It has been a year of controversies, and also some panic for the IT industry and its employees. In an interview with BusinessLine , Infosys Executive Vice-President and HR head Richard Lobo clears the air on several issues, including compensation for CEO Vishal Sikka, and the growth of the sector.
Infosys has talked about hiring in the US. Does that mean hiring budgets will increase?
The plan is to hire in many geographies. We will be creating many development centres, not just in the US, but also Europe and some places in Asia-Pacific. The US centres will mirror India, but not in terms of scale. These will be close to the places where our clients are located, and will comprise locals. It will be a near-shore kind of model but instead of working from our client’s offices, it will be done out of Infosys’ offices. Most of the hires will be from campuses there. Yes, there will be a cost impact, but we will offset it with better business.
We are not asking anybody to leave because we do not want them. Around 0.25 per cent will leave on performance grounds. Some people feel entitled — that they belong to the next level. Unfortunately, their skillsets are not relevant to what our clients want. What they were doing a few years ago is not relevant any more. Those in their mid-30s are young enough to learn newer skills, but have to spend time in re-skilling, just as we are willing to invest in them. Traditionally, people at the bottom of the pyramid were getting more billed than those in the middle and at the top. We are trying to change that [to a scenario] where more people in the middle and senior levels can get billed.
What has been the total attrition rate, and how much of it is involuntary?
Total attrition stands at 13.5 per cent and involuntary attrition is 1.27 per cent of that. But there has been no drastic change in attrition. We continue to hire from campuses across the country, and we have given them joining dates and they are being inducted.
Do you believe that automation and AI will actually reduce the number of jobs in the IT sector?
Automation will, in fact, create more jobs. But what it is doing is, the [new] job is not necessarily [being] created for the same person in the same place. Certain sets of jobs will not exist. For example, an engineer monitoring faults in the network will be redundant. Instead, different jobs will be created in other places. Whether the same person can do the job is the question, and that is where re-skilling comes in. Any activity which is repetitive will go away.
H1 Visa applications have come down. What could be the reasons for that?
See, the US government has not changed the numbers. We have applied for lesser numbers. It is because we took into consideration the centres we are opening abroad, and especially in the US. It is a call you have to take, on how much you want to apply. If it is not us, somebody else will. H1 is transferable and it can be passed on. The US government has not done anything to change the numbers.
Infosys has delayed increments.
This is not the first time we have done this. We don’t always [dole out] payout increments in July. In fact, there were a couple of years when we didn’t do it all. We did not have a clear visibility at that time to commit to a particular budget number. If we had more visibility, we would have certainly done it. This year, we said we will not do any average hikes. We have that much better predictability of talent now: we now know who the performers are, and who are being billed better. That data is available now. We want to give a better hike to good performers. People will get a hike in July. Out of that, some will get hikes which are in double digits. We will get into the lower levels first and that is a conscious decision.
There has been a lot of controversy surrounding the compensation to the top management, including the CEO. Then there were reports about how the hikes are related to the $20-billion revenue target and how that is not a possible target, and therefore, the CEO will take home a lesser salary.
These reports have been coming out for the last year. There have been no changes in senior management compensation in April, or now.
Two things of significance happened in November last. We changed the structure. The compensation was a fixed salary and variable salary based on targets, and then there was the long-term bonus which you got if you stayed for a longer period of time. The fixed component is 40 per cent, and the rest is variable — which is one part, and the other part we moved into an RSU grant. The RSU grant is spread over four years, but if you show it as a single number then it looks big. RSU is performance-based and linked to the [company’s] share price.
The top executives could lose significantly if they do not perform. Our CEO, Vishal Sikka’s compensation was also restructured to factor this in. He also has fixed incentives and stocks. What target he has been set is for the board to decide. He has received what [payment] the rest of the senior management got. He has also taken lower compensation as we have got. If you look at the variable payout, we pay a higher payout at the lower levels. For example, if we pay 70 per cent for the levels below, we pay 50 per cent higher based on performance.
So, it has nothing to do with the $20-billion revenue target?
Yes, it has nothing to do with that. The target is for the year. All of us have yearly goals, which partly might be the company’s goal and partly our own. We publish our guidance and internally it might be higher.
So, the senior management does not have to take a pay cut because of attrition?
To put it very frankly, the senior management salaries have already seen a cut. If you take a target with what we could get and what we get, there is already a cut. With the variable pay structure, there is no choice. This is nothing new. If you see many of the numbers, the cash component has actually gone down. The other side is that, in a good year, people have gained.