Top executives of Mumbai-based Tata Consultancy Services have taken pay cuts for the financial year 2020 as the information technology (IT) services firm braces for Covid-19’s impact on business.
According to TCS’ annual report, CEO, CFO, COO and company secretary among others have taken smaller pay packages for FY 20. The pandemic is expected to erode both revenue and net profit of TCS in the current financial year.
TCS CEO and managing director Rajesh Gopinathan took home Rs 13.38 crore for FY 20, as compared with Rs 16 crore that he took during FY 19, a decline of 16% year over year. Gopinathan, who took over as CEO and MD in February 2017, received a commission of Rs 1o crore, the largest component in his package, a salary of Rs 1.36 crore, perquisites of Rs 1.29 cr.
"The remuneration for FY 2020 is lower than FY 2019 in view of the economic conditions impacted by the COVID-19 pandemic. The directors have decided to moderate the remuneration for this year to express solidarity and conserve resources," TCS said in its annual report.
TCS COO N Ganapathy Subramaniam remuneration for FY 20 stood at Rs 10.12 crore, as against Rs 11.6 crore in FY 19, a decline of 13% over the previous financial year. His compensation for the financial year ended March 2020 included a salary of Rs 1.29 crore and a commission of Rs 7 crore.
TCS chairman N Chandrasekaran, who is also the chairman of the board of Tata Sons, the majority owner of TCS, had abstained from receiving commission from the IT services major and took home only Rs 4.2 lakh as sitting fees for board meetings.
"The sharp shift in consumer preferences will force enterprises to significantly accelerate their digital transformation initiatives. They will also invest heavily in building resilience at every level, on the front-end as well as in back-office operations," Chandrasekaran said in the annual report.
He added that TCS' strong relationships with customers and partners, scale, a diversified business mix, and strong financials will help the company to weather the Covid-19 storm.
"We will be able to take advantage of opportunities that come up during the downturn to acquire new capabilities and gain market share. In the post-pandemic world, technology will play an ever-larger role in helping enterprises adapt to the new normal and differentiate themselves," Chandrasekaran added.
The country's largest software exporter expects Covid-19 to be just as bad for business as the global financial crisis of 2008. The company’s exports constituted 94% of its annual revenue of $22 billion (or Rs 1,56,949 crore) for FY 20. It reported a 7.2% growth in annual revenue, which is lower than some of its peers like Bengaluru-based Infosys and HCL Technologies.
"All major economies have been brought to a standstill. The impact has been very fast and widespread, and the next few months will be very difficult for everyone, individuals and organisations. On the other hand, the economic downturn is not due to any structural problem in any industry, but due to an externality that has hit the pause button on all economic activity. Whenever that externality is removed, an equally quick recovery should follow," Gopinathan said in the note to shareholders in the annual report.
The company CFO V Ramakrishnan took home a pay package of Rs 3.98 in FY 20 as compared with Rs 4.13 crore for FY 2019, and company secretary Rajendra Moholkar took home Rs 1.39 crore in FY 20 as against Rs 1.4 crore he took home in FY 19.
During the financial year, non-managerial staff had seen salary hikes at 7.7%, after accounting for promotions and other event-based compensation revisions. While employees outside of India received hikes in the range of 2-6%, depending on the respective countries' average salary hikes, the annual report said.
The $190 billion IT industry is going through a tough financial year with a likely decline in revenues for the first time ever.