Indian IT firms cut staff bonuses as U.S., European clients tighten budgets

Infosys told employees in an email seen by Reuters that the company was making "structured efforts" to improve performance, as it cut variable pay

India's top IT services firms are freezing or cutting staff bonuses, worried that tightening budgets at U.S. and European clients who are bracing for a recession will sharply hit their own profits after a pandemic-led boom.

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Infosys Ltd., India's second-biggest IT company, and smaller rival Wipro recently told their employees they had reduced the variable pay portion of employee compensations, according to respective internal emails sent by management to staff at the two companies and seen by Reuters.

Some Indian companies include variable pay as a part of employees' overall salary package and link it to the performance of the employee as well as the company.

"There's growing conviction in businesses that we need to prepare for a (global) recession," said Peter Bendor-Samuel, chief executive of U.S.-based consultancy Everest Group, which provides research on IT companies globally.

"The first thing they do is try to eliminate discretionary spending. It is early, but starting to happen."

Big Indian IT companies paid top dollar to lure skilled workers over the past two years as demand surged for services such as cloud-computing, digital payment infrastructure, cybersecurity and cryptocurrency transactions. That set off a tussle for talent with company reports showing that net numbers of people leaving big IT companies this year are 60%-80% higher than two years ago.