Infosys Reduces Employee Bonuses After Execs Promised Better Profit Margins

Concerns over rising labor costs and the subsequent impacts on their profits have led Indian outsourcer Infosys to cut Q1FY23 variable bonuses to an organizational average of 70 percent of theoretical maximum.

In an email dated sent to employees on Monday and seen by The Register, Infosys told its workforce:

While the average payout is said to be 70 percent, some employees will receive up to 95.1 percent and others nothing, depending on the unit or department in which they work.

The payouts are expected to take place in the payroll of August 2022.

The last two sentences of the email to staff may sound familiar. They are quotes attributed to chief financial officer Nilanjan Roy in the company's Q1FY23 statement last month.

"We continue to optimize various cost levers to drive efficiency in operations," added Roy in July, although at the time he did not reveal that bonuses would be included in the cost levers.

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For Q1 2023, Infosys reported 17.5 percent year-on-year growth in revenue to $4.4 billion. Operating margin was 20 percent, reflecting a year-on-year decline of 3.7 percent.

Infosys also reported a staff attrition rate of 28.4 percent for the previous twelve months. That figure was higher than that recorded at rivals Tata Consultancy Services (TCS), Wipro, and HCL Technologies.

The four IT outsourcers have all experienced relatively high attrition rates as workers have felt safe to seek new gigs with the easing of COVID-19 restrictions, resulting in much industry churn.

Like Infosys, TCS, Wipro and HCL Technologies reported healthy finances for their most recent quarters while warning of future challenges.

TCS and Wipro have also chosen to defer or reduce variable payouts for April to June.

Labor rights organization Nascent Information Technology Employees Senate (NITES) told The Register it condemns the deductions it believes are done only under the "pretext" of an uncertain economic environment, given the year-on-year growth for the quarter in both net profit and revenue at Infosys.

"After posting such financial results still the company is deducting 30 percent of variable pay which is clear exploitation of IT employees," NITES president Harpreet Salujah told The Register.

"In May 2022 the company justified a 43 percent increase in salary to CEO Salil Parekh saying the firm has achieved industry-leading growth in recent years," Salujah added.

The Register has reached out to Infosys for comment and will report back if there is substantial reply. ®