Massive Pay Cuts For TCS Management In Q1 2020; Why Cognizant VPs, SVPs Are Exiting?
As per the reports, the annual incomes of top executives at Tata Consultancy Services fell in the just-concluded fiscal year, as India’s largest IT services provider posted slower growth due to business uncertainty triggered by the Covid-19 pandemic.
How Did This Happen?
In the previous financial year, the Chief executive Rajesh Gopinathan income dropped 16.5% to Rs 13.3 crore in the fiscal year ended March 31 from Rs 16.04 crore.
Further, his compensation included Rs 1.35 crore in salary, Rs 1.29 crore as perquisites, Rs 10 crore in commission and about Rs 72 lakh from other allowances.
Similarly, the Chief operating officer N Ganapathy Subramaniam and chief financial officer V Ramakrishnan’s salary packages also dipped.
Where, Subramaniam’s income fell to Rs 10.1 crore from Rs 11.6 crore (-12.9%), while Ramakrishnan’s dropped to Rs 3.98 crore from Rs 4.13 crore (-3.63%).
What Does TCS Say?
According to the company’s annual report, “The executive remuneration for FY20 is lower than FY19 in view of the economic conditions impacted by the Covid-19 pandemic,”.
Apart from TCS’ Directors, including HDFC CEO Keki Mistry, also took a pay cut.
Moreover, the total compensation for independent and other executive directors fell to Rs 9.20 crore from Rs 12.43 crore.
The report added, “Directors have decided to moderate the executive remuneration for this year to express solidarity and conserve resources,”.
While the non-managerial staff, however, were given average pay hikes of 6% in India, the same as in the 2018-19 fiscal year. Employees outside India received a wage increase of 2- 6%.
Further, TCS said while there were short term business challenges due to the pandemic, it expects to gain more business later, as companies invest more in technology to adapt to the new normal and differentiate themselves.
Also, TCS could face credit risk and possible defaults from clients impacted by the pandemic, it said in the annual report.
What About Cognizant?
As per the new developments, the exit saga at Cognizant continues as more senior leaders step down.
Now Jaideep Poondir, SVP in the banking and financial services vertical, Rajesh Balaji, SVP and global delivery head of enterprise application services practice, and Vinayambika Kidiyur, SVP and global delivery transformation head joined this exit saga.
Out of them, Poondir was a Cognizant veteran and Balaji, oversaw a $2-billion portfolio comprising Fortune 500 customers and led its SAP and other ERP practices.
While the other two VPs, Archana Ramanakumar, global delivery head of the life sciences business, and Vikash Gaur, global delivery head & digital engineering at Cognizant, have also resigned.
As per the report, Ramanakumar resigned in April, while others are serving their notice period.
Although, some of these leaders have delayed their exit to support Cognizant navigate the pandemic.
Why Would This Happen?
Previously, in October last year, Cognizant had announced its plan to cut about 7000 jobs in the next few quarters as the company started to restructure the organization.
Further, the company had shared its plan to remove a number of mid-to-senior employees, and redeploy about 5000 of those impacted.
Basically, the IT companies restructuring plans got a bit distracted by the COVID-19 pandemic as the firm now has an added and more urgent situation to deal with.
Cognizant will freeze most of its lateral hiring across all functions in India, with few exceptions in sales roles, given the subdued demand environment.
Also, Cognizant hinted that it would tweak its bench policies to the current environment.
So far, Cognizant’s focus on digitization and upskilling talent have been intact and it continues to deal with the crisis and the senior management exits.