Satyam Computer Services [Get Quote] will scrap the variable pay policy and introduce a revenue-linked allowance from next month for a section of associates in a bid to minimise cost.

In an e-mail to its employees, CEO of the company A S Murty said, "A revenue-linked allowance is being introduced effective April 1, 2009. This will only apply to associates working in approved 'billable' roles and those who are allocated billable customer projects."

Billable projects are the one where the man-hour is billed as per specified milestones.

Murty said the variable compensation policy would be withdrawn from April 1 for all associates across Satyam.

However, the fixed compensation would continue undisturbed, he added.

In the e-mail, Murty said the company is focusing on two critical issues - rebuilding the organisation and optimising costs. "It is very important to balance income and expenses, and we have to pay close attention to this issue," he added.

However, for the third quarter ended December 31, 2008 and the fourth quarter ended March 2009 only the minimum guaranteed amount (25 per cent) of the variable pay would be paid to all associates.

Satyam have variable pay as part of salary (since July 2006) and it depends on organisation/circle and business performances. Variable pay varies between 10 and 30 per cent of (an) individual's total package offshore and between 5 and 15 per cent onsite.

However, of the variable component 25 per cent is guaranteed pay and the rest is performance-oriented.

"These are demanding and difficult times which require hard decisions and unavoidable measures. Maintaining a healthy balance between achieving aggressive goals, retaining talent, and lowering expenses, is key," Murty said. Referring to the recommendations of the Task Force, he said the measures announced earlier addressed only a part of the expenditure.

"In a service industry like ours, the primary costs are people-related and we are addressing that part. All of us, irrespective of bands and business categories, will have to contribute towards this financial restructuring," he added.