Switches from experience to performance, target achievement
Wipro, the country’s third-largest IT services exporter, will implement a new incentive structure for its sales and delivery employees with a sharper focus on performance.
At the company’s analyst meet on Wednesday, Wipro CEO TK Kurien said, “In the past all our promotional policies and compensation used to be based upon how many years you have spent on a particular job and what your rank is in the company… In future we would pay our compensation based on the value that a person brings in mostly from technology and businesses.”
The change in incentive structure will be effective April 1. Elaborating on the new structure, Kurien said, “We have to focus on sharper target identification and sharper accountability. This year we have moved our entire incentive pay from gross targets to incremental growth.”
This implies that Wipro’s sales and delivery employees will make the cut only if they show individual achievement of targets. “There is a different mindset that we want to drive at the grassroots in terms of execution. It is going to be extra effort in sales and marketing,” Kurien said.
However, this compensation structure is unlikely to impact the entire employee base.
“The resources have changed and the way you do business has changed and the culture has changed. It will address a completely different economic buy in a completely different way,” he remarked.
Giving an update on the business environment, Wipro said that for the fourth quarter of FY15, it expects an operating profit margin impact of 200-250 basis points due to cross-currency movement.
However, the IT major said the overall demand environment remained steady with more optimism around its US prospects. However, it expects challenges in the oil and gas sector in terms of spending cutbacks following falling crude prices. This was likely to play out in the current and next quarter.
On the other hand, the company has been witnessing good momentum in segments such as healthcare, retail and manufacturing. Wipro has maintained its revenue guidance for the fourth quarter with 1-3% growth. The IT major continues to see deal momentum and expects to close some big ones in coming months.