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<ul><li><keyword id="6354512" type="General" weightage="20" keywordseo="Infosys" source="Orion">Infosys</keyword> reported a sequential decline in its net profit in the June quarter as high wage hikes weighed on it.</li><li>This caused Infosys’s EBIT margin to spiral down to the lowest point in the last two years.</li><li>Nomura has also lowered its earning per share (EPS) expectation by 1-3% for the next two fiscal years.</li></ul>India’s second largest IT services company Infosys reported a sequential decline in its net profit in the June quarter, as the high wage hikes weighed down on its margins. Infosys’s EBIT (or earning before interest and taxes) margin declined to 20.1%, the lowest in the last two years. The decline was due to multiple factors, including wage hikes, lower utilization and higher sub-contracting expenses, some of which will continue to impact the company in the ongoing September quarter as well. Brokerage firm ICICI Securities is of the view that the increase in travel costs, wage hikes for senior employees in Q2FY23 and supply-side cost pressures will weigh on Infosys margin. Nomura believes that the impact of wage hikes may be limited, while improvement of utilization and effects of price increases in contracts are likely to be gradual. The company has retained its EBIT margin at the lower end of 21-23% range, triggering brokerage firms like ICICI Securities and Nomura to cut their forecasts to 21% as well. “Recovery in FY24F will be driven by pyramid optimization, lower sub-con [subcontracts] as travel normalizes and some benefits from price hikes in renewals and new deals,” Nomura added. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Old EBIT Expectations </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">New EBIT Expectations </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY2022 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22-24% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">23% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY23F </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">21.1% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY24F </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY25F </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22.1% </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source: Company Data, Nomura Note: ‘F’ in the table stands for Forcast. Nomura has also lowered its earning per share (EPS) expectation by 1-3% for the next two fiscal years, factoring in lower margins, partly offset by better currency. Infosys’ competitor Tata Consultancy Service (TCS) is expected to outperform in this domain. Infosys’ revenue witnessed a sequential growth of 6.8% in the June quarter as its revenue stood at ₹34,470 crore. Meanwhile, the constant currency revenue growth stood at 5.5% sequentially and 21.4% year-on-year. The company has increased its revenue guidance for FY23 to 14-16% — up from the previous guidance of 13-15% — despore the supply side challenges and high travel costs. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[]]></cdata></div> “We continue to gain market share and see a significant pipeline driven by our Cobalt cloud capabilities and differentiated digital value proposition,” said Infosys CEO and MD Salil Parekh, sounding a bullish tone for the rest of FY23. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/finance/banks/news/rbi-governors-recipe-for-banks-of-the-future-oodles-of-social-media-new-tech-a-dash-of-human-touch/articleshow/93138812.cms">RBI governor’s recipe for banks of the future: Oodles of social media, new tech &amp; a dash of human touch</a> <a href="https://www.businessinsider.in/business/ecommerce/news/e-commerce-platform-shopify-lays-off-1000-employees/articleshow/93151446.cms">E-commerce platform Shopify lays off 1,000 employees</a> <a href="https://www.businessinsider.in/business/news/indias-newly-digitized-msmes-need-offline-marketing-as-much-as-online/articleshow/93138395.cms">India’s newly digitized MSMEs need offline marketing as much as online</a>

