Digital contracts is the way to go, according to Infosys and the performance incentive policies for the future are being revisited to factor this in. The IT behemoth had announced increments to its employees but around 500 senior executives at the Assistant Vice President level and above were not included in that exercise carried out in April’ 2018.
An Economic Times report now states that these executives will be given modest increases in the range of 3 to 5%, which is what these employees would have received the previous year too. Some at the very top level may receive Restricted Stock Units (RSUs) instead of direct monetary increase and some 100 to 150 of these may expect to get promoted even.
Among the reasons for such limited increases in emoluments are the declining margins in the industry in general and the increasing volume of business in the digital contracts space where the scope for earnings are in any case lower. There is the move to offer performance-linked bonuses or incentives at all levels, as well.
Digital performance, revenue and operating margin are the metrics on which the performance by employees is assessed and rewards or salary increases finalized. These are then suitably applied to levels lower than them and so on. The senior employees are otherwise identified as title-holders and have the accountability to manage verticals yielding $150-$300 million in terms of revenues.
IT experts feel there is the resistance within the ranks at Infosys to take on digital work as opposed to many of the legacy or traditional types of assignments. This may be true for other IT companies as well. The digital type of business is what is more prevalent these days. But these are probably more challenging and the margins at the end of the assignment are not very high. Managements have to do a balancing act and shif the focus on salary increases to digital performance could be one way to make it more attractive for the employees to go for these willingly.
Top level compensation is an issue other IT majors are also confronted with. The case of Cognizant Technology can be cited, where around 600 senior executives have been shown the door, with some decent severance packages, of course, in the last 2 years.