Infosys plans to implement an average of 80% variable pay for the first quarter.

Infosys has unveiled its plan to introduce an 80% average variable pay for its workforce for the quarter that concluded in June. This variable pay is set to be disbursed as part of this month’s salary, marking an adjustment that reflects the company’s performance and approach to employee compensation.Expressing the company’s perspective on the matter, an internal communication addressed to Infosys employees highlighted the positive outcomes achieved during Q1 and emphasized the solid foundation established for future growth.

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The communication underlined the organization’s ongoing commitment to supporting businesses in their digital transformation journeys and catering to evolving client needs. The company attributed its success to the dedication of its teams, the prioritization of key initiatives, and the ability to adapt to dynamic circumstances. The company’s optimistic outlook for the upcoming quarter was conveyed in the communication, which was reviewed by ET.Within the context of this variable pay announcement, it was noted that the average payout at the organization level would stand at 80% for the first quarter of the fiscal year 2024. This figure, however, is subject to individual variations based on employee performance and contribution during the specified quarter.

The company distributed the communication to its workforce over the course of the week.This development follows Infosys’s previous quarter in which the company distributed an average of 60% variable pay. Additionally, the communication highlighted that annual salary hikes for the fiscal year 2023 had not been implemented, with the last round of hikes taking place in July 2022. The company’s chief financial officer, Nilanjan Roy, had indicated that decisions regarding annual increments were under “active consideration” during the post-earnings conference for the first quarter.In comparison to this approach, rival company Tata Consultancy Services (TCS) had announced annual salary hikes effective from April. These hikes included increments of 12-15% for “exceptional” performers. Furthermore, TCS committed to providing 100% variable pay for 70% of its workforce, with the remainder’s variable pay contingent on the performance of their respective business units.Reflecting on the company’s performance in the June-ended quarter, Infosys reported a nearly 11% increase in net profit for the first quarter, although it fell short of analyst estimates.

The company also revised its revenue growth projection for the fiscal year, attributing the adjustment to spending cuts and delays in client decision-making. In light of global macro challenges affecting the IT sector and a less robust demand for outsourcing services, Infosys revised its revenue growth projection to 1.0-3.5% in constant currency terms for fiscal year 2024. This update, representing the lowest growth projection in over a decade, drew significant attention from analysts and industry observers, with brokerage firm Jefferies describing the cut as “drastic” and surprising.

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