Reducing pay to its employees is not only demoralising/retrograding but also deters the prestige of the organisation like TCS. May be they are not getting targeted profit but they are getting profit as well as concluding MOUs after MOUs. The salaries could continue status-quo since the Company has already earnt more than the targetted profits in the past years and might be retaining the profits cumulatively besides reemploying the retained profits into the business. So retained profits can easily offset the temporary phase of Rupee appreciation and resultant short-incomes and it will not be prudent to tax the employees for meeting the targeted profits. Rather , while entering MOUs with US etc., it would be prudent and better that if internal inflation , FE - Rupee conversion fluctuations etc., could be encapsulated into a clause like " Exchange rate variance/variation (Escalation clause)" and charge the same from the Clients as being done by Govt.Sectors., who would not dare to reduce the pay of their employees on the basis of exchange rate variance. i.e. Price of prouduct to be delivered at a particular scheduled date on the basis of say Rs.40/$ rate and if it falls short of that, apply percentage of such fall say. 5 or 10% as the case may be and be collected from the client. Base conversion rate should be fixed at the time of entering MOQ not to have fiscal or legal complications at a later date . Thus volatility in currency can be met without taxing its own employees
RE:NOT A HEALTHY STEP!
by bagsnsave on Jan 31, 2008 05:26 PM Permalink
Its easy to preach biz economics rather then sale...better get in BD and get some business. Try to work in terms of target and pay the shareholders back. THen you will find that cutting 5% money is worthwhile then losing jobs
