Wipro to slash variable pay by half

Employees who are on the bench for at least 60 days in a quarter to be affected.

To cut costs further, Wipro Technologies, India’s third largest information technology services provider, is understood to have effected a 50 per cent cut in the variable pay of a certain band of employees who are not billable (on the bench) for at least 60 days in a quarter.

Last year, the company had cut the variable pay of employees who were not billable for at least 75 days in a quarter. The new policy was made effective from the first quarter of fiscal year 2010.

The variable pay policy in Wipro, which is known as the Quarterly Performance Linked Compensation (QPLC), is decided every year and given to the employees on a quarterly basis. Wipro decides the QPLC of employees based on their level and seniority in the organisation. The company has decided to give variable pay to a certain band of employees (e.g. project managers) only when their respective business units achieve 80 per cent of the business targets set for the quarter.

Company sources say variable components comprise around 10 per cent of most Wipro employees’ total cost to the company (CTC). So, the overall compensation of the employees who are not billable for at least 60 days in a quarter will be impacted by around 5 per cent.

Wipro’s HR Head Pratik Kumar said, “We revisit our variable plan every year. This year, fundamentally we have not changed anything.” He added that “it (the 60-day number) is too specific a number to comment on.” He, however, added that the individual billability-linked system has been there in the company for the past two-three years. “This is not something we have introduced recently.”

Wipro had 97,810 employees as of March 31, which includes 74,986 working with the company’s IT services business. Of these, close to 8,000 are on the bench. However, not all will be affected, since in the case of a certain level of employees — who are primarily into sales and support roles — the QPLC has been linked to the performance of the overall (IT) business of the company. For employees belonging to certain other bands, it has been linked to the profitability of their respective business units, as well as the company’s overall business performance.

The QPLC of the third category, which comprises primarily software engineers and constitutes the largest chunk of the overall employees, is linked to an individual’s billability factor and the performance of the company. The individual billability factor and the performance of the company is being given equal weightage while deciding a variable pay of the employees in a particular quarter, for this third category of employees.