New Delhi: It is not usually the case that all three big software companies in India give bad news to their employees together. Last week was an exception in this case. At the same time, much bad news came from IT. Money Control reported that IT giant Infosys has cut variable pay by 70 percent. After this news came that Wipro and TCS have either reduced or stopped the variable pay of their employees.
Later TCS said that there is no delay in variable pay for the first quarter. The payment of the full amount will be determined in the first or second month. However, IT companies are under pressure to register double-digit growth.
Hired a record number of freshers
Companies have hired a record number of freshers due to the increase in the dropout rate. But it takes months to train and deploy them in the project. As a result, they also hired experienced employees, turned to sub-contractors, and paid higher salaries to prevent employees from quitting. Therefore, its effect is seen in the margin of the company.
Margin improvement pressure
Together with work from home, this made it an expensive cocktail in times of strong demand. Now that offices are starting to open, companies are focusing on reducing costs due to rising travel costs and uncertainty in demand. Companies have been forced to look for other ways to improve margins. Under this, a reduction in variable pay is also a solution.
The attrition rate is very high
“Margins have declined more than what the analysts had anticipated. Now the matter of concern is that the attrition rate is very high in the companies, so more salary has to be paid and the expenses of the companies are increasing.
Last week, Wipro had said in an email to employees that employees in bands B and C (mid-manager level) and above would not be paid variable pay, while junior employees in bands A and B would get 70 of their variable pay. You will get the percentage. The company said that there is continuous pressure on operating margins. This is the situation in most fat companies.
