Update on Satyam

MUMBAI: In an effort to bring back company’s lost kudos, the newly placed management of the troubled Satyam Computers has embarked on cost control measures. On Monday afternoon, it has decided to remove the variable part from employees’ total annual salary from April onwards. However, there is no reduction in fixed compensation.

According to the company HR norms, only 10 per cent of the total annual salary forms variable part for an employee irrespective of his level. Out of total variable pay minimum 25 per cent is guaranteed for the employees.

In an email message to its employees, the new CEO of the company Mr. A S Murthy said, “for the period Q3 and Q4 in FY09, only the minimum guaranteed amount (25%) of the variable pay will be paid to all associates (employees). Effective from April 01, onwards, the variable compensation policy will be withdrawn and stands suspended for all associates across Satyam.”

However, a revenue-linked allowance is being introduced effective from April 01. This will only apply to associates working in approved ‘billable’ roles and who are allocated to billable customer projects, the e-mail further states; meaning that billable associates who work under specific project awarded by company’s clients and also get paid by clients only, will get an extra allowance instead of any variable pay.

Through the allowance, an amount equivalent to 100 per cent of variable pay compensation policy (as applicable prior to its withdrawal and suspension) will be paid on a monthly basis.

Meanwhile, the task force (made for the revival of the company) recommended certain measures to the company board, which include maintaining a healthy balance between achieving aggressive goals, retaining talent, and lowering expenses etc.

“It is very important to balance income and expenses. This move will help us to optimize our people costs, thereby making us even more agile and financially competitive. I appeal to all of you for supporting this program wholeheartedly – it is vital to our success and your security,” mentioned Mr. Murthy in his email sent to the Satyam employees.