From freezing recruitments to postponing the joining dates of new employees, to laying off ‘non-performers’ — the players have tried it all already.
Take-home in realty, telecom, fin services & insurance down 7-20% alreadyMUMBAI: The economic slowdown is forcing companies to explore every possible option of trimming costs, particularly those pertaining to personnel, which make up the single biggest cost head for many a service provider.
From freezing recruitments to postponing the joining dates of new employees, to laying off ‘non-performers’ — the players have tried it all already.
Those in the banking, financial services and insurance (BFSI) space have gone a step further and effected reductions in variable pay. And now, going by experts, even fixed pay is on the line.
Typically, the variable component of an employee’s pay is given based on the performance of the individual, his team and the organisation as a whole during the course of a year. With revenue and profit estimates for the year under a pall of gloom, many companies have long decided to give out only two-thirds or one-third of the variable pay mentioned in cost-to-company (CTC) calculations for this year.
The fixed component, in contrast, is paid irrespective of performance rating and is usually the larger chunk of the two, at around 90:10, though CTCs have lately been getting skewed towards the variable side, to as much as 70:30. One would have thought this portion was safe, despite the downturn, but no.
Recruitment and human resource consultants say many companies, especially in real estate and telecom, have started cutting the fixed pay of employees already.
Surabhi Mathur Gandhi, general manager (permanent staffing) at staffing company TeamLease Services, says some players are slicing fixed pay to the tune of 7-20% so the take-homes are going down. The list includes some financial services and insurance players, besides real estate and telecom, she says.
Still, employees have no choice but to stick to their jobs. “People would rather do some job, despite the cut in pay, than not earn anything at all,” says Gandhi.
And the contagion is spreading, signalling the end of the lavish pay-packet days.
Kris Lakshmikanth, founder CEO and managing director of Bangalore-based recruitment firm HeadHunters India, says fixed salaries are bound to be affected.
Yogesh Saigal, a New Delhi-based HR consultant, says this trend of cuts in fixed pay is across all levels and more so in case of employees in the sales team or those whose jobs are directly linked with the revenue stream.
TeamLease’s Gandhi asserts that fixed-pay cuts are a trend, even though no company would admit to it yet.
An HR official of a financial services firm says, “We haven’t cut fixed pay as of now, but you can’t predict the future.”
Lakshmikanth says even the innovative strategies employed by companies such as IT majors Infosys and Satyam of giving employees the choice of going on sabbatical have the same motive - reducing the fixed pay burden. He says that is one option others could also explore.
g_priyanka@dnaindia.net 
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