Tata Consultancy Services? (TCS) decision to cut variable pay of its over one lakh employees has set alarm bells ringing among the country’s code-writers, bringing back memories of 2001.
Though industry officials were quick to dismiss it off as being “company-specific” and allayed concerns of wage cuts, there was a note of caution that the salary increases may not keep pace with yesteryears.
?There is no need to panic and we do not have to revisit salaries. But there has to be a moderation in expectations of salary increases. With the inflation hovering around 4%, it is my view that salary hikes will be moderated around 9-10% from the earlier average of 15%,? software companies? apex body Nasscom vice-chairman and managing director of Zensar Technologies Ganesh Natarajan said.
?It is inevitable. There has to be a moderation. It is not because of slowdown, but the compensation costs have been rising 14-16% per annum for a decade and a new balance level has to come in,? MindTree Consulting chairman and managing director Ashok Soota said.
He said there would be an increase in the variable components and smaller companies would wait for the larger firms before deciding on the moderation.
In August, FE had reported that with increasing costs and rising rupee, the Indian IT industry was looking at wage moderation. But now with the sceptre of a slowdown in the world’s largest economy looming large, the Indian IT industry has been taking a cautious stance.
TCS in an email to its employees on Tuesday had said that it had failed to meet its economic value-added target, forcing it to cut employees share from the variable pay linked to the company?s performance.
However, its nearest competitors ? Infosy and Wipro ? both said they had no intention to cut variable pay of employees. ?Everybody in the industry is subject to the same market conditions. Whether you cut employee salaries based on business outcomes depends on the business model you follow. As long as we sell on value and not on price, we will remain competitive,? Infosys HR director T V Mohandas Pai said, adding Infosys had no system to cut future salaries based on current corporate performance.
?We see no reason to squeeze employee remunerations and do not intend to do so,? Wipro’s corporate vice-president (HR) Pratik Kumar said.
?Wage moderation in the industry is subject to the demand-supply situation for professionals. Whether big or small, the same market conditions are prevalent. As long as we have a strong revenue stream, a strong base of customers, there is no need to worry,? Sonata president and managing director B Ramaswamy said.
Natarajan said though the outlook from the US was moderate, Europe and Asia-Pacific were doing well. ?Our view is that offshore work will get accelerated,? he added.