Infosys has given out salary hikes across the board to its employees.
The salary hike for India-based employees is 6 per cent and it is effective from October 1 this year. Onsite employees (who work outside India) have been given a 2-3 per cent hike. Further, for onsite employees, the hike will be effective from January next year for the fiscal 2013.
Competitors TCS and Wipro have given an eight per cent hike across the board to its employees at the start of the FY13 fiscal, which is a norm followed by the companies to help them cushion the employee costs over the year.
Ankita Somani, Analyst-IT and Telecom, said the wage hikes will again negatively impact the operating margins that are already under pressure since past two quarters. Further, this will impact the company in the next quarter too, which, in turn, would put more pressure on the company’s overall margins as it struggles to maintain margins in the backdrop of a sluggish economic climate in developed markets.
As a result of salary hikes, operating margins of Infosys will decline by 200 basis points in FY13 compared with the 50-100 basis points decline estimates before the hikes were announced, opine analysts. A basis point is 1/100th of a percentage and is used to measure differences between percentages.
However, outgoing CFO V. Balakrishnan told Business Line that you have to continually make investments and in spite of a challenging business environment.
Also, the company has seen an attrition of 15 per cent in the September ended quarter, marginally higher than the 14.9 per cent it witnessed in the previous quarter.
However, the company has seen a slew of top management exits, with the likes of Shaji Farooq, a senior level executive, and Ritesh Idnani who was the Chief Operating Officer of Infosys BPO, quitting in the last few months and these hikes have been given to keep existing employees motivated and bring attrition down, according to a CEO of an international HR consulting firm.