Accenture India to skip pay hikes and reduce promotions, bonuses
What's the story
Accenture has made the tough call to hold off on pay raises for its employees in India and Sri Lanka in 2023, according to an email to employees from Managing Director Ajay Vij, as reported by Moneycontrol.
This excludes legally required increases or those tied to critical skills.
The decision was made in response to a difficult climate for the industry, as Accenture doesn't foresee a boost in discretionary spending or an improved macro environment.
Details
Challenging macro environment and lower growth
In his email, Vij explained that Accenture faced a more challenging macro environment than expected at the start of FY23, leading to slower growth than anticipated.
The company, which operates on a September-August fiscal year, posted mixed results last quarter and offered the second-lowest start-of-year guidance for FY24 in the past 16 years.
Vij stressed the importance of keeping payroll in line with market trends to maintain a healthy business and competitive service pricing.
What Next?
Significantly lower individual performance bonuses
Vij's email also touched on individual performance bonuses, stating that while they will still be paid out based on contributions, they will be significantly lower than last year.
He clarified that global annual bonus funding depends on company performance, and given Accenture's recent results, employees should brace for smaller bonuses compared to the previous year.
This move mirrors similar actions taken by Indian counterparts like HCL Technologies and Wipro.
Insights
Promotions severely reduced at Accenture
Lastly, Accenture is cutting back on promotions. Promotions up to the Associate Director (Level 5) will still be awarded in December as planned but will be fewer than last year.
For Levels 1 through 4, promotions have been pushed back to June 2024.
The email also revealed that promotions to and within Managing Director and appointments to Senior Managing Director are on hold until June 2024, allowing the company time to regain growth and make promotions more affordable.