Infosys Prepares to Implement Variable Compensation for Qualifying Employees

21 Nov, 2023

Infosys Prepares to Implement Variable Compensation for Qualifying Employees

Infosys, the Bengaluru-based IT giant, is set to disburse a quarterly performance bonus to eligible employees for their July-September achievements. The individual payouts will hinge on each employee's performance during this quarter, with an anticipated average payout of 80%.

Employees categorized under position level 6 (PL 6 managers) and below—excluding entry-level positions—are in line to receive this variable pay. The allocation of payouts across units will be overseen by unit delivery managers, who are expected to notify eligible employees of their entitlements within this week.

Amidst fiscal conservancy, Infosys had previously frozen salary hikes in FY23. However, it initiated its annual appraisal cycle in October. This bonus distribution coincides with a period where Infosys, along with other leading IT firms, reported restrained revenue growth in the September quarter. Despite this challenging environment, Infosys managed to maintain relevance and set a sturdy groundwork for future market share expansions in Q2.

In Q2 FY24, the company recorded an operating profit of ₹8,274 crore, with an EBIT margin of 21.2%. The top line saw a 6.72% increase, and profits rose by 3.17% YoY in the same period. Compared to the previous quarter, revenue grew by 2.8%, and profits increased by 4.49%.

This 80% payout aligns with the first quarter of the fiscal year but surpasses previous quarters in FY22, where payouts ranged between 60% to 70%. For the quarter ending in March this year, Infosys disbursed 60% as variable pay.

Infosys performs its annual appraisal cycle spanning from October to September in the subsequent financial year. Employee ratings are usually revealed around January, with pay raise notifications being issued by June. Nevertheless, the IT sector has encountered a decrease in its workforce owing to widespread industry growth constraints.

Acknowledging the challenging demand environment, Infosys communicated these industry realities to its employees. Reporting a modest 3.2% YoY revenue growth at ₹38,994 crore, the tech giant has revised its revenue growth guidance for FY24 to 1%-3.5%. This adjustment is in response to global clients reducing tech expenditures, leading IT firms to be cautious in employee expenses, including new hires.

The $245-billion IT industry has faced mounting pressure due to global macroeconomic concerns and ongoing geopolitical tensions. This has resulted in reduced technology expenditure across the board.