Infosys defers salary hikes till July; no job cuts planned

BENGALURU: Infosys has delayed salary increases to at least July and even later for senior employees, India’s second-largest software services exporter said, even as it played down fears of job cuts and started taking steps to reduce operating costs.

For employees ranked JL5 (job level 5) and below — typically those with less than eight years of experience — the compensation review will be effective from July, chief operating officer UB Pravin Rao said in an email on Wednesday.

He added that the review for other employees would be rolled out in subsequent quarters and said no job cuts are planned. “I would like to put to rest any speculation around planned layoffs.

As has been the case in the past, we will primarily see some performance-based exits,” Rao said. ET has seen a copy of the letter sent to employees.


Addressing concerns about variable payout, Rao said Infosys would work on delivering higher payout and would try and ensure predictability at junior levels. He said the company had started cost-optimisation measures and some were discontinued following employee feedback that they were causing discomfort.

Infosys did not respond to an email seeking comment. Salary increases at the company are typically effective from April.

“They have delayed the salary hike. They are also raising the cost of parking in the campus and facilities fees. So even if you get a hike, you will end up giving most of it back to the company,” an employee with Infosys told ET.

Given how IT companies structure their workforce, employees with less than eight years of experience would typically account for over 40% of a company’s headcount. Infosys had a little over 200,300 staffers at the end of March. The delayed hikes for rank-and-file employees come after Infosys recently faced criticism for how much it pays its top executives.

Infosys founder NR Narayana Murthy has said it is unfair for top executives to give themselves large hikes while curbing pay for the other employees.

Infosys is not the only company delaying wage increases. ET earlier reported that Tech Mahindra deferred hikes for employees with more than six years of experience. “Delaying wage hikes is a short-term way to protect your margin for a quarter or two. But when you delay hikes to the more senior bands, it’s a signal that they should maybe start looking for other jobs,” an analyst with a Mumbai brokerage said, declining to be identified. “Cognizant took a more direct approach that way with its voluntary separation programme.”

For IT employees, delayed wage hikes only add to growing job insecurity. Cognizant let go off over 6,000 employees after appraisals, Infosys 1,000, Tech Mahindra about 1,500 and Wipro over 600. The companies denied that these were out of the ordinary and stated that they were part of the regular performance appraisal process.

The Indian IT services industry is facing a tough time – customers in banking and healthcare in the US have held back on spending due to uncertain regulations and clients in the UK are yet to bounce back from the vote to exit the EU.

Nasscom has delayed setting a growth target for FY18, citing an uncertain environment. IT companies also have to spend hundreds of millions of dollars hiring onshore amid visa curbs even as automation cuts into contract pricing. The changes will force IT companies to be stricter with employee appraisals.

“The onset of automation and productivity means that if your performance is not good enough, then you are not really able to deliver values the company needs. The appraisals of the competencies of the people will certainly have to be rigorous in keeping with changing global standards,” R Chandrasekhar, president of Nasscom, told ET in a recent interview.