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Corporate Aug 8, 2014

Fighting attrition: Vishal Sikka okays 5000 promotions at Infosys, Cognizant hands out pay hikes

By Firstbiz Staff
Fighting attrition: Vishal Sikka okays 5000 promotions at Infosys, Cognizant hands out pay hikes


When Vishal Sikka took over as Infosys CEO on 1 August he knew he had an uphill task to get the company back to its numero uno position in the IT space.  One of his main challenges was  rising attrition but it looks like he's already tackling the problem just a week into his job.

Multiple news reports  from The Economic Times, Business Standard and Financial Express state that Sikka has approved about 5,000 promotions to retain key members and boost employee morale.

Infosys' employee attrition hit a record high of 19.5 percent in the April-June quarter of 2014-15, up from 16.9 percent in the year-ago period.

According to the Financial Expresssources said the promotions went to employees between the L3 and L5 categories, which means software programmers and higher posts.

Both ET and BS quote an Infosys spokesperson as saying that with the latest round of promotions, Infosys has now  promoted about 15,000 employees since the start of the year. Infosys had announced quarterly promotions for 10,000 people in February 2014.

The software major has undertaken several measures such as reducing the variable component in the salary structure, introduced a quarterly promotion cycle and put in place a fast-track career programme for top performers to improve attrition.  In an internal mail to its staff in February, Infosys had said that it will be showering employees with incentives including promotions every quarter and a 5-7 percent salary hike for 2014-15 in order to retain quality talent.

NRN Murthy resorted to a similar  tactic to boost company morale when he took over the reins as chairman last year. Within weeks of his return, Infosys increased salaries of its employees in India for 2013-14 by an average 8 percent. In 2012, Infosys had delayed hikes and the salary increases were given only in October, when the company came under pressure from increments offered by peers. In January, Murthy said the company is looking at returning to its practice of announcing salary increments effective April.

A recent survey by executive search firm MANCER Consulting revealed that ITeS will face the highest overall attrition of 21 percent this year with the junior level seeing exits at almost 30 percent. ( For more on why  the IT sector sees  high employee churn read this Firstbiz story).

On Wednesday, Cognizant too said it will dole out double-digit salary hikes to its offshore employees after the company's attrition jumped sequentially to 16.9 percent in the June quarter from 14.1 percent in in the previous quarter. Cognizant's major rival TCS reported an attrition of just 12 percent in the June quarter.

Cognizant has given an average 10% salary increase to offshore employees, while it also promoted a third of its progeammers.

"This year's salary revisions are designed to be market competitive, differentiate niche and critical talent, and reward high performance," Cognizant CEO Francisco D'Souza said in a blogpost to employees.

Cognizant's wage hike matches TCS, but is higher than Infosys, which announced a 6-7 percent hike for offsite employees and 1-2 per hike for onsite employees. Wipro has given an average salary hike of 8 percent for offshore staff and 2 percent for onsite.

This battle to retain talent, however,  is not specific to the IT sector. Yesterday the Economic Times reported that India Inc is fighting fiercely to retain top and mid-level talent in anticipation of a strong economic revival in the country. Apart from higher pay, counter-offers, promotions, overseas postings,  in-demand projects are some of the tactics being used by corporates to retain in-house talent.


by Firstbiz Staff

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