Infosys employees get Q1 variable pay; average payout remains at 70%

Infosys has paid an average variable bonus of 70% to eligible employees for the first quarter of FY27, maintaining the same payout level as the previous quarter even as the company navigates a slower demand environment and trims the upper end of its annual growth guidance.

According to a report by Financial Express, the Q1 payout ranges between 65% and 80%, depending on employee performance ratings. The payout is also reported to be 10 percentage points lower than the corresponding period last year, reflecting the cautious compensation approach being adopted across parts of the IT services industry.

The development comes at a time when India's second-largest IT services company is balancing investments in AI-led growth with a challenging macroeconomic environment that continues to influence client spending.

Performance ratings determine payout levels

The variable pay distribution for the April-June quarter was linked to employee performance ratings.

According to Financial Express:

• Employees rated "commendable" are expected to receive close to 80% of their variable pay.
• Employees rated "met expectations" are expected to receive around 65%.
• The average payout stands at 70% across eligible employees.

The company had also paid an average variable bonus of 70% in Q4 FY26, indicating no quarter-on-quarter change in the latest payout cycle.

However, payouts remain below levels seen during parts of the previous financial year. In December, Infosys reportedly paid an average bonus of 85%, the highest level in recent quarters. Employees had also received average payouts of 80% and 75% during the first and second quarters of FY26, respectively.

Infosys did not respond to Financial Express' request for comment on the latest payout figures.

Variable pay trends reflect broader industry caution

The latest payout cycle highlights how large IT services firms continue to manage compensation costs amid an uneven recovery in technology spending.

Over the past year, several major IT employers have adjusted performance-linked compensation structures, moderated payouts, or redesigned incentive programmes as clients delay discretionary technology projects and remain cautious on spending.

The trend has extended beyond Infosys.

Tata Consultancy Services (TCS) revised its employee variable pay structure earlier this year. Part of the payout was reportedly shifted to an annual cycle, while a portion of monthly performance-linked compensation was tied to attendance requirements.

Financial performance remains mixed

The employee payout announcement follows Infosys' first-quarter FY27 results, which showed revenue growth but weaker profitability.

Key Q1 FY27 numbers:

• Revenue rose 3.9% sequentially to Rs 48,211 crore, up from Rs 46,402 crore in the previous quarter.
• Net profit declined 8.6% quarter-on-quarter to Rs 7,769 crore, compared with Rs 8,501 crore in Q4 FY26.
• The company narrowed the upper end of its FY27 revenue growth guidance.

Infosys now expects constant currency revenue growth of 1.5% to 3% for FY27, compared with its earlier outlook of 1.5% to 3.5%.

The company, however, maintained its operating margin guidance of 20% to 22%, signalling confidence in its profitability management despite demand uncertainty.

Salary hikes to continue in phases

Alongside variable pay, Infosys is also moving ahead with annual compensation revisions.

The company has indicated that salary hikes for employees will be implemented in two phases, with the first tranche scheduled for October. Senior employees are expected to receive their compensation revisions and related payouts in January.

Last year, Infosys rolled out salary increases in the range of 6% to 8% for its India workforce.

Compensation remains in focus as IT sector recalibrates

The latest variable pay payout underlines the balancing act facing India's IT services majors.

Companies continue to reward performance and retain talent, but are doing so within tighter business conditions and slower client spending cycles.

With revenue growth expectations remaining modest and AI-led transformation reshaping client priorities, compensation policies are likely to remain closely watched by employees across the sector in the months ahead.