working at its Pune facility, on the condition of anonymity.
A Bangalore-based Infosys staffer said he came to know Infosys BPO employees had already been assured of wage hike. “If they can hike BPO employees’ salaries, why not IT employees’ too,” he asked.
According to industry sources, the company fears its decision may increase attrition rate at the information technology (IT) major if other Indian and global IT companies decide to increase staff wages.
Infosys CFO V Balakrishnan said the company would stick to its decision for the time being and “would revisit it when such a situation arises”. He, however, said the company was considering salary hike for its BPO employees as “attrition in the BPO industry is upward of 34 per cent”.
According to analysts, at 14.7 per cent, Infosys’ current attrition rate is marginally above its comfort zone. So, its effort would be to ensure the rate does rise to 20 per cent or above. This is the reason why the company has decided to promote its top performers. This would ensure its key resources remain satisfied and its project delivery does not get affected.
According to some employees, effective July 1, 2012, the company has given promotions to 15,000 people — close to 10 per cent of its total workforce — with wage hikes. In 2011, Infosys had promoted 18,000 employees.
“The attrition rate at the company is around 14 per cent. Even if it gives a hike, attrition will continue at that level, which is the normal rate in the industry. It should be concerned only if the attrition level exceeds 20 per cent, because in that case it may lose many good performers too,” said Kris Lakshmikanth, CEO of executive search firm Headhunters.
He said most other software companies were also expected to follow the same path. “Even if it gives hike, that will be minimal, below the rate of rise in cost of living, which is growing at 10-11 per cent a year,” he added.
Before this, Infosys had decided not to give any hike in April 2008, when Indian IT services companies were bleeding against the backdrop of the global economic crisis. However, in October the same year, the company revisited the decision and increased employees’ salaries, albeit moderately.
The information about Infosys giving promotions with effect from April 1, 2012 (as stated earlier in this report, and since modified) was based on statements by the company's top management during their earnings call last Friday. However, on checking with a few employees, it was learnt that though promotions were announced in April, they would be effective only from July 1, 2012. Besides, these employees confirmed that the total number of promotions was 15,000 and not 16,000, as earlier reported. Infosys officials were not available despite efforts to contact them.
As far as salary hikes to those given promotions are concerned, both employees and the company say that when there is a change in band and grade, there is a different pay structure. So all those who have got promotions will get higher pay based on the salary scale of the respective posts and bands they have been promoted to.