Infosys' desire to stay close to high margins necessitated the no-pay-hike announcement, but the fallout could lead to an industry-wide impact on salary hikes.
Industry watchers and analysts say that like ESOPs, the IT bellwether's no-pay-hike too would be emulated by the industry.
“It's likely that some companies would cite this as a precedent. As all companies are facing marginal pressures, this could well be the norm in the industry,” says Mr E Balaji, Managing Director and CEO, Ma Foi Randstad, an HR consulting firm.
Mr Sundararaman Viswanathan, Manager, Consulting, Zinnov Management Consulting, globalisation advisory firm, however, calls the step ‘short-sighted and taken to appease the market.” He feels that the company should have stopped with a cut in the variable pay of senior leaders and left the over one lakh junior and mid-level employees out of this exercise. “They have not faltered in their efforts. This will dishearten the employees and does not augur well for the company.”
On impact on the industry, he says that large rivals may not follow suit, but announce marginal hikes (2-3 per cent) just so that so they do not get ‘bad press' like Infosys did.
“I'll be surprised if other companies will make a predatory move and announce huge hikes to attract talent from the IT major,” says Mr Venkat Shastry, Partner, Tech Practice of global consulting firm Korn/Ferry International.
His rationale is that growth has been flat for all companies and not unique to the company. “Loyalty is fast disappearing among all level employees and there are quite a few companies of this size that offer them similar opportunities,” he says.
“I don't think this would impact attrition at Infosys as margin pressure is an industry-wide phenomenon,” says Mr Balaji of Ma Foi.