It Cos Cut Variable Pay: Report

[Jambhalheart]

BANGALORE: Large IT companies have begun to implement marginal cuts in employees' variable pay, an indication of the economic challenges they foresee. Brokerage firm Nomura said in a January report, "Our channel checks at [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/tier-1-IT-companies&t=ACfmUVGnb43dz1MzEkzBmomzevrMLw-PUBVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]tier-1 IT companies[/url] suggest marginal variable salary cuts compared to previous quarters have already started in view of the uncertainty in demand and recent performance."


The report adds that variable compensation is 4-6 % of revenues of tier-1 IT companies ( [url="http://www.orkut.co.in/Interstitial?u=http://economictimes.indiatimes.com/infosys-technologies-ltd/stocks/companyid-10960.cms&t=AHfvFq0c-4t1u6FhGwoVWpzpt88FmVRSjBVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]Infosys[/url], [url="http://www.orkut.co.in/Interstitial?u=http://economictimes.indiatimes.com/wipro-ltd/stocks/companyid-12799.cms&t=AC7BEK3Gy08jzVEFQ54ypudkhKo15_--JxVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]Wipro[/url] and [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/TCS&t=AP4PLzB8uJW3fGpx4ANVcUnn7FldXDuoKRVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]TCS[/url]), and 20-30 % of their offshore salary costs. The offshore salary stands between 18% and 27% of overall revenues.


An [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/HSBC&t=AHdlMNEZ95gcKK24BWpTpRSFow_hJdD3-BVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]HSBC[/url] report in September said the process of [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/variable-pay&t=AMKQoTDxhNXSWjuDxsnUf4r-1jf39S1JLRVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]variable pay[/url] cuts began as early as the June quarter. Official confirmation was not possible as the IT majors are in a silent period ahead of their Q3 results. A source at Wipro said that the company has so far not made such a move but variable pay cuts are imminent.


Recent results of technology majors like [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/Oracle&t=AKHdqcw7R06QBo7M5QaDG4eRCQYgx7RTDxVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]Oracle[/url] , [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/Accenture&t=AD4K39qs61lgkk6vjwnDLvluHPcEBhTaDhVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]Accenture[/url] and [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/Red-Hat&t=AKD8xzfyHXmGRNgXoQB27BMeVV54zRfRhBVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]Red Hat[/url] indicate decelerating demand for packaged software. This according to analysts will impact demand on the discretionary portfolio of Indian IT companies. Research firm Gartner has also cut [url="http://www.orkut.co.in/Interstitial?u=http://timesofindia.indiatimes.com/topic/IT-spending&t=AHxDG3w2ctzz7ccpappIK4rgKzOt6BtEEhVF6BHPOhTLLepkcou6qJpV89btnA5JBcIcq4CgFTjFWubyjMexdr4Egu0z4qwcLwAAAAAAAAAA"]IT spending[/url] growth forecast to 3.7% in 2012 over the previously forecasted 4.5% due mainly to the concerns in Europe.