Click to play videoBangalore: The current downturn has forced IT companies to slash variable pay components like travel and entertainment allowances of their employees. This means employees could also be staring at pay cuts.
HR experts have warned that there could be a 10 to 20 per cent drop in salaries across IT companies. The reason for this drop is that companies maybe hiking basic salaries by five to 10 per cent but variable pay components may be slashed.
Tata Consultacy services (TCS), which has a 'Fixed Variable Pay' policy, has until now paid nearly 100 per cent. But industry watchers say TCS may announce a cut soon.
Sources say Wipro is expected to bring overall salaries down by 10 per cent. And Infosys has already slashed variable pay for senior managers by five per cent and says that this could be implemented across the organisation depending on the macro environment.
"We are reducing variable pay for some of the senior folks. We are trying to keep the variable as variable, not as a fixed cost - keeping in mind our revenue's going ahead," said CFO, Infosys, V Balakrishnan.
Experts say even Nasdaq-listed cognisant may cut salaries by 10 per cent going forward.
"Changes are that most companies will cut variable pay significantly. So far variable pay was paid out almost like salaries with surety. This year there could be a difference," said founder, Headhunters, Kris Lakshmikanth.
The challenges of the business environment is also forcing a change in attitude at companies. Infosys says it has recently adopted a 'zero-tolerance' attitude towards non performers, whereas earlier anywhere between 1.5 per cent to 3.5 per cent of non performers were handed out warnings to shape up.
However, now the bottom five per cent of the rung has been put under the scanner and given between three to six months to improve dramatically. It's a move HR experts say most other companies will adopt.
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