Cognizant hands out bonuses

CHENNAI: Some good news from the IT sector, at last! Cognizant, India’s fourth largest software services firm in terms of revenue and staff strength, is riding against the tide to hand out bonuses to employees across the board. The IT major, which has most of its facilities in Chennai and Bangalore, is paying employees the full variable pay component at a time when tech giants such as Infosys and Tata Consultancy Services as well as tier-II players like Hexaware are in the process of implementing pay cuts or even layoffs. Most tech companies pay employees 20-35% of their gross as variable pay, with senior executives sometimes getting over 50%. TOI spoke to several Cognizant employees, who said they had received a bonus. In some cases, it is the full component of the variable pay. Cognizant ranks fourth among top IT firms in India, both in terms of revenues ($2.8 billion) and headcount with nearly 62,000 employees. “It’s a relief to be receiving this news in the current scenario. There has been a lot of talk that pay cheques will be revised downwards. We had also heard about lay-offs,” an employee said. Confirming the development, a company spokesperson told TOI, “Cognizant has paid good incentives for 2008 in keeping with our philosophy of sharing the results of good company performance with our associates. As compensation is confidential information, we cannot reveal any further details.” Cognizant reported a 32% rise in revenue for the fiscal year ended December 31, 2008 and ended the period with over $900 million in cash. Most Indian tech companies follow the April-March fiscal calendar. Last year, Cognizant paid between 70% and 100% and in some cases employees exceeding the highest expectations were paid even more than 100% of their promised variable pay. A few days ago, Tata Consultancy Services, which pays around 8% of gross revenues every year to staffers in the form of performance-linked variable pay, said it would review the variable pay component. Infosys has also indicated that it would pay lower discretionary pay to senior management level personnel due to the economic slowdown. Hexaware Technologies has cut salaries of about 350 employees on the bench, and salary cuts between 2-10% will be effected for employees above a certain designation. Variable pay is a proportion of an employee’s remuneration that is based on his/her performance assessment as well as the company’s performance.