Days after IT major Wipro paused variable pay for mid- and senior-level staff, India’s largest IT services company Tata Consultancy Services (TCS) is also following suit and has delayed performance bonus and variable compensation for some employees for the June 2022 quarter, by a month.
The bonus and variable compensation payout will now be paid by August-end now, against its scheduled due date in July. These employees include assistant consultant, associate consultant, and consultant levels.
According to an ET report, TCS said all compensation and bonus cycles are as per plan. The report also quoted an employee say that the quarterly performance bonus is given in the payroll that follows the end of the quarter. This time, the company had communicated a “delay”.
“The delay is not due to cost concerns. The performance evaluation process has not been completed due to the massive size of the workforce being covered. A minuscule share of the employee base is yet to receive their bonuses which, as communicated, will be rolled out by the next salary cycle,” according to the report quoting a company person.
Meanwhile, IT companies in India are struggling with high attrition rates over the past few quarters, with more numbers of employees leaving their jobs. To battle this issue, many IT companies including Wipro, Infosys, Tata Consultancy Services and HCL Technologies have announced measures including salary hikes and bonus to retain employees. Wipro salary hike for employees will be implemented from September.
IT major Infosys’ attrition rate also remains high. To address this, the company is raising salaries and net hiring may also be increased which might impact the firm’s near-term margins. The company believes that it will bring down the attrition rate, which rose to 28.4 per cent during the June 2022 quarter as compared with 27.7 per cent in the previous quarter.
Infosys chief financial officer Nilanjan Roy has said, “We are fueling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions. While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth. We continue to optimize various cost levers to drive efficiency in operations.”
TCS plans to give a 5-8 per cent salary hike to its employees, after the company recorded a high attrition rate of 19.7 per cent during the first quarter of the current financial year.
Informing that TCS salary has been increased up to 8 per cent, the company’s chief HR office Milind Lakkad said, “Following our annual compensation review, employees received salary increases of 5-8 per cent, with top performers getting even bigger hikes. Our empowering, performance-driven work culture is helping us attract local talent across all our key markets.”
Wipro has also said hikes for its employees will be effective from September 1, 2022. The company has completed the first cycle of quarterly progressions effective July 1, 2022.