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IBM Offers US$1000 in Stocks to Employees in India, Mumbai

Computers - IT Software
Coming out of recession, nearly 100,000 IBM India employees are set to receive a $1,000 stock bonus each before June 16, the day when the Big Blue celebrates its hundred years of existence, in a move that will force other multinational and Indian tech firms to dole out more incentives to check attrition.

Sam Palmisano , chairman of IBM, is expected to visit Bangalore during the second week of February and trigger the company\'s centenary celebrations by addressing employees apart from holding other meetings with IBM\'s customers and scientists at Bangalore-based Indian Institute of Science, at least three people who have been invited to attend these meetings confirmed to ET last week.

In a year when TCS, Infosys and Wipro are preparing to fight the talent war, IBM\'s latest move to retain and woo new staff is expected to force many others to explore stock-based incentives apart from other perks. As these tech firms prepare to cope with rising demand for outsourcing, India has become the battleground to hire the most and retain the best performers.

\"Hundreds of thousands of IBMers, virtually all across the globe except those at the executive level will receive these stock bonuses,\" confirmed an IBM India spokesman.

IBM does not break out country-level employee numbers, but company insiders and experts tracking IBM said it employs nearly 1,28,000 staff in India. In India, barring the top 40 executives, all those on IBM rolls will get this bonus. In an email message to IBM staff across the globe this month, Palmisano said only non-executive IBM staff will be eligible for this bonus.

\"Our long-term success is the product of the work, innovation and superior execution of more than 400,000 IBMers.\"

\"In recognition of this, I am delighted to announce that all non-executive IBMers who performed consistently over the 2010 roadmap period will receive a grant of $1,000 of IBM stock, where permitted, which will vest at the end of the next roadmap, in 2015,\" Palmisano said in his email on January 21.

The eligible IBM employees will be offered what is called restrictive stock unit (RSU), an agreement under which the employees will be promised returns on the stocks awarded without actually owning them.

For instance, IBM\'s $1,000 stock bonus will translate into around 7-8 stock units each valued at around $159 on the NYSE as on Friday last week. And given that IBM\'s shares have more than doubled over the past five years, these employees are looking forward to reaping rich dividends.

\"Working for a company that\'s been around for hundred years is itself a bonus, but this is a great gesture, and it looks like nobody will be left out,\" said an IBM India employee based in Bangalore.

Not all of IBM\'s India staff will be eligible for this incentive, as the company has laid down several criteria.

\"Only those who are IBM employees as of December 31, 2010, are eligible — full-timers and part-timers included,\" the spokesman added.

Also, since these stock incentives will not vest until 2015, anybody quitting the company before June 16 of 2015 will lose the eligibility.

IBM employees at wholly-owned subsidiaries will be included. While most of IBM\'s 400,000 global workforce are eligible for this perk, the company\'s Indian operations, which now employs more staff than even the US, will be the single biggest beneficiary. In many ways, IBM\'s India operations have helped the company bring down cost of delivering services to top outsourcing customers such as ABN Amro and JP Morgan .

For the full year, IBM reported revenues of almost $100 billion and a record-free cash flow of $16.3 billion. Palmisano, according to people familiar with the company\'s strategy, attributes a lot of this growth to the company\'s operations in India.

\"In 2010, we achieved record profit and free cash flow, and delivered $99.9 billion in revenue, up 4% at constant currency, excluding the divested product lifecycle management (PLM) operations. Our pre-tax income was $20 billion — up 9%. Net income rose 10%. We generated $16.3 billion of free cash flow, up $1.2 billion, excluding Global Financing receivables. Gross profit margin rose for the seventh straight year. And earnings per share were $11.52, an increase of 15 percent, and the eighth consecutive year of double-digit EPS growth,\" Palmisano said in his email to employees.

IBM\'s latest bounty for its staff is set to trigger a rethink among Indian tech firms already planning promotions and other incentives to keep their payroll intact.

Coming out of last year\'s recession when these tech firms trimmed their payroll and tightened perks to cope with the crisis, the top three software exporters alone plan to add nearly 100,000 new staff in 2011, much higher than just 20,000 they added last year.

While TCS, the country\'s biggest software exporter plans to double the number of promotions this year, both Infosys and Wipro are set to dole out at least 100% variable pay along with double-digit salary hikes to their staff in 2011. For the first time since 2005-2007 when the industry offered 13-15% salary hikes, double-digit wage inflation is set to make a comeback next year.
Source : TOI
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