Infosys, one of India’s leading IT services companies, has announced a reduction in performance bonuses for the third quarter ending December 2024.
The company has decided to offer an average of 80% of the target bonus to its eligible employees, a decrease from the previous quarter’s payout.
This decision comes ahead of the anticipated annual pay hikes expected to be rolled out by the end of March 2025.
The move has sparked discussions within the industry about the company’s financial strategies and its impact on employee morale.
Background on Infosys Bonus Reduction and Impact on Employees
The average payout of the variable pay has dropped by up to 10 percentage points from the second quarter.
This affects employees across delivery and sales units, who form the bulk of Infosys’ workforce of over 323,000.
In the July to September quarter, employees received an average of around 85% of the variable pay.
This time, employees received an average of around 75% at the unit level rating.
For JL5 & JL6, the ratings were 100% for ‘outstanding,’ 85% for ‘commendable,’ and 70% for ‘met expectations.’
Infosys has stated that the reduction in bonuses is in line with its organizational goals of building a high-performance work culture.
The company emphasized that it continues to drive performance differentiation while closing bonus payouts.
An employee, speaking anonymously, mentioned that the reduction in bonuses appears to be a measure to conserve funds for the upcoming pay hikes.
Despite the lower payouts, Infosys has raised the lower end of its revenue guidance for the current fiscal year to 4.5%-5.0%.
The reduction in bonuses has affected employees across various job levels.
Team leaders at the rank of JL5, as well as software engineers, senior engineers, system engineers, and consultants, have seen a decrease in their variable pay.
Managers, senior managers, delivery managers, and senior delivery managers at JL6 and above have also experienced lower payouts.
The company has communicated that the bonus will be credited along with the February salary.
Comparison with Competitors, Financial Performance and Pay Hikes
Infosys’ decision to lower bonuses comes at a time when its larger rival, TCS, has also released quarterly variable pay.
This covers the October-December period.
Approximately 70% of TCS employees received 100% of the variable pay. Meanwhile, senior-level employees continued to receive lower payouts of 20% to 40%.
The variable pay percentages at Infosys differ based on an employee’s performance and contribution for the quarter.
Despite the reduction in bonuses, Infosys reported strong financial results for the October-December quarter.
The company posted an 11.4% increase in net profit at $800 million and a 7.6% rise in revenue at $4.9 billion.
The company’s strategic digital offerings, key initiatives, market positioning, and structured approach to margin expansion have contributed to this growth.
Infosys is expected to roll out annual pay hikes by March 2025.
Employees at and below job level five (JL5) will receive hikes with effect from January 1. Those at job level six (JL6) and above will get the revised pay from April 1.
The company’s chief human resource officer, Shaji Mathew, communicated this information to employees during a town hall on February 5.
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