Tech Mahindra Halts All Bonuses, Increments
Amidst this chaos, India’s IT services companies are replicating the moves made during the US financial crisis a decade ago as told by senior executives and analysts. The companies may halt pay hikes and cut bonuses to deal with the business slowdown caused by sudden shutdowns.
India’s IT sector firms and other companies have asked the majority of their employees to work from home. The trainees are also sent back home from campuses with an aim to implement social distancing norms and reduce the spread of the virus. Most India-based IT services firms have eight out of ten employees working in centres locally.
According to C P Gurnani, CEO of Tech Mahindra, “Bonus, variable pay or any increment is right now on hold. At this stage, most of the world is addressing their first priority: keeping people safe”.
A Nasscom executive said, “IT companies have seen demand and bill rates crash, as clients have moved to doing only the most crucial work to keep their business running. New deals are not being signed and old ones are being placed on standby.”
Peter Bendor-Samuel, CEO, Everest Group said, “The crisis will likely negatively affect profits and to the extent that bonuses are tied to firm performance and profitability, they will automatically be reduced. In this case employees are likely to view the reductions as justified.” In addition he stated that if the compensation adjustments are made to keep profits high then the firms are likely to have morale and turnover problems going forward.