Infosys Technologies, India's second largest software services exporter, said on Friday its senior management personnel would be most affected in case of a variable pay-cut.
The company, which reported a moderate performance in the third quarter of FY09, had earlier indicated that it could resort to such a step. India's largest software exporter Tata Consultancy Services said on Thursday that it planned to review the variable component of employees' salaries every quarter in an attempt to cut costs.
The variable component is as high as 50 per cent of the total pay packet of Infosys' senior executives. However, in the case of the junior -- and middle-level personnel, this component is around 20 per cent of gross salary. The variable pay is linked to revenue growth and operating margin of the company.
Infosys CEO Kris Gopalakrishnan said that in the wake of the global economic downturn, the company would pay a lower variable pay to the senior management.
"It is not a pay cut. The performance of the company is slow, so the variable pay is low for senior management. The executive board members can lead by example. Discretionary pay is going to be lower this time," he told reporters on the sidelines of a conference organised by CII in Bangalore on Friday.
Infosys officials have already made it clear that the annual wage hike, given in April every year, might be in single digits this year as the company was expecting the slowdown in the IT services to continue.
"Owing to slow performance, the increment to employees will be minimal this time," Gopalakrishnan added."This is going to be a prolonged downturn and the environment continues to be challenging. "The feedback we are getting from clients are that the budgets are going to be down, in some cases significantly down," he added. Infosys has already initiated many cost-cutting measures which include reduction in sales, travel and general administration costs.
Going forward, Infosys is going to be 'selective' for the company's future recruitments as the company would only recruit for specific requirements based on business demand.
However, the Infosys CEO said that the company would honour the offers made during the campus recruitments last year, and expected new recruits to join soon.