Margin recovery likely an uphill task for Infosys after Q1 shock

<ul><li>Earnings season will begin next week with the results of major IT companies -- TCS on April 11 and Infosys on April 13.</li><li>Digital transformation deals continue to boost IT sector’s growth along with rupee depreciation in the recent months benefiting the sector.</li><li>However, profit margins of these companies are expected to be under pressure because of increase in employee salaries and record hiring.</li></ul>The March quarter earnings season will begin next week with the results of major information technology (IT) companies such as Tata Consultancy Services (TCS) on April 11 and Infosys on April 13. Most analysts believe March is a seasonally weak quarter for IT companies and they expect moderate earnings growth amid margin pressures. The profit margins of IT companies are expected to be under pressure because of increase in employee salaries and record hiring. “Sequential growth for Indian IT will be moderate in March 2022 quarter and in line with historical seasonal trends. Margins will remain under pressure resulting from elevated wage increases, onsite as well as offshore,” said Kotak Institutional Equities. The entire IT sector is struggling to retain employees including top five companies. In fact, in the last quarter <a href="https://www.businessinsider.in/tech/enterprise/news/more-employees-are-leaving-tech-mahindra-than-tcs-and-wipro/articleshow/89291721.cms">more employees left Tech Mahindra </a>than at TCS and Wipro. The report added that talent shortage continues even as the industry has added a record number of freshers. High cost to backfill attrition and retain talent will seep into margins across companies. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top IT companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Expected revenue growth in Jan-Mar* </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.7% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3.6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HCL Tech </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tech Mahindra </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5.2% </td></tr></tbody></table>Source: Emkay Research*Revenue growth in constant currency on a sequential basis Meanwhile, the growth momentum may sustain due to healthy broad-based demand as firms across the world have increased spending on new technologies. “The demand environment is robust at present. There could be moderate risk to demand as fallout of the Russia-Ukraine imbroglio starts impacting key economies. Nonetheless, we believe double-digit growth is feasible for many,” said a report by Kotak Institutional Equities. Higher employee cost and shortage of skilled talent will remain the key challenges in the short term for IT companies. Investors will keenly monitor the management commentary on any impact on technology spending from higher energy prices, inflation and potential economic slowdown, demand trends in key verticals such as banking, financial services and insurance (BFSI), retail, manufacturing and communications, and the attrition rates. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top IT companies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Results date </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 11 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 13 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Wipro </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 29 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HCL Technologies </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April 21 </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/unacademy-reportedly-lays-off-1000-employees-from-sales-business-and-other-functions/articleshow/90709336.cms">Unacademy reportedly lays off 1000 employees from sales, business and other functions</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/bharatpe-ceo-takes-a-jibe-at-ashneer-grover-says-no-money-left-to-pay-salaries-since-grover-stole-it-all/articleshow/90706030.cms">BharatPe CEO takes a jibe at Ashneer Grover, says no money left to pay salaries since Grover stole it all</a>

Profit margins of IT companies must be under pressure for January-March quarter due to record hiring and salary hikes

<ul><li>Over 100 employees in TCS received over ₹ 10 million in annual remuneration in the last fiscal, ET reported. </li><li>In comparison, Infosys extended ₹10.2 million to nearly 60 employees in India, including variable stock component. </li><li>The two IT companies reportedly increased their hirings by 350% in FY19. </li></ul>Homegrown IT major Tata Consultancy Services(TCS) reportedly extended nearly ₹10 million in annual remuneration to over 100 employees in the previous fiscal. Of this, nearly one-third of the employees started their careers with the IT company, according to an<a href="https://economictimes.indiatimes.com/news/company/corporate-trends/more-than-100-tcs-employees-earn-more-than-rs-1-crore-annually/articleshow/69764584.cms?from=mdr"> ET report</a>. In comparison, TCS has 91 employees having annual salary above ₹10 million in FY17, and the count has increased to 103 in 2019. However, this excludes the salaries of employees based outside India, and top-notch employees — CEO Rajesh Gopinathan and COO NG Subramaniam. The annual remuneration includes salary, cash incentives, allowances and the company’s provident fund component. In comparison to<a href="https://www.businessinsider.in/wipro-campus-placements-to-double/articleshow/67719782.cms"> TCS, Infosys</a> offered over ₹10.2 million salary to nearly 60 employees. This, however, includes the variable stock component. The youngest employees(earning over ₹10 million) in the company are in their early 40s, while the oldest employee in the company is 72 years old. TCS has a good retention rate among the senior employees. According to analysts, TCS’ success is due to the stable and consistent senior talent pool and its ability to give people leadership roles without losing them to rivals, ET reported. Strengthening the employee base, the two IT companies reportedly increased their hiring by 350% in FY19. In its recent achievement, <a href="https://www.businessinsider.in/after-becoming-the-third-largest-it-service-brand-in-the-world-tcs-surpasses-ibm-in-market-cap/articleshow/69741769.cms">TCS surpassed IBM</a>, in terms of market capitalisation, which stood at $120.5 billion. See also: <a href="https://www.businessinsider.in/60-iimc-students-had-their-salaries-doubled-after-an-executive-mba/articleshow/69750286.cms">60 IIMC students had their salaries doubled after an Executive MBA</a> <a href="https://www.businessinsider.in/hiring-tcs-infosys-wipro-and-others-up-12-months-in-a-row/articleshow/69019342.cms">Hiring by Indian IT companies has grown 12 months in a row, up over three-fold</a> <a href="https://www.businessinsider.in/after-becoming-the-third-largest-it-service-brand-in-the-world-tcs-surpasses-ibm-in-market-cap/articleshow/69741769.cms">After becoming the third largest IT service brand in the world, TCS surpasses IBM in market cap</a>

