Satyam Computer Services, the beleaguered IT firm that was acquired by Tech Mahindra, has decided to scrap variable pay for all employees this fiscal. 'We have decided not to give variable play to employees until further notice,' said a person privy to the development.
The company has paid variable pay component for last fiscal, despite the economic downturn. A cut in variable pay would mean a lower take home pay for 48,000 employees this fiscal too. Variable pay constitutes a part of the salary package and is subject to the company and employee's performance.
Much on the lines of Satyam, several companies in the export-driven IT services industry in
The variable component for Satyam employees is 10% at the entry level, 20% at the middle level and 30% at the senior management level. Half of the variable pay is a guaranteed payment. The other half is linked to three parameters including the performance of the company, the individual and the business unit.
Manpower costs account for over half of the total expenses of the firm, like in all other IT companies.
However, the fraud-struck IT firm has seen several exits since its defamed founder B Ramalinga Raju confessed to perpetrating a Rs 7,000 crore fraud. 'The employee attrition rate is about 14%, and is not that alarming,' said the senior official. Satyam's monthly wage bill amounts close to Rs 500 crore. The attrition rate in most IT firms has been round 11-15% over the last few quarters compared to 20-25% during the boom.
Of the total workforce, more than three quarters are handling offshore projects and the rest are on-site. Close to 12,000 Satyam employees are believed to be on the bench, according to IT analysts.
The beleaguered IT services company is undergoing an account restatement exercise after its disgraced founder B Ramalinga Raju confessed to inflating revenue and hiding liabilities at the firm in January.
Source: The Economic Times
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