Infosys Reduces Variable Salary to Compensate for Weak Q4

After back-to-back 100 per cent variable payouts during September and December quarters, Infosys reduced the variable pay for its employees to 70 per cent during the March quarter to compensate for falling utilization and weak operational performance.
  The reduction in variable pay helped Infosys add 120 basis points to its operating margin during the March quarter. For the full year, Infosys' average variable payout, however, rose from 64 per cent in 2013-14 to 86 per cent in 2015-16. Higher variable pay helped the company check record-high employee attrition.
  "100 per cent payout helped retain talent... I am happy to report employee attrition has been contained," Infosys CEO Vishal Sikka said on Friday.
  In the first three months of 2015, a total of 1,768, 1,437 and 1,352 employees left Infosys as compared to 2,850 employee exits in May 2014 and 2,528 exits in July 2014.
  In good news for 1.76 lakh Infosys employees, India's second largest outsourcer clarified that the actual increase in salaries would be higher than the average 6.5 per cent hike announced last month. (Read the full story here)   "The numbers that we have rolled out of 6.5 per cent excludes the benefits and promotions including which it will be somewhere between 7.5 per cent to 8 per cent," said Infosys chief financial officer Rajiv Bansal.
  For employees outside India, the salary hike would be around 2.5 per cent, when benefits and promotions are taken in to account, and not 2 per cent as stated earlier, Infosys said.
  The clarification came amid criticism that a small salary hike would dent employee morale and may hasten employee exits from Infosys. Infosys' bigger competitor TCS had announced an average of 8 per cent salary hike for its employees earlier this month.
  "I think if you look at the major competition has also rolled out hikes in the same range," Mr Bansal added.
  Infosys also said that it could consider further salary hikes for top performers during the year. "We are transforming ourselves towards a much more of a performance-driven culture where we are continuously identifying and rewarding higher performance," Dr Sikka said.
  Last year, Infosys had given a midyear wage hike to about 20,000 employees in October. It also promoted 25,000 employees during 2014-15 fiscal year.