Infosys gives 6-12% pay hike, stock options to high performers

Bengaluru: Infosys Ltd handed out salary hikes that were higher than last year to the bulk of its employees and said it will roll out stock options for top performers as well, after the company posted better-than-expected results with a 1.6% rise in fourth quarter dollar revenues and a 9.1% growth in revenue in financial year 2016.

The company said its offshore employees will receive a 6-12% salary hike. While this is higher than the 5-7% hike the company gave last year, the average of 9% is still slightly lower than what HR experts predicted employees of the industry would earn. Onsite employees get an average hike of just 1%, lower than last year’s 2%.

Offshore employees constitute the majority of Infosys’s workforce.

Human resource (HR) consultancy firm Aon Hewitt predicted a salary hike of 9.5% for the IT services industry in financial year 2016-17. Overall, Indian firms are expected to give hikes to the order of 10.3%.

High performers at Infosys can earn up to 13% more, said Richard Lobo, HR head for the company’s Indian operations.

The IT services business has been giving hikes in single digits for the past four years as the impact of salaries on revenue is considerable.

“This is an extremely cost-sensitive industry as compensation costs account for a very significant part of the revenue. Even a 10% increase in compensation cost impacts profitability significantly. So, the business requires you to be very cautious of the increase in compensation costs,” said Anandorup Ghose, head of the talent and reward vertical at Aon Services India Pvt. Ltd

In a bid to attract and retain talent in this highly competitive market place, the company, after a hiatus of about five years, said its top performers will also be given incentives in the form of stock options for executives and restricted stock units for other employees, U.B. Pravin Rao, chief operating officer, said, adding that this was increasingly becoming a global standard.

“About 20-25% of managerial level staff will be given stocks,” said Krish Shankar, group HR head, Infosys.

The company, one of the first to introduce employee stock options, got the board’s nod to allocate 1% of its equity for employee stock options for a period of 4-5 years, Rao said.

In the fourth quarter, employees were given a variable pay of 90%.

The company also promoted 2,147 people in the quarter, taking the total promotions given during the year close to 8,800, significantly lower than the 14,000 promotions it gave in fiscal 2015 as it got a better handle on attrition, explained Lobo.

The attrition rate improved to 12.6% at the end of the fourth quarter and in the year ended March it was 13.6%, compared with 18.9% in FY15.

Infosys also elevated three of its executive vice-presidents to the rank of president. Head of financial services Mohit Joshi, head of delivery S. Ravi Kumar and head of retail Sandeep Dadlani have been elevated to the rank of president, said a company statement.

Infosys chief executive officer Vishal Sikka said this move was to bring more operational bandwidth at the leadership level.

“We have been consumed by operational issues and not just strategic issues,” said Sikka.

He added that the company is increasingly looking to hire locally and reduce its dependence on visas.