Employee variable compensation at Wipro increases to 85% in Q3

Indian IT giant Wipro paid an average of more than 85% to its workers in the third quarter of the current fiscal year, after implementing an average variable payment of 80% for the previous two quarters, according to two sources inside the firm.

The IT company deployed an average of 80% and 81% in the first and second quarters of current fiscal year, respectively. The Wipro FullStride Cloud business line, which generates more than a third of the company’s revenue and employs almost 80,000 people, according to another source, had an average variable pay rate of 100% in the September quarter and 89.74% in the December quarter.

The variable reward will be based on three factors: revenue (40%), gross margin (30%), and total contract value (30%), according to a recent email from Wipro to staff. Wipro did not respond to questions addressed to them until just before going to print.

The corporation had postponed its staff wage increases from the second to the third quarter in order to increase profits. The IT business recently gave chosen staff yearly raises ranging from 6 to 8% after postponing them for a few months. The corporation implemented increases that become operative on December 1, 2023.

Despite reporting sales of Rs 22,205 crore, which was 1.4% lower than the previous quarter (q-o-q), Wipro exceeded market predictions. The company’s margins have held up well in the face of severe headwinds, including lower demand, seasonal furloughs, and employee wage increases. In Q3, the margin dropped to 16% from 16.1% in Q2. In constant currency terms, Wipro anticipates that its IT services business segment would generate between -1.5% and 0.5% of sales in the March quarter. The business had previously predicted that sales for the third quarter would be between -3.5% and -1.5% in constant currency terms.

After offering variable payments of almost 80% for the first two quarters, rival IT giant Infosys lowered its average variable pay to 73% for the third quarter of the current fiscal year. Citing global macroeconomic difficulties, the IT giant has reduced variable compensation to 60% during the March quarter of FY23.