Infosys cuts Q4 bonus payouts after up to 100% variable pay in previous quarter: Report

IT giant Infosys has trimmed its performance bonus payouts for the March quarter after disbursing up to 100% variable pay, its strongest payout in more than three years, in the preceding quarter, according to internal communication reviewed by Moneycontrol.

According to the report, the average payout under the performance bonus component stood at around 70% for the March quarter, lower than nearly 85% paid in the December quarter (Q3FY26), which marked the company’s strongest variable pay distribution since the Covid period.

How much bonus pay did employees receive?

The internal payout matrix showed that employees in personal level (PL) 4 received payouts ranging from 67% to 82% across business units. Those in PL5 received between 65% and 78%, while employees in PL6 saw payouts ranging from 63% to 77%.

PL refers to the internal employee rating bands used by the IT services company during its appraisal cycles to assess an individual's performance and determine variable pay payouts.

The payout percentages also varied across delivery and business segments, the communication showed.

“The performance bonus (PB) recommendation for Q4 FY2025-26 has been completed. The organisation's average bonus payout stood at 70% for Q4 FY26,” the internal note said, according to Moneycontrol.

Blockbuster variable payout last quarter

The lower bonus payouts come just one quarter after Infosys distributed variable pay ranging from 75% to 100% to eligible mid- and junior-level employees, with most clustering around the 85% average, the news report said.

Employees had then described the payout cycle as among the strongest seen in recent years, with some staff receiving full variable pay, which was reportedly an uncommon occurrence since the pandemic-era demand surge.

Infosys gradually increased its variable pay levels over successive quarters, rising from around 65% to 80% before reaching an average payout of nearly 85% in the third quarter of the financial year 2025-26.

What led to the reduced bonus pay?

The moderation in Q4 bonus payouts also comes amid continued uncertainty across the global technology sector, where companies and investors are closely assessing the long-term impact of rapid advancements in artificial intelligence on traditional IT services business models. Concerns around automation, pricing pressure and changing client spending patterns have kept sentiment cautious across the information technology industry.

Meanwhile, global IT stocks have also witnessed increased volatility in recent months as investors reassessed growth prospects for legacy IT outsourcing and software services businesses in the era of generative AI. While companies continue to invest heavily in AI capabilities and related projects, there are also growing concerns that parts of traditional services may face disruption.

Another key concern for the IT industry is the extent to which AI-led productivity gains are being passed on to clients through lower pricing and tighter contracts. During Infosys’s post-earnings analyst call on 23 April, chief executive Salil Parekh said, "The competitive intensity in the market has gone up, and the productivity will get passed back to the client largely.”

Infosys Q4 results

Infosys, on Thursday, 23 April, reported a 21% year-on-year (YoY) rise in consolidated profit to ₹8,501 crore for the January-March quarter of the financial year 2026 (Q4FY26). In the same quarter of the previous financial year, the company's profit was ₹7,033 crore.

Sequentially, or on a quarter-on-quarter (QoQ) basis, the IT company's profit jumped 27.8% from ₹6,654 crore in Q3FY26.

Consolidated revenue for the quarter under review registered a YoY growth of 13.4% and a QoQ rise of 2% to ₹46,402 crore. In Q4FY25, Infosys' revenue was ₹40,925 crore, and in Q3FY26, it was ₹45,479 crore.