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Infy top echelons may see more pay cuts this year

Bibhu Ranjan Mishra  |  Chennai/ Bangalore 

The senior management and board members of India’s second largest IT company Infosys Technologies who already have taken a ‘deep pay cut’ due to sharp reduction in their total variable pay in the fiscal 2008-09, might even be paid further less this fiscal.

Close to 350 people including the board members of the company were given around 58 per cent of their total variable pay in the fiscal 2009 in the wake of the global economic downturn. In the current fiscal (2009-10), the company expects that this may further go down to about 50 per cent.

“All of us have shared the pain and we have to beat the current situation together. Because we believe that the leaders have to walk the talk, and the pain has to be taken by more people at the top,” Infosys head of HR, education and research T V Mohandas Pai said. “In fiscal 2010, we expect the variable pay for the senior management to be less than 58 per cent,” added Pai who is also a member on the Infosys’ board.

Variable component is as high as 50 per cent in the total pay packet of the senior executives whereas the fixed component constitutes the other half. However, in case of the junior and middle level personnel, the variable pay constitutes about 20 per cent of their gross salary. The variable pay is linked to the revenue growth and the operating margin of the company.

The company however had effected marginal cut in the variable pay of the employees in the middle and junior levels in fiscal 2009. The average variable pay given to the employees in fiscal 2008-09 was about 84 per cent of the total variable pay when compared to 96 per cent in 2007-08 and 95 per cent in 2006-07.

The impact of global meltdown has also forced the Bangalore-headquartered company to freeze wage hike and fresh hiring in new fiscal 2009-10. The company however has decided not to effect any pay cut.

The company has decided not to give the pay hike which is usually given in April every year. However, the company might re-visit the decision if the situation improves subsequently, said Pai. “This is perhaps the second time we are not giving any hike and promotions. However, we will examine it again later if things improve,” he told Business Standard.

In 2002, the company has deferred giving wage hike to its employees in April in a tough environment arisen out of the burst. However, towards September and October in the same year, the company has revisited the decision when the situation improved. According to Infosys’ CFO V Balakrishnan, the freezing of wage hike this year will have a positive impact of 4.5 to 5 per cent in the company’s operating margin. Meanwhile, the company has decided not to give any hiring guidelines in the fiscal 2009-10. Pai said while the company had decided to abstain from campus recruitment, the lateral hiring would be decided based on the business demand. IT companies recruit freshers well in advance anticipating the business flow in future. In fiscal 2008-09, Infosys had made campus offers to about 20,000 people of which 16,000 will join the company in the current fiscal.

First Published: Fri, April 17 2009. 00:15 IST