- 23 Aug 2022
- ICICIdirect Research
Infosys pays average 70% bonus in Q1INFY - 1428 Change: 44.40 (3.21 %)
News: According to The Economic Times, in its internal communication to employees, Infosys indicated that it would be paying average 70% of the bonus in Q1. The company mentioned that current quarter i.e. Q2, margin impact is a reflection of a reduction of variable payout.
View: Unlike Wipro (where it deferred variable payout for senior employees) and TCS (where it deferred variable payout for select categories of consultants), we believe Infosys has taken a balanced approach of paying out 70% of bonus irrespective employee position in the company hierarchy. It is not clear whether rest 30% bonus is deferred or dismissed at this moment. We also note that Infosys undertook three substantial salary hikes in the last 15 months (January 2021, July 2021, and April 2022). As a result of this, its quarterly annualised attrition has come down by 500 bps in Q4FY22 vs. Q3FY22 and further 100 bps in Q1FY23. Hence, we do not see any major increase in attrition due to non-payment of some portion of bonus, going forward. We also believe that it is a step in the right direction to achieve target margin band of 21-23% for FY23.