US-based IT major, Accenture, which last month reported a below estimate first quarter earnings, will not be paying out hikes to its employees in India and Sri Lanka this year, except in few critical skill areas and where it is legally mandated.
In an internal email to employees accessed by Fe, country managing director Ajay Vij said that the company experienced a macro environment that was more challenging than anticipated at the beginning of the FY23, and growth was lower than planned. He said that because of this the firm needed to make some hard decisions around promotions and rewards.
Accenture has over 300,000 employees in India.
Accenture follows a September-August financial year, and its guidance for FY24 was the second-lowest among the beginning of year guidance in the past 16 years. It has guided a revenue growth of -2 to 2% in Q1FY24 and for the full year, expects revenue growth to be in the range of 2-5%.
“Our rewards philosophy is to provide market relevant pay based on skills and location that is affordable for Accenture. Keeping our payroll aligned with market is essential to the health of our business, including competitive pricing of our services,” Vij said in the email.
The email also stated that while it will payout individual performance bonuses based on the individual’s contributions wherever it is applicable, but added that it will be ‘significantly lower than last year’.
“…our global annual bonus funding is based on our company performance. Given our performance, you should expect our global annual bonuses to be significantly lower than last year,” he said.
The company is also severely reducing its promotions. Upto the level of associate director (Level 5), the company said it will reward promotions in December as scheduled, but it will be lower than last year. Accenture has 13 levels, with 13 being the lowest and 1 being the highest. For levels 1 through 4, promotions have been postponed till June 2024.
“We are postponing our promotions to and within MD, and appointments to SMD, until June 2024 in order to allow ourselves to return to growth so that promotions are affordable,” Vij’s email said.
“Our rewards philosophy is to provide market relevant pay based on the skills and locations where we operate. We also consider a variety of factors, including the macroeconomic environment in making our decisions around pay and benefits,” an Accenture spokesperson said.
Prior to Accenture, several domestic IT firms have also undertaken similar decisions. In the April-June quarter , HCLTech said it was skipping the salary hike of senior management level staff, and deferred the pay hikes of junior employees by a quarter.
Wipro has also pushed its salary hikes from September to December 2023, and Infosys is yet to roll out salary hikes initially slated for April and July.