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    Infosys variable pay cut and TCS’ delayed bonus amid shrinking margins upset Street

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    Infosys variable pay cut and TCS’ delayed bonus amid shrinking margins upset Street


    Infosys, Wipro and TCS shares fell on Tuesday, after the IT giants have amended their plan to file out variable payout to employees.

    Infosys shares fell as much as 2.5 percent on Tuesday, a day after reports that the IT behemoth has scaled back the average variable payout of employees for the June quarter amid margin concerns due to high employee costs.
    At 10 am, shares of Infosys were trading at Rs 1,543.75, down 2 percent from its previous close on BSE. Though the stock has gained close to 5 percent in the past month, it has burnt 17 percent of investors’ wealth in 2022 so far (year-to-date).
    Tuesday’s downtrend in the IT stock follows the company’s move to reduce the variable payout for employees for the first quarter of 2022-2023 fiscal due to employee costs impacting its margin.
    In an email sent to employees, the company said at an organisation level, the average variable payout for June 2022 ended quarter is 70 percent.
    Infosys told its staff that the firm is fueling growth momentum with investments in talent through hiring and compensation revisions. “While these investments have impacted margins in the immediate term, we are making structured efforts to improve our performance in the quarters to come,” the email accessed by Moneycontrol read.
    However, the date when the email was sent could not be immediately ascertained.
    The employees will receive the variable payout along with August’s salary, in line with the firm’s schedule. The average payout is 70 percent but an individual employee’s final variable payout will depend on their unit or department’s guidelines and shall vary for different pay grades and departments.
    Infosys is the third IT giant to make amends to the amount or time of variable payout to employees, after Wipro and Tata Consultancy Services (TCS).
    Another IT giant Wipro has held variable pay for mid and senior-level employees for the April-June quarter as margin pressure continued to hurt. Last week, the company didn’t comment on the quantum of variable pay, it, however, said hikes for employees will be effective from September.
    Since the report on August 18, Wipro shares have slipped 5.7 percent, at day's low. The stock was trading 0.9 percent lower at Rs 416.20 on BSE at 9:45 am.
    On the other hand, reports suggest TCS has delayed performance bonus and variable compensation for several employees for the June 2022 quarter, by a month. The bonus and variable compensation payout will now be paid by August-end now, against its scheduled due date in July. These employees include assistant consultants, associate consultants, and consultant levels.
    TCS plans to give a 5-8 percent salary hike to its employees after the company recorded a high attrition rate of 19.7 percent during the first quarter of the current financial year.
    Following the report on August 21, the stock has fallen 2.3 percent, today's low. Today, the TCS stock was trading 0.72 percent lower at Rs 3,330 at 9:48 am.
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