TCS has 100 people earning over ₹10 million-- and a third of them started their careers in the company

The Indian IT sector is struggling for growth and witnessing few profits, as a result of which the chief executives of many companies took home less bonuses. The CEOs of companies such as <keyword id="25698" type="CITY" weightage="100" keywordseo="Genpact">Genpact</keyword>, <keyword id="6354512" type="CITY" weightage="20" keywordseo="Infosys">Infosys</keyword> and even <keyword id="28721" type="CITY" weightage="20" keywordseo="Cognizant">Cognizant</keyword> saw performance bonuses shrink. For instance, Genpact CEO NV Tyagarajan was paid $700,000 out of a 2016 target bonus of $1.12 million. "Tyagarajan achieved lower-than target performance on both the financial and strategic metrics included in his scorecard. The 48% decrease in Tyagarajan's 2016 bonus compared to his 2015 bonus reflects a decrease in the Company multiplier under the bonus plan from 96% in 2015 to 83% in 2016, the impact of lower-than-target Company performance on achievement of the financial metrics in his scorecard, and lower-than-target performance on the strategic metrics in his scorecard,” stated Genpact. In 2016, Genpact's revenue went up by 6% to $2.57 billion in constant currency terms and the company said that it was no longer guaranteed a minimum amount of business from its former parent General Electric. Cognizant CEO Francisco D'Souza's compensation went down by one-third in 2016. He took home $8.26 million down from close to $12 million in 2015. "For 2017 awards: Revenue reduced to 50% weighting for PSUs to reflect increased Company focus on non-GAAP Operating Margin. Non-GAAP EPS increased to 50% weighting for PSUs; target accounts for $1.5 billion accelerated share repurchase program initiated in March 2017,” Cognizant said in its proxy filing. Infosys CEO <keyword id="6369763" type="PERSON" weightage="20" keywordseo="Vishal-Sikka">Vishal Sikka</keyword> was issued fewer than a fifth of the stock options he was eligible for as part of his compensation. "If the targets were not met, as in the case of Vishal, the compensation came down this year as compared to last year. We just acted on the promise we made to shareholders,” Infosys chairman <keyword id="484178" type="PERSON" weightage="20" keywordseo="R-Seshasayee">R Seshasayee</keyword> told ET.

Not only employees, CEOs of Genpact, Infosys, etc are also taking home fewer bonuses. Here’s why

IT industry, at this time, is facing a lot of issues, leading to the salaries at entry level going down the hill. However, the CEOs from the IT industry have had no effect of this, since they are still earning several hundreds to a thousand times the salaries that a middle employee gets, says an <a href="http://economictimes.indiatimes.com/tech/ites/it-ceos-like-vishal-sikka-are-earning-several-times-the-median-employee-remuneration/articleshow/52931439.cms">ET</a> report. 
 
The shareholders at TCS and Infosys have already begun questioning the payments of these CEOs, which as per them are very high. The highest salary is taken home by Infosys CEO Vishal Sikka, and Infosys also has the highest CEO compensation in comparison to median employee remuneration, which is 935.38 times. 
 
In comparison, Wipro's CEO is paid the least, and the company has the lowest ratio of CEO compensation to employee remuneration (260.19 times). 
 
For several years now, the starting salaries of IT entrants have been within the Rs 2.5-3.5-lakh per annum, which has forced some companies to hire B.Sc and a few arts graduates who can support IT people, so that they can continue maintaining low salaries at the bottom of the pyramid. 
 
<a href="http://simc-wire.com/wp-content/uploads/2015/07/2a14b53c-e0fc-46e1-8131-08c0a571e406wallpaper1.jpg">Image source</a>

IT CEOs take home thousand times a maiden employee’s salary

Because of a brilliant performance in 2015, <keyword id="289464" type="ORGANIZATION" weightage="100" keywordseo="Cognizant-Technology">Cognizant Technology</keyword> Solutions has rewarded its top management with hefty bonuses and executive compensation packages. In 2015, the Nasdaq-listed software services and consulting firm grew at a roaring speed, overshadowing all its Indian rivals like Infosys and TCS. 
 The stellar performance met with Cognizant’s CEO <keyword id="328719" type="PERSON" weightage="100" keywordseo="Francisco-DSouza">Francisco D'Souza</keyword> and his top team receiving 142% of their target bonuses for the year, which also led to a significant addition in their annual pay packages. 
 
