By Ayushman Baruah
Bengaluru-based IT major Infosys has reduced the variable payout for employees for the first quarter of FY23, a trend seen across the industry, due to pressure on margins.
“The average variable payout for Q1 FY23 is 70% at an organisation level,” Infosys said in a letter to employees, a copy of which FE has seen. “The performance bonus payout for Delivery and Business Enabling Functions for Q1FY23 is scheduled to take place in the payroll of August 2022.”
Infosys’ operating margin narrowed to 20.1% in Q1FY23 compared to 23.7% in the same quarter of the previous year and 21.5% in Q4FY22.
During the first quarter earnings, Infosys management said that competitive salary increases have been given to majority of employees from April.
“Given the supply tightness and high prevailing inflation, salary increases across all geos this year are higher than historical levels. The increases vary based on job levels and performance of employees with top performers getting double-digit hikes. Salary hike for other employees is being done effective July 1,” Nilanjan Roy, CFO, Infosys said during the analyst call post Q1 earnings.
Top Indian IT services firms have either deferred or reduced the variable payout for the employees as pressure on margins is mounting.
Earlier, Tata Consultancy Services (TCS) and Wipro deferred or reduced variable payouts for the April-June quarter. IT companies’ margins have come under pressure due to rising employee costs such as salary hikes, travel, return to office and retention costs due to high attrition levels.
At TCS, the performance bonus has been deferred. “Performance bonus for Q1FY23 is yet to be finalised for C3A, C3B, C4 and equivalent grades. This will be paid along with August 2022 payroll,” TCS notified its employees.
A TCS employee told FE on condition of anonymity that typically in the past they receive their variable pay on a quarterly basis at the end of each quarter.
Wipro will not be paying out the variable pay to employees in band C and above for the first quarter, and junior-level employees will receive 70% of their variable pay, according to media reports.