Most employees received their increments effective April. The senior-level employees were to get it effective July, but that did not happen.
Sources said budgets are being finalised and discussions on hikes are underway for increments to what are called title holders – those in ranks of associate vice presidents (AVPs), vice-presidents (VPs), senior vice-presidents (SVPs) and executive vice-presidents (EVPs). There are some 500 people in these ranks.
The hikes are expected to be muted, in the range of 3%-5%, no different from last year’s, sources said. The company’s decision to strategically lower margins is also weighing on the increment decision.
Some 100-150 title holders are expected to be promoted. There are discussions underway to give restricted stock units (RSUs) to SVPs, which, some sources say, makes more sense than giving a low single-digit increment. An email sent to Infosys, did not elicit a response.
Senior level compensation has come under closer scrutiny following the wave of new digital technology and business model changes in the IT industry. The focus on performance-linked incentives has become sharper.
Recently, Infosys linked top executive compensation to digital performance, besides traditional metrics such as revenue and operating margin. The new metrics are expected to trickle down to other title holders, both on the sales and delivery sides – those who manage $150-$300 million revenue targets a year.
Peter-Bendor Samuel, CEO of IT advisory Everest Group, said Infosys and other leading industry firms are trying to overcome the bias for traditional work. Digital work is more complicated to deliver, often carries lower margins and often cannibalises existing legacy work. So line managers tend to resist selling digital work. “Inconveniently, the market wants to buy digital and reduce the amount of legacy it buys. So Infosys and other leading firms have to address this bias in their teams or they will stop growing. The change in compensation incentives is one of the most powerful ways for firms to address this issue. The senior leaders of Infosys are under intense scrutiny from their investors to ensure that they lead their firms in this pivot. This pressure is then passed on down to line managers through directives, targets and compensation changes,” he said.
Cognizant too has been trying to adjust its senior employee base to the new requirements. Last year it offered a voluntary separation scheme to 400 senior employees. This year it has let go off about 200 employees at the director level and above with a 3-4-month severance payout. For those who remain, raises and promotions are expected to be announced in this quarter.