IT Firms Slash Entry Level Salaries
Economic Times reports that though most companies are moving towards performance-linked compensation packages or a variable pay model, industry estimates suggest that entry level salaries have been cut by 20-25% across major companies. Even as this happens, companies are rewarding top performers by increasing their pay. “While companies in the US selectively reduce salaries to fund the bonus pool, companies in India are also following suit,†said a CFO at a leading Indian software company.
Though it is not known whether a 20-25% cut in entry level salaries would be enough to fund bonus reserves and other allowances, sources in top rung companies state that since the measure will be across the board, it would lead to substantial benefits.
The market is looking forward to the first quarter results, beginning with MphasiS. Infosys is slated to announce its results the next day. “All eyes will be on Infosys, which has taken strong measures to further cut costs. These measures, which include cuts in entry level compensation, onsite rationalization of salary-related allowances and a focus to shift work offshore, would reflect in the coming quarters. But the cost-push pressures from offshore salary hikes could be more immediate, when seen together with a weakening dollar and rate declines,†an analyst at Credit Lyonnais Securities said in his report.
Read the full report Here
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