Weeks After IT Bloodbath Over Results, Accenture Overhauls Salary Hikes

Just a few weeks after the "bloodbath" in tech stocks following lower-than-expected Accenture earnings, the tech giant is in the news again. The global IT services company has now changed the way it gives salary hikes to employees. It will now split annual pay increases into two parts instead of adding the entire raise to an employee's fixed salary.

The move is designed to ensure that more employees receive salary hikes, even as the company keeps a close watch on its long-term payroll costs. 

Under the revised compensation model, half of an approved salary increase will be added to an employee's base pay. The remaining half will be paid as a one-time lump-sum amount during the company's main June compensation cycle.

For instance, if an employee is approved for a 4 per cent raise, only 2 per cent will become part of the monthly base salary. The remaining 2 per cent will be paid separately as a one-time cash payout. Follow Markets Live Updates

The new structure was communicated through an internal memo reviewed by multiple media organisations.

Why Accenture Is Making The Change

According to the company, the revised approach allows it to recognise a larger number of employees without significantly increasing fixed salary costs.

Accenture said many employees value immediate cash payments. Splitting the increment between permanent salary and a one-time payout helps strike a balance between rewarding staff and managing costs in a difficult business environment. 

The company had offered only limited salary increases to employees who stayed in the same role during the previous compensation cycle. This year, it is widening the pool of employees eligible for such hikes by adopting the new payout structure. 

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Promotions Remain Unaffected

However, the revised formula does not apply to promotions.

Employees moving to a higher role will continue to receive the entire salary increase as part of their base pay. The company has also clarified that the one-time lump-sum payment is separate from its annual performance bonus, which is paid during the December compensation cycle. 

Speaking on the move, Abhishek Bhilwaria, Partner at BhilwariaFinserv, said, "This approach allows companies to recognise and reward a broader segment of their workforce today while simultaneously managing long-term fixed payroll compounding and operational risk."

What It Means For Employees

The new model gives employees a larger amount of cash immediately. However, because only half of the increase becomes part of the fixed salary, the long-term impact on future increments and retirement-linked benefits may be lower than under the earlier system.

The policy has sparked discussion among employees, with some welcoming the immediate payout while others questioning its effect on future salary growth and taxation. 

Accenture employs more than 7.8 lakh people globally, including around 3.5 lakh in India, making the change one of the biggest compensation policy revisions in the IT services sector this year.