Infosys, India’s second-largest IT services firm, has declared an 85% average performance bonus for its eligible employees for the September quarter. The bonus will be granted to Band 6 and below employees, which include junior to mid-level staff working across various units such as delivery and sales. This group represents the majority of Infosys’ workforce. According to reports from some employees in Band 3, a few received up to 100% of their variable pay, depending on individual performance.
Employees were notified about their bonus payouts through letters sent on November 25 and 26. The exact bonus amount varies based on individual performance, and the payouts will be disbursed along with the November salaries. Infosys has stated that the bonuses are designed to reward employees based on their contributions and the company's strong performance.
The 85% bonus payout for Q2 marks an improvement from the 80% payout in the previous quarter and is significantly higher than the 60% bonus issued in the fourth quarter of FY24. In an email to employees, Infosys attributed the increased payout to its strong Q2 performance, especially in cloud and generative AI (GenAI) services. The company reported a sequential increase in net profit by 2.2% for Q2FY25, amounting to Rs 6,506 crore, while revenues grew by 4.2% to Rs 40,986 crore.
Building on its solid Q2 performance, Infosys has also revised its full-year FY25 revenue growth guidance upwards, from 3-4% to 3.75-4.5%. This positive forecast highlights the company's resilience and its focus on high-growth sectors like cloud computing and AI technologies.
In contrast to Infosys, sector leader Tata Consultancy Services (TCS) recently reduced the variable pay for its senior employees in the September quarter, citing demand uncertainties. TCS employees in senior roles received significantly lower payouts, with some receiving only 20-40% of their expected variable pay or no payouts at all, despite adhering to the company’s mandatory work-from-office policy. On the other hand, junior employees at TCS reportedly received full payouts.
Unlike TCS, Infosys has not tied its bonus structure to its work-from-office mandate. The current policy at Infosys requires select employees to work from the office for at least ten days per month. This flexibility allows Infosys to reward its employees based on their individual performance rather than their office attendance, differentiating its approach from that of other firms in the industry.
The IT sector, in general, is facing challenges due to muted client budgets and soft business performance. As a result, several top IT services firms, including TCS, have reduced the variable pay for their senior employees in the September quarter. Experts suggest that senior employees, particularly in people manager roles—who manage projects but do not have billable hours—are experiencing a reduction of 20-30% in their variable pay.
Despite the ongoing headwinds in the industry, Infosys remains committed to offering competitive compensation packages to its employees. The company has emphasized that it will not reduce its variable pay for junior or mid-level employees, and its bonus structure reflects the strong business performance of the organization in Q2. This approach has helped maintain employee morale and retain top talent amidst the challenges faced by the broader IT industry.
In conclusion
Infosys’ decision to offer an 85% bonus serves as a clear signal of the company’s confidence in its performance and its commitment to rewarding its workforce. This move stands in stark contrast to other firms in the industry, where senior employees are facing reductions in variable pay. By focusing on individual performance and delivering strong financial results, Infosys aims to strengthen its position in the competitive IT services market.