Pay High and Take High Quality Talent

All eyes fell on top software outsourcing companies after the sector's leader, Tata Consultancy Services, cut variable pay for all its employees, citing a shortfall in its performance viz-a-viz internal targets. Investors and employees are keen to know how salary norms in the outsourcing industry are going to evolve in the wake of worries over economic slowdown in the United States.
TCS ploughed back Rs 83 crore from employees' hands into the company's coffers, saying previously set expectations of shareholder returns had not been met by its fiscal third quarter earnings. This made staffers poorer by 1.5 per cent of their annual cost to company. Officials in top outsourcing companies including Wipro said they're not considering a similar move right away. Human resource consultants, however, said many will follow TCS sooner or later, after ascertaining the demand environment in the United States. T V Mohandas Pai, who heads human resources at Infosys, said that the country's second largest software exporter sees no dramatic change.
A quick interview: You might have read TCS has cut variable pay for its employees... I am not too worried when a company changes variable pay. See, variable pay is variable with performance. Nothing is guaranteed in it. I don't think any dramatic change has happened. With fears of a slowdown, how do you see salaries moving in the next several months? Honestly, I don't think the hiring environment has changed. There is still demand for high quality freshers. Lateral hires in high growth areas are in demand. Lateral hires in mature areas such as application development ... well, there is supply there and there is not so much of a rate increase. But if you want high quality talent, you have to pay. For several quarters now, we have been seeing 12-15 per cent wage hikes.