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Cognizant may hike variable pay component in move to lower costs: Report

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Cognizant, the Teaneck, New Jersey-headquartered software services major, may increase the variable pay component in its employees’ compensation structure, the Economic Times reported on Tuesday, citing sources in the know. The move is being mooted as the IT services firm moves to cut costs and possibly shore up margins, added the report.

The company is restructuring itself under the new CEO, Brian Humphries, said the report. This includes reducing the management layers and rethinking its sales and business strategy. Further, according to the report, reworking the compensation structure is another measure in a roadmap aimed at making the company ‘fit-for-growth’. Earlier, Humphries had said that changes to compensation were being considered, added the report.

A source with knowledge of the deliberations told the financial daily that at present, the variable pay was a smaller component of compensation. However, the idea is to increase the variable pay to actually reward growth and contribution. “It could be 35 per cent or more in mid-levels, but it won’t be significantly higher for freshers, who are on a low base,” added the source.

The financial daily reported that a spokesperson said, “Aligning compensation to key strategic focus areas like digital is a critical enabler for us and this is a process we are being very deliberate about and spending significant time and effort working on.”

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