More pay cuts for Infy top echelon

The senior management and board members of India's second largest IT company Infosys Technologies, who already have taken a 'deep pay cut' due to sharp reduction in their total variable pay in the fiscal 2008-09, might be paid even less this fiscal.

Close to 350 people, including the board members of the company, were given around 58 per cent of their total variable pay in the fiscal 2009 in the wake of the global economic downturn. In the current fiscal (2009-10), the company expects that this may further go down to about 50 per cent.

"In fiscal 2010, we expect the variable pay for the senior management to be less than 58 per cent," said Infosys head of HR, education and research T V Mohandas Pai. He is also a member on the Infosys' board.

Variable component is as high as 50 per cent in the total pay packet of the senior executives whereas the fixed component constitutes the other half.

However, in case of the junior and middle level personnel, the variable pay constitutes about 20 per cent of their gross salary. The variable pay is linked to the revenue growth and the operating margin of the company.

The company had effected marginal cut in the variable pay of the employees in the middle and junior levels in fiscal 2009. The average variable pay given to the employees in fiscal 2008-09 was about 84 per cent of the total variable pay when compared to 96 per cent in 2007-08 and 95 per cent in 2006-07.

The impact of global meltdown has also forced the Bangalore-headquartered company to freeze wage hike and fresh hiring in new fiscal 2009-10. The company however has decided not to effect any pay cut.

Infosys has also decided not to give the pay hike which is usually given in April every year. However, the company might re-visit the decision if the situation improves subsequently, said Pai.

According to Infosys' CFO V Balakrishnan, the freezing of wage hike this year will have a positive impact of 4.5 to 5 per cent in the company's operating margin.