Big domestic IT services firms are likely to incentivise their top executives on the basis of digital revenue as announced by Infosys recently, reflecting the growing focus on the segment for driving future growth of the Indian IT industry.
According to analysts, more companies are likely to follow suit with Infosys's kind of initiatives in the near future as IT sector witnesses a shift in the traditional business model with share of legacy business coming down with each passing year.
"What Infosys has done is a very innovative thing. With this move, the company has put digital segment at the core of its future growth. Also, linking variable pay of top executives to digital revenue growth brings the top management on the same page," said Kris Lakshmikanth, Founder & CEO of Head Hunters India.
"I think, the top 5-10 companies are likely to come up with some incentives in the digital revenue space going ahead because digital stands at the core of their very existence."
Infosys in an exchange filing to US Securities and Exchange Commission (SEC) said this week that the variable pay of the six top employees will be based on digital revenue growth apart from overall revenue and profitability of the firm.
The six top executives include chief operating officer, UB Pravin Rao; chief financial officer MD Ranganath; head of banking and financial services vertical, Mohit Joshi; deputy chief operating officer S Ravi Kumar; head of human resources Krishnamurthy Shankar and general counsel Inderpreet Sawhney.
Infosys has already linked its chief executive officer, Salil Parekh’s compensation to the company’s ability to get a higher share of business from digital technologies along with other parameters like return to shareholders, stability in operations among others.
Digital revenue of Infosys grew 27 per cent to $803 million in the first quarter ended June 30, 2018. Digital, for now, accounts for 28.4 per cent of the company’s $2.83 billion revenue in the June quarter.
Similarly, Tata Consultancy Services (TCS) digital revenue stood at $1.26 billion, 25 per cent of its total revenue of $5.05 billion in the first quarter while Wipro's digital revenue accounted for 28 per cent of its gross revenue of $2.02 billion during this period.