The last financial year resulted in the company exceeded its 2015 target with a 21% increase in revenue, as opposed to the Indian counterparts struggling to grow in single digits. 
 
As per reports, Francisco D'Souza earned about $11.95 million last year, and thus became one of the highest-paid CEOs along with Vishal Sikka of Infosys, N Chandrasekaran of TCS and Abidali Neemuchwala of Wipro. 
 
"The compensation committee set the 2015 target awards for the named executives at a level equal to 85% of the named executives' base salaries," Cognizant said in the regulatory filing. 
 
Based on the company's results, "the committee determined that performance under the annual cash incentive programme had been achieved at a level equal to 142% of the target award," it said. 
 
There were also some changes in the stock compensation programme for its top executives, along with a two-year performance measurement period, which would replace the existing one-year clause. 
 
 
<a href="https://media.glassdoor.com/o/1a/d3/f4/51/tco-cts-hq.jpg">Image source</a>

Cognizant Technology exceeded growth targets by 21% last year, and rewarded its top executives like they do in dreams

The spat between <a href="http://www.businessinsider.in/searchresult.cms?query=infosys&amp;sortorder=effectivedate">Infosys</a> founders and the board members regarding the pay packages and governance issues is getting uglier. 
 On one hand where <keyword id="6354512" type="CITY" weightage="100" keywordseo="Infosys">Infosys</keyword> founders are raising objections over pay hikes and severance packages of the people at the helm, the board is saying not much has been raised in the salaries of the top management. 
 
Infosys founder <a href="http://www.businessinsider.in/searchresult.cms?query=narayana+murthy&amp;sortorder=effectivedate">NR Narayana Murthy</a> wrote a letter criticising pay hike given to <a href="http://www.businessinsider.in/searchresult.cms?query=pravin+rao&amp;sortorder=effectivedate">Infosys COO Pravin Rao</a>, calling it unjustified. 
 
However, <a href="http://www.businessinsider.in/searchresult.cms?query=vishal+sikka&amp;sortorder=effectivedate">Infosys CEO Vishal Sikka</a> said pay hike is critical to retain top talent. 
 "It is essential for us to see that this revision in his compensation, as with several of our senior leadership team, is focused on making Infosys more competitive, is benchmarked against peers. (It) is critical for us to retain key talent and align the long-term interests of our leadership team with that of our shareholders," said CEO <keyword id="6369763" type="PERSON" weightage="100" keywordseo="Vishal-Sikka">Vishal Sikka</keyword>. 
 
Meanwhile, Infosys stated the stock given to Rao has a vesting period of four years. This means the net increase in his compensation for fiscal 2018 will be 1.4% which could go up to 33.4% in the fourth year, assuming similar grants are made in subsequent years. 
 
The company said cash component of Rao's salary, including annual cash bonus, has fallen 10.6% to Rs 4.6 crore from Rs 5.2 crore earlier while the performance-based component, directly linked to company and individual performance, has been increased to 63% from 45% of total compensation. 
 
"I do not see Rao's compensation as a corporate governance issue. That is because it is not a related party transaction. Rao is a professional and not a promoter," said JN Gupta, managing director at Stakeholders Empowerment Services. 
 
The issue will be discussed during the two-day board meeting, which is scheduled for April 12 and 13.

Infosys founders Vs board: Here’s what CEO Vishal Sikka said in COO Pravin Rao's defence

<a href="http://www.businessinsider.in/searchresult.cms?query=wipro&amp;sortorder=effectivedate">Wipro</a> CEO Abidali Neemuchwala drew $ 1.8 million annual salary package, whereas Vice Chairman TK Kurien took home $2.1 million. 
 
Last year, Kurien received a salary package of $1.5 million. 
 
Meanwhile, <a href="http://www.businessinsider.in/searchresult.cms?query=azim+premji&amp;sortorder=effectivedate">Azim Premji</a> took home $327,993 as annual package but this is minus the earnings from his shareholding. 
 Premji’s son and <keyword id="10862" type="CITY" weightage="20" keywordseo="Wipro">Wipro</keyword> strategy chief Rishad Premji drew $325,462. 
 Wipro, in its filing, stated that <keyword id="6419840" type="PERSON" weightage="20" keywordseo="Azim-Premji">Azim Premji</keyword> was paid a commission at the rate of 0.3% on incremental net profits of Wipro Limited over previous year until July 30, 2015 and at the rate of 0.5% on incremental net profits of Wipro Limited over previous year from July 31, 2015, computed based on the method approved by the Board Governance, Nomination and Compensation Committee and in accordance with the provisions of the Companies Act, 2013. 
 
