Software giant Oracle, in India, is reported to have started the practice of linking payments to its 20,000 employees with the number of productive hours they spend in the office.

A report in the Business Standard said that the move has resulted in salary cuts for the company, ranging between 10 and 50 per cent across the board.

As a practice, the software industry bills its employees to the client as a "billable resource", based on the number of hours the employee is engaged in tasks that result in working for the client. If an employee is not assigned to any project, and is instead working on an internal project or is on the "bench", his salary comes from the company's kitty.

By this token, the report suggests that if an employee is billable for 15 days a month, he will be paid in full for that period, and for the remaining he would be paid a "nominal" amount. The report said that the company did not provide any response to an emailed query, except for declining to comment on "speculation or rumours."

The report also said that Oracle India has asked all non-billable employees to engage themselves in internal projects, failing which they can choose to explore "external opportunities". The report said that this programme was initially implemented for the employees of Oracle Financial Services Software, which was earlier known as i-Flex Solutions, and has now chosen to do a country-wide roll out across all its centres, even though it is yet to communicate the decision to its workforce in writing. It said that the company is trying to show this as a temporary phenomenon that is being taken as a step to avoid layoffs, and will see the usual compensation and allowances return once "things start improving".

According to its second quarter results that Oracle announced in December, the company has been able to stay profitable inspite of almost flat revenue growth; its net income fell half a percentage point to $1.27 billion and sales were up 5.5 per cent to $5.6 billion. Oracle's revenues from new software licences, which basically predict future sales, were down three per cent to $1.6 billion.

Reports said that after the acquisition of i-Flex, Oracle was planning to lay off almost all employees of that company, though the decision was scrapped after intervention of Oracle's management, as the layoff of all i-Flex employees could project a failure of the acquisition.

Reports also quoted unnamed sources as saying that Oracle India has scrapped employee travel costs and withdrawn free snacks and food. It is also reported to have asked freshers who were earlier issued offer letters for annual packages of Rs2.4 lakh to Rs2.5 lakh to consider lower packages of Rs1.5 lakh to Rs1.8 lakh.

In a report by the IT Examiner in December 2008, Allen Mathew, senior director of human resources at Oracle India had ruled out salary cuts, saying that the company ran its own recruitment agency, and therefore followed a "very different model".

The report said employees of I-flