Infosys has reduced average variable payout to 70% for the June quarter amid margins squeeze.
India's second largest information technology(IT) services firm Infosys has reportedly scaled back the average variable payout of employees to about 70% for the first quarter of FY23 due to the impact on margins and high employee cost.
Approximately 70% of the variable payout has been decreased by Infosys, according to the sources, and the employees have been told of this change for the June quarter or Q1 FY23.
“The margin impact in the current quarter has reflected on the performance bonus for this cycle,” the company told its employees over email.
“While 70 per cent is the correct figure, an important point is we have been told that the company will not defer any variable payment. It is being paid according to schedule,” said a person.
Variable pay is the incentive companies pay to employees based on performance. Companies may choose a variety of ways to give variable pay, and not all forms are monetary.
As per the company's plan, the variable payout will be paid concurrently with August's paycheck. While the average payout is 70%, each employee's actual variable payment will be based on the policies of their unit or department and will vary for various pay grades and divisions.
The operational margins of Indian IT companies during the most recent quarter have been affected by high attrition rates, which result in increasing labour expenditures. Infosys reported attrition rates of 28.4% even though the leading provider of software services has added 21,000 workers to its workforce.
At its Q1FY23 earnings call, Infosys’ Chief Financial Officer Nilanjan Roy said the company was not planning to cut employee costs. “We did two wage hikes in the calendar year 2021. This year, we rolled out another in April. Within a year and a half, we have done three substantial hikes and in September last year, we also did a skill-based increase. To capitalise on this demand, we have to pay for premium skills.”
“We do not want to leave a five-year demand on the table because of short-term cost pressures. We can optimise these over this year and the future as well,” he added.
Prior to Infosys, other big players in the IT industry including Tata Consultancy Services and Wipro had postponed or decreased variable payouts for the April–June quarter as a result of pressure on the margins.
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 "Infosys employees to reportedly get reduced payout for the June quarter, here’s why")
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