Apart from Neemuchwala, <a href="http://www.businessinsider.in/searchresult.cms?query=TCS&amp;sortorder=effectivedate">TCS CEO N Chandrasekaran</a> got Rs 25.6 crore as annual package and Rs 10 crore more as a part of one-time special bonus. 
 
<a href="http://www.businessinsider.in/Infosys-CEO-Vishal-Sikka-rakes-in-7-45-million-in-salary-this-year/articleshow/52348269.cms">Infosys CEO Vishal Sikka</a> now commands an annual package of $11 million.

Wipro’s Abidali Neemuchwala receives $1.8 million as salary

New Delhi, Apr 23 () Infosys is confident of coming out "stronger" in the post-COVID-19 world on the back of strong operating metrics and client focus, even as the situation remains uncertain in the near-term, its CEO Salil Parekh said. COVID-19 has disrupted businesses globally and impacted operations for Indian IT firms as well. There are concerns in the industry around budget cuts by clients and layoffs, as enterprises grapple with reduced earnings amid lockdowns across various parts of the globe. Speaking to , Parekh said while there is uncertainty in the near-term, the company is confident of its strengths that will help it navigate this period and emerge stronger from it. "Last year, we had 9.8 per cent growth and the year before 9 per cent growth. We've had a really extremely successful business over the last couple of years, a very strong operating margin and expansion in earnings per share, USD 9 billion in large deals," he said. "So all of our metrics, I think already were industry leading. In the near term, there will be some concerns in the business from an overall economic perspective," he added. Parekh said that as the situation improves, the company is "extremely comfortable that we will emerge stronger". "We are already having discussions with clients on vendor consolidation, on how they want to look at some captives, a lot of discussions in the cloud, movement on virtualisation, workforce transformation. "All of those are positives even in this difficult environment. So I am quite confident that given our strengths, we will come out stronger as we come out of this situation," he said. Responding to a question on how many quarters would bear the brunt of the slowdown, Parekh said there isn't a clear view of when the recovery will happen. "While I don't have a timeline for how long this is going to take...our objective is given our strengths, we want to make sure we conserve our energy, focus on what clients want to do today, which are areas of vendor consolidation, cloud virtualization, and make sure we come out surviving and strong," he said. Infosys registered 6.3 per cent rise in consolidated net profit at Rs 4,335 crore for March quarter, but refrained from providing a revenue outlook for FY21, citing uncertainty amid COVID-19 outbreak that is expected to impact its business in the near-term. Its revenue grew 8 per cent to Rs 23,267 crore in the said quarter. While the company has frozen hiring, salary hikes and promotions, it has stated that it will honour all the offers already made to freshers and lateral hires. Parekh took over as Infosys CEO in January 2018 after a year-long acrimony between founders and previous management over corporate governance issues. Tasked with turning around the company, Parekh had outlined a three-year road map to stabilise and accelerate the company's business. In October last year, Infosys had received anonymous whistleblower complaints alleging certain unethical practices by the top management, following which it started a probe and roped in external investigators. In January this year, Infosys said its audit committee found no evidence of financial impropriety or executive misconduct. Asked if more steps need to be taken to improve transparency at the firm, Parekh said the company is extremely transparent. "We believe there's extreme transparency and everything that's done is done keeping in mind all of those principles," he said, adding that the management is committed to keep focus on clients, shareholders and employees. SR RVK

COVID-19: We'll come out stronger from this situation, says Infosys CEO

Worries, for <keyword id="6354512" type="CITY" weightage="80" keywordseo="Infosys">Infosys</keyword>, India’s second largest <keyword id="6361043" type="ORGANIZATION" weightage="80" keywordseo="Software">software</keyword> exporter doesn’t seem to be ending. At a time when <keyword id="6354185" type="ENTERTAINMENT" weightage="80" keywordseo="IT">it</keyword>’s fighting high attrition rates within the organisation tooth and nail, its first set of <keyword id="10876" type="UNKNOWN" weightage="80" keywordseo="salary">salary</keyword> <keyword id="62263" type="UNKNOWN" weightage="80" keywordseo="hikes">hikes</keyword> has employees anything but happy. The software giant doled out its first salary appraisals for the year 2014-15 mostly in single-digits that has its employees questioning the way its new leader, <keyword id="6369763" type="PERSON" weightage="80" keywordseo="Vishal-Sikka">Vishal Sikka</keyword>, is envisaging the complicated attrition situation in the company. 
 Infosys announced the hikes through the company's internal intranet portal, <keyword id="117647" type="ENTERTAINMENT" weightage="80" keywordseo="Sparsh">Sparsh</keyword>, last evening. The link to the portal has since then been taken down, employees at Infosys said. 
 
For the 2014-15 financial year, employees on an average have been handed out hikes of around 6.5%, while top performers in the company will get about 9%. Onsite employees will receive a 2% hike. 
 
In the last financial year, Infosys had given out single-digit hikes in April but that was preceded by an off-cycle hike across the company in December that was aimed at boosting employee morale. 
 
"Compensation revisions are being rolled out in 55 countries across the globe, effective April 1 2015. The average increment in India is 6.5% and can go upto 9% for high performers. The letters will be rolled out for those located in India starting March 27, 2015," Infosys said on its company intranet Sparsh, before the link was taken down reported the Economic Times. 
 
"The average increment outside India is 2% and the letters will be rolled out by April 24, 2015. In addition quarterly promotions and role changes will continue to take place across all levels," the announcement added. 
Infosys did not respond immediately to an email seeking comment said ET. 
 
According to at least half a dozen Infosys employees who spoke on condition of anonymity, employees on an average are unhappy with the quantum of hikes that have been rolled out across the company and were expecting better salary raises since Sikka took over. 
 
 
"The hikes are very, very disappointing," said an Infosys employee based in Hyderabad. "We were definitely expecting better hikes than this since Sikka took over, given that he has set out to boost employee morale and made it one of his top priorities since he took over. Don't be surprised if attrition rates go up after this." 
 For its part, Infosys has regained some of the list momentum since the new <keyword id="5645" type="POSITION" weightage="80" keywordseo="CEO">CEO</keyword> Sikka took over last year. And his new initiatives to boost employee morale in past few months have been received well. That in part could be responsible for high staff expectations on the hikes, a company executive said on conditions of anonymity. 
 
"We're extremely disappointed with the hikes. After the 10% raises rolled out to level 3 employees mid cycle last year and with the CEO's engagement efforts and reaching out to the employees, this is the last thing we expected. If the company was looking to arrest attrition, this is really not the way to inspire employee confidence. I am sure a lot of us will start looking out for options," said a Chandigarh-based employee who did not wish to be named.

Infosys is being 'stingy' with its salary hikes. Employees clearly unhappy about it!

<keyword id="6354512" type="CITY" weightage="100" keywordseo="Infosys">Infosys</keyword> chief executive <keyword id="6369763" type="PERSON" weightage="100" keywordseo="Vishal-Sikka">Vishal Sikka</keyword> took home an annual salary package of $7.45 million for the 2015-16 financial year, while other top company executives such as operating chief UB <keyword id="1983988" type="UNKNOWN" weightage="100" keywordseo="Pravin-Rao">Pravin Rao</keyword> and general counsel <keyword id="551667" type="PERSON" weightage="100" keywordseo="David-Kennedy">David Kennedy</keyword> also raked in multi-million dollar pay packages. 
 
Sikka's salary, which compared favorably against other top IT CEOs such as N Chandrasekaran of TCS and Abidali Neemuchwala of Wipro, includes his earnings from incentives and and bonuses as well as his stock options. 
 
Earlier in 2016, Infosys's board rewarded Sikka with a significant pay hike and an extension on his current tenure, after he effected a turnaround in the fortunes of Infosys that helped the company trump other top rivals and deliver industry-level growth rates after years. 
 
As part of the new proposed compensation structure, Sikka stands to make about $11 million every year, starting January 2017. Infosys has rewarded with a significantly higher component of stock options and reduced the part of his salary that was linked to variable pay. As part of his old contract, Sikka made $7.08 million, including stock options. 
 Since last year, Infosys has raised <keyword id="6402851" type="UNKNOWN" weightage="100" keywordseo="Salaries">salaries</keyword> of top executives significantly, as part of a broader strategy to retain key executives and subsequently reward rainmakers. 
 
 
 
Image credit: Indiatimes

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