Leading consultancy and audit firms have taken definitive steps relating to human capital even as India Inc. tries to gauge the impact of the Covid-19-related slowdown and works to save jobs.
PwC India, Deloitte India, Ernst and Young or EY India have all decided to defer their employee appraisal cycles, which includes deferring promotions and bonuses, because of the virus outbreak, said officials working with these firms.
KPMG India will take a decision next week but the senior partners may decide to forgo some of their incentives and bonuses. The appraisal cycle could also be deferred, said a person aware of the matter, who declined to be named. “We will be in a better position to comment on this next week as we are still evaluating our options," said a KPMG spokesperson in an email.
Deloitte India held two calls with its employees last week to ensure that there is clear communication and transparency from the management to the employees on how they are managing the crisis.
Some of the partners of Big4 have also been encouraged to reduce their draw from the partners’ pool (funds that need to be contributed by the partners as equity into the firm, which can be later withdrawn as part of their compensation), said a partner aware of the matter.
The Deloitte management also communicated to employees that increments will be recalibrated this year and promotions will be considered when there is a visibility of profits in the line of business, he said. “No new recruitments will be considered unless absolutely necessary. Individuals who have already been given offers to join will be honoured, but the date of joining will be pushed," he said.
A spokesperson for Deloitte India confirmed the developments.
PwC India is also focusing on ensuring it is not forced to cut jobs as a majority of the companies are facing a cash crunch and may not be able to honour payments to consultancy and audit firms on time.
“The issue is not about just lack of business but mostly about companies who we are servicing or auditing not being in a position to honour payments on time. We want to ensure that no jobs are lost," said a partner working with PwC India. The senior partners will also take a 25% cut on their salaries.
Among the more worrying signal is the visibility on April salaries. Deloitte employees said that they have already been paid March salaries. PwC also clarified to its employees in a conference call that it will pay March salaries on time.
Shyamal Mukherjee, chairman of PwC India, took to social media platform LinkedIn to further assuage the concerns of his employees. “We at PwC India have initiated proactive measures that will help navigate the uncertainties, keep all employees safe and make our organization more sustainable. We have worked out some interim measures, which include deferment of promotions, increments and bonus till a point in time one gets certainty around business," he said.
EY India has decided to forgo performance-based bonuses. Promotions that are typically effective before the start of a new fiscal are being deferred to 1 June, said an employee. EY India did not respond to emailed queries.
Consultancy and audit firms are among the front-line companies affected by Covid-19-related economic slowdown because almost all their client companies have halted key strategic and ongoing projects, which has affected payment schedules.
The other big factor contributing to the Big-4 stress is the delay in publishing quarterly earnings.
Market regulator Securities and Exchange Board of India on 19 March had extended India Inc.’s timelines for filing quarterly and annual audited results to 30 June to reduce the compliance burden.
“As these timelines have been extended, the companies would pay their auditors only when the work is complete," said a partner working with one of the Big-4 firms.