Hyderabad: Satyam Computer Services Ltd, the country’s fourth largest software services firm by revenue, has delayed the payout of annual performance-based salary raises and expects the increases, when they happen, to be smaller than last year’s, as it attempts to ride out a slowdown in the information technology industry.
“Weak market conditions and the corresponding financial outlook is the main reason why things are getting delayed,” said S.V. Krishnan, head of human resources at Hyderabad-based Satyam.
The performance evaluation process, which used to start in April, was delayed and completed only by the first week of July. In previous years, employees had received performance-based raises along with their July pay cheque. Krishnan said the company expects to complete calculating salary increments only by the first week of September.
IT hurts: Satyam chairman B. Ramalinga Raju. ( Madhu Kapparath / Mint)
The delay comes in the face of an anticipated slowdown in orders from the US, the biggest market for Indian software firms, where clients are tightening their IT budgets as they weather a credit crunch.
At Satyam, average hikes are expected to be about 11-12% for India-based employees compared with last years’ 16.5-18%, said Krishnan. While the company said it had managed to bring down the attrition rate to 12.6% in the three months to 30 June from 14.9% a year ago, it has slowed hiring as well. Satyam hired 651 employees, including 161 freshers, in the June quarter, its first of fiscal 2009, down from 2,716 (including 1,298 freshers) a year earlier.
Some Satyam employees said while they understand the implications of a weak market, they are unhappy that the management hadn’t kept them informed. “Basic courtesy would be to inform us about such delays,” a Satyam employee who has been with the firm for nearly 10 years said, wishing not to be named. “We were told to expect pay hikes on 14-15 August, and that (date) has already passed.”
Satyam didn’t respond to other questions from Mint. An emailed query hadn’t elicited a response till late Monday.
An analyst said it was unlikely Satyam’s move would increase attrition. “In uncertain times, attrition is normally under control and it has been stable in the past two-three quarters,” said Harit Shah, an equity analyst at Angel Broking Ltd.
Tata Consultancy Services Ltd announced a 10% salary hike for this fiscal, compared with 10-13% in the previous year, while Infosys Technologies Ltd offered a 11-13%increase against 12-15% a year ago. Wipro, which normally announces salary hikes forIndia-based employees in the September quarter, expects raises to be in the range of 8-9%.
“Moderation in wages has started ahead of the industry expectations,” said B.S. Murthy, head of Human Capital Consulting Pvt. Ltd, a Bangalore-based recruitment firm. “The industry was expecting wages to moderate with single- digit hikes in 2010 or 2011.”
Vishwanath Kulkarni contributed to this story.