Explained: Why IT majors like Infosys and TCS are cutting back on variable pay amid high attrition

India’s second-largest information technology (IT) firm Infosys has decided to reduce the average variable payout of employees to 70 per cent due to falling operating margins in the first quarter of 2022-23, according to people in the know.

Variable pay is the incentive companies pay to employees based on performance. Operating margin is the percentage of revenue that a company generates that can be used to pay the company’s investors (both equity investors and debt investors) and the company’s taxes. It is a key measure in analyzing a stock’s value.Before Infosys, other IT majors such as Tata Consultancy Services and Wipro deferred or reduced variable payouts for the April-June quarter after the margins came under pressure.