How fair is Infosys’ silver jubilee bonus?
Posted by Ashish on August 2nd, 2006
It’s difficult to miss the article in the various newspapers that Infosys announced a special bonus of Rs. 126 crores for its employees to mark the occasion of its silver jubilee.
From the article:
The Silver jubilee celebrations won’t be the only reason for the Infoscians to cheer. In addition to the celebrations that mark 25 years of the IT giant’s existence, all the employees of the company are set to receive a substantial bonus. A princely sum of Rs 126 crore will be distributed among its 58,000 employees.
If you just think about the figure of 126 crores (US $30 million) outside the context, it sounds huge. But let’s do some calculations: (Assumption: US $1 == Rs. 42.00)
126 crores for 58000 employees == Rs. 21724 (US $517) per employee.
So basically Infosys is handing over, on an average, just above $500 to each of its employee. Of course, those who have been in the company for a longer duration will get more than the average while the others will get even less than that (Any company will do this - you will always get rewarded for being loyal). I am sure their average annual bonus will be more than this amount.
Let’s take a look at it from another perspective. Infosys also announced its quarterly results for April-June quarter and its revenue expanded 38.7% to $660 million from $476 million. Assuming $660 million as revenue and 30% profit, the net profit for the quarter is $198 million - which averages to ~ US $66 million per month.
When the monthly profit is US $66 million, a disbursement of just $30 million to mark 25 years of existence seems abysmally low to me. I definitely expected a lot more from Infosys. So, yes, they did a pretty good job at announcements with media showering praises on them - but I think that the Infoscians deserved a better deal.
Or did I miss anything in my calculations?
With Infosys still being the most fair company amongst the big names when it comes to treatment of their employees, it’s not surprising to see people at these companies getting frustrated. I can only say, with the risk of making a very general statement - “You either offer some good, challenging and satisfying work OR you offer good money OR you do both; what is the point in offering none?”
Technorati Tags: Infosys, Silver Jubilee, Silver Jubilee Bonus
August 2nd, 2006 at 12:40 pm
New look and feel of ur blog is realy cool..much more easy to read’;)’..
August 2nd, 2006 at 12:56 pm
INFY is trying the same old mgmt (proven) technique that MSFT and GOOG have been hugely successful with - conserve cash, and use stock as the long-term retention and compensation incentive. GOOG and MSFT have both explicitly stated that their cash comp is to be in teh 66% percentile. the philosophy is that cash is a one-time deal, stock keeps people focused on a future potential reward and therefore less likely to switch to another company just for a higher cash salary.
or did I miss the point of the post and a subtle recruiting tactic to lure INFY folks to Tekriti?
August 2nd, 2006 at 5:38 pm
Thanks Nitin - I also think that this template makes best use of the real estate available.
Murthy (it might make a lot more sense to write your own name
) - I didn’t know that Google has the same philosophy. At least they don’t do it in India and I have a few friends in the Google US also whose salaries dont justify that claim. But this is really not about cash vs stocks thing. This is about bonus and that too a once in 25 year bonus. And, BTW, Infosys no-longer gives stock-options (it doesn’t make sense anyways).
And, yeah, I don’t mind if people from Infosys want to work at Tekriti - the criteria remains the same for everybody. Honestly - I was not giving any subtle hints - I am very open to saying that it’s a lot better (in all respects) to join a startup than an ‘established company’.
I guess I have made those claims more than a few number of times in the company and at my blog also.
August 2nd, 2006 at 9:31 pm
“it’s a lot better (in all respects) to join a startup than an ‘established company’.”
Then why did u go to work at Microsoft instead of joining a startup immediately after graduation?
I have no intention to offend u, but just curious know to know if the circumstances were different in those days or if it was some other reason that prevented u from joining a startup.
August 2nd, 2006 at 10:13 pm
Ahmed - how I wish that I had somebody to guide me for that. And unfortunately I didn’t have the maturity to understand it then myself. If I had found people with the kind of work a lot of different startups (Tekriti is one such company) are doing now and the passion that the various people have, I would have never joined Microsoft.
Not offended at all, I am glad that you asked. I will be even more glad if I can inspire more smart people to join startups - that is the hope I have and then only we can create another Microsoft, Google or Yahoo.
The fun is not in joining Microsoft, the fun is really in creating a Microsoft.
August 3rd, 2006 at 1:23 am
Ashish, I just want to say that I hope you will achieve tremendous success with Tekriti.
I have a lot of things to say but, I dont want to do any big talk, without myself achieving anything laudable.
August 4th, 2006 at 11:57 am
Hi Ashish…I have a question now….U said that start ups are better that established companies…and i very well agree to ur point…
but do u realy think creating another Google or Microsoft would be fun…ya as an entrepreneur it would be no doubt…but just think as a Techie…dont u think i a step to create another Google or Microsoft u’ll be able to maintain the same creativity in the work and avoid doing the same monotonous work over n over again…Weren’t these the reasons u left Microsoft…
dont u think this will result in lossing up the freshness of a startup????
August 4th, 2006 at 4:48 pm
Nitin Bajaj:
“So, why do u want to startup?”. Most budding entrepreneurs dont have a clear answer to this question and some others come up with immature answers like “my goal is to kick ass!” or like what u have just said “to avoid monotonous work” e.t.c. These kind of answers are just pieces of a bigger reason to start a startup.
And I believe the bigger reason is “to create/invent great products that can be of more benefit to customers than what the existing companies are providing”.
In any organization, there are fundamentally two questions that are being handled:
“What to do” and “How to do”. The founder of a company is the guy who has the answer to the first question - a vision of what is to be done next. Then comes the execution part, where the second question ‘how to do?’ is solved.
If u are working in an established company or a startup, u will be predominantly solving the ‘how to do’ part. If you think u have a better answer to ‘what to do’ then its time u should start ur own company. If u are working in a company, and u think “heck! why are these guys doing X, they should be doing Y”, and u strongly believe that doing Y is more important than doing X, then its time u go ahead and startup ur company.
Once u startup with this principle in mind, u wont get frustrated or upset when the work gets boring or monotonous because now ur primary reason of starting up is not to have fun but to express people what u feel is the right way of doing things and create better products and a better organization.
August 5th, 2006 at 12:36 am
Good question, Nitin. And an equally good answer by Ahmed.
A really short answer is: “Yeah, when it becomes Microsoft, it might lose the freshness but you can be part of it when it is still in the process of becoming another Microsoft.”
On a more serious note - I think that everybody thinks that when they become big, you will have a better way of doing things and keep the startup culture alive. But realistically speaking, I don’t deny that it’s very difficult to maintain the same energy as a startup. All those companies who are big now were small at some time - so the people there are smart too. And I don’t even want to differentiate b/w an entrepreneur and a techie. Anybody who joins a startup is an entepreneur - you have to be in that mindset to join a startup.
The thing that I was stressing is that the bumpy rides are a lot more fun that the ones where the vehicle has either stopped or going at a very slow pace. A startup is a sexy new sports car (or call it a bike, if you prefer) whereas an ‘established company’ is an ambassador or a flat 4-door sedan.
The fun is never in fighting a battle where you are sure to win and just need to complete the formalities and it won’t even make a difference if you are not there; the fun is where there is a bit of unpredictability and odds are stacked against you but you still see rays of hope and follow your heart to emerge a winner.
I see that and I hope that everybody who is with us see that too.
August 5th, 2006 at 3:41 pm
While we are drawing analogies.. I would say working at a startup is more like riding a glider-plane or a single engine Cessna in clear weather and enjoying the view vs. flying in a boeing 747 and looking out the window.
But when the clouds start to gather its time for most to land. Not everybody is cut out for riding out a storm.
So, the question really is “Can you read the weather?”.
August 5th, 2006 at 8:22 pm
Infy truly deserves a pat on the back on its silver jubilee for being a text book example for wealth creation quite ethically.
August 7th, 2006 at 5:26 pm
I can feel what Ashish mean to say ..”be part of the journey, while they are creating the next GOOG/MSFT/INFY”..I think more Indian professionals should take the calculated risk and opt for “startups”. The advantage of hierchy-less company, space to show your creativity, leadership, technical skill and also be part of a “passion” to build a world-class organization is something one hardly gets in established companies.
However the goal can be to create unique path and learn some bit from companies like Infy but to make a truly unique masterpiece.
August 8th, 2006 at 12:07 pm
Nice analogy, PK
But I also believe that life will give you another chance even if you erred in reading the weather the first time - unlike single engine Cessna. Isn’t it?
Kishor - I agree. Infy has definitely given a lot to India and have been one of the most ethical companies in India (even though you can’t be 100% ethical). They have my respect but I feel that it’s no longer the fun place it used to be 10 years back.
Santosh - I agree - learn from everybody but have your own uniqueness.
August 15th, 2006 at 4:41 am
May be I am taking the discussion in a different direction but I am intrested in news like As a mark of its 25th Anniversary Infosys is doing this as its due share to the Indian community
A well dedicated effort to support the textile workers in Benaras
A dedicated effort to create awareness among farmers about the crops they can bank on based on the environmental conditions.
If I start these then they will be many. Being a large company with such a pulse among the public will give Infosys an advantage of shaping the future of not only Infyians but also the rest of the people.
I believe that creating a success by selecting 2 out of 100 and establishing the wealth should pave the way so that the rest of 98 can also be taken for advancement by the dedicated effort of people guiding the first two.
The reason for this hope is that companies like Infosys is the conglemeration of some of the bright brains of India under one roof.
Imagine the results once these are directed in a direction which can benefit one and all…
May be I am not ware of the social activities of Infosys but this is just a thought…
August 23rd, 2006 at 4:25 pm
It is officially out today!
Cut off date for the Bonus - July 31 2006
- Employees completing less than 1 year - Rs 2083 * no of months
- Employees completing between 1 and 3 years - Rs 25000 fixed
- Employees completing above 3 years - fixed amount per year based on personal band (Band A - Rs 1500, B - 3000, C - 4500, D - 6000, E - 12000)
September 17th, 2006 at 7:00 pm
Can someone tell me about how banding in infosys works?