Infosys' former Chief Financial Officer TV Mohandas Pai called co-founder Narayana Murthy's suggestion that senior executives must take pay cuts to curb layoffs a “motherhood statement”.
It is easy for people to stand up in public and make broad statements on pay cuts because they are the beneficiaries of the system, Pai, a former board member of Infosys, told BloombergQuint in an interview. “For Murthy, it is very good to make statements because Murthy and his colleagues own 13 percent of the company. What they lose is very small salaries and get (it) back in terms of dividends and value in the stock,” he said.
Last week, Murthy had asked senior executives to take pay cuts to stop layoffs amid reports of several employees losing jobs at Indian software services companies. The job losses have been largely attributed to tougher visa norms in the U.S. and automation.
There is already a variable component in pay and senior executives' compensation comes down if the company's performance is poor, he said.
Murthy's family office didn't immediately respond to BloombergQuint's email.
Currently the chairman of Manipal Global Education, Pai called large-scale job losses in the IT sector a “hype”. The numbers are grossly exaggerated based on some media reports and by head-hunting firms that are looking to drive business for themselves, he said.
Around 4.5 million people are employed in the industry and the top five IT companies employ nearly 1.2 million, Pai said.
At 12 percent attrition, nearly 145,000 people leave every year. At the same time, the top IT companies are growing at 7-9 percent. Meaning, they have to increase the head count by 3-4 per and expand. It is a cycle we go through every 3-5 years.Mohandas Pai To BloombergQuint
There's not need for alarm and only those not performing well are being asked to leave after being put on a personal improvement plan, he said. However, global growth is slower due to political reasons, due to which growth rates will come down and impact employment generation, he said.
Pai said that automation has't had much impact on jobs. In the U.S., unemployment in the IT sector is just 2.5 percent. Which means, shortage of 600,000 people, and “if there is hiring in the U.S., how can we say that there are layoffs in India,” he said.
He said a union of IT employees will be destructive. “The 12 percent attrition in the IT sector is low as compared to the 15 percent attrition where people change jobs every 3-4 years. Do you think they need any union or protection?” he asked.
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