Infosys could be looking at some seriously distended expenses, thanks to a bunch of highly overpaid employees. Apparently, the company has over 1,800 employees abroad who are getting paid over 1 crore. And the number of oversea hires the company has made is likely to only go up.
All this leads on to believe that the company’s expenses may be in serious danger of exceeding a lot. After all, only last month Infosys announced that it was going to hire 10,000 new employees in the US, with some being new and others being more experienced hires. These many hires and that too in the US are out of the ordinary practice, and is said to have been brought by the recent wave of protectionism in the US.
And it is more expensive to hire employees outside the country. Consider this, Infosys employs over 150,000 people in India. However, only 50 people merited receiving a salary of over one crore. Abroad on the other hand, over 1,800 employees received 1 crores or above out of merely 48,000. That is a huge discrepancy, even while taking the effect of different currency into account. And the market average for these countries is higher as well.
Speaking on the topic, Peter Bendor-Samuel, CEO of IT advisory firm Everest Research., said:
The firms are trying to address this to some degree by hiring out of college and these wages will be lower and more in line with the $70,000 for first year workers. But the wages will quickly climb to the market average of $125,000-$150,000 (Rs 80-96 lakh) as these employees gain experience.
Speaking in response to ET, Infosys said:
Infosys’ hiring overseas in FY17 was similar to FY16, and the average salaries in both years have been consistent. Any potential impact arising out of our recently announced US recruitment strategy has already been factored into our margin guidance.
One thing is certain though, the increasing pressure on these IT firms, of increasing their headcount in the US is going to have a very tangible effect on their expenses. Infosys, Wipro, TCS are all going to be looking at new hires within the US — hires that will derive a significantly larger salary from the company.
And while the average annual salaries for IT professionals in the US hover around INR 45 lakhs in the US, the competition among Indian IT firms — to buy them in a bid to increase their US headcount — is likely to push the average even further up.
Salaries are a recurring costs and there are estimates that this average could be pushed all the way up to 83 lakhs if the current administrations H-1B proposals are accepted– in which case, salaries and other compensation related expenses will suddenly start having a much more tangible effect on the company’s balance sheet.