Infosys Slashes Average Variable Payout Of Employees

Infosys, India's second largest IT services business, has reduced the average variable compensation of employees to around 70% for the June quarter due to margin pressure and rising labour expenditures. According to reports, Infosys has lowered variable compensation for the June quarter or Q1 FY23 to over 70%, and staff have been told.An e-mail submitted to Infosys on the subject received no response. 

Infosys reported a lower-than-expected 3.2 percent increase in June quarter net profit due to rising costs last month. However, citing solid demand and a robust transaction pipeline, the business boosted its full-year revenue growth forecast to 14-16%. The business maintained its margin forecast of 21-23 percent, but stated that due to the rise in costs, it will be at the lower end of the margin expectation. In Q1 FY23, Infosys' operating margins were over 20%.

Higher employee benefit expenditures, subcontracting charges, and travel expenses increased total costs for the Bengaluru-based company in the June quarter. As a result, increased turnover leads to greater staff expenditures, reducing the profitability of the Indian IT sector. 

In the Q1 earnings report, Infosys' Chief Financial Officer, Nilanjan Roy, stated that the business is fueling the strong growth momentum with smart investments in personnel through recruiting and competitive compensation adjustments. "While this will have an immediate impact on profits, it is intended to minimise attrition levels and position us well for future growth," Roy added.

Wipro has delayed variable compensation for employees owing to margin pressure, inefficiencies in its personnel supply chain, and investment in technology. Tata Consultancy Services, a larger rival, has reportedly delayed quarterly variable compensation payouts for some employees by a month.