MUMBAI: Mid-tier software services firm MphasiS, which is owned by Hewlett Packard (HP), plans to replace its annual salary increment for its staff with a one-time bonus in order to ensure more variability in its employee wage bill and align it better with the company’s performance.

The bonus, termed as a recompense bonus, was introduced earlier this year, replacing increments, and is likely to be extended over next few years, said a senior company official on Tuesday.

“We have started innovating on the compensation model. We will not do salary increases… If the company is doing well, the employees will be compensated for it,” Elango R, chief human resources officer, MphasiS, told ET.

Unlike some top IT firms, which already have a variable pay structure in place, MphasiS had a predominantly fixed salary structure till 2009. By shifting to a one-time bonus, which is linked the employee’s performance and the company’s performance, MphasiS aims to make about 20% of its employee wage bill variable in the next three years.

In 2009, the demand slump and the need to conserve cash forced the management to reach out to employees, and ask them to forgo salary hikes, customarily given in March or April. Mr Elango said the company didn’t do any layoffs or salary cuts, and employees were promised they would be compensated when the company performed well. True to promise, MphasiS recently gave a recompense bonus of 10% and higher than that will be paid out in December.

MphasiS, which announced results for its fiscal ended October 2009 last week, posted a sharp 44% rise in revenue to Rs 4,283.3 crore and a two-fold jump in net profit to Rs 908 crore. The company also intends to resume hiring and will hire as many as 1,500 experienced professionals to fill open positions in the current quarter alone. In the October 2009 quarter, it had opted not to hire, as it had to absorb around 750 employees from AIGSS — the software captive of insurance firm AIG that it acquired. About 300 of the 750-employees of the captive were on the bench, and MphasiS has now deployed them on client projects.

While larger tech rivals hire employees and keep them on bench in preparedness for new projects, MphasiS has a just-in-time hiring policy. “Our hiring engine is highly tweaked. We don’t carry a huge bench,” said Mr Elango. The company had an 82% utilisation Read more…

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MUMBAI: Mid-cap companies, which pulled the plug on annual increments in the last financial year due to the global economic slowdown, are turning the clock back, as hopes of an economic recovery are fuelling the flight of talent. Many of them are offering mid-term increments and promotions, as they scramble to retain talent and build up new leadership teams to accelerate growth plans that were put on the back burner.

Mid-cap companies have a market capitalisation of between Rs 2,000 crore and Rs 11,000 crore that is arrived at by multiplying the company’s outstanding shares with the closing price of its share.

Drugmaker Lupin Pharma doled out mid-term increments in the range of 18-20% in September. “We want to retain our talent and develop new leaders, as we are expanding faster,” said a Lupin spokesperson. Lupin, with a market capitalisation of Rs 10,809 crore, is ramping up its global footprint.

Ditto with textile firms, which face a surge in domestic demand and rise in export orders that dried up after US consumers tightened their purse strings after the subprime crisis. “We have not given increments during the April-May period. We will soon announce mid-term increments of about 15%,” said Nitin Kasliwal, MD, S Kumars Nationwide.

Heads of human resource at various manufacturing companies admit they face pressure from business heads to increase Read more…

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BANGALORE: After software giant Wipro lifted freeze on promotions and hikes, although selectively, mid-sized technology firms like MphasiS-EDS, Sonata Software and Symphony Services are also planning to increase salaries and give bonus.

IT services firm MphasiS, which recently bagged new outsourcing contracts, has announced a recompense bonus for its staff which the company feels is possibly an innovative compensation model. “For good performers, the bonus can be 15-25% higher than the average pay hike,” MphasiS chief human resources officer Elango R said.

Recompense bonus will compensate for the salary freeze which was introduced in early 2009. “It is a one-time adjustment in the form of a bonus to reward employees for their commitment and contribution,” said Mr Elango.

The recompense bonus is guaranteed up to the third quarter and is linked to the company’s overall performance and that Read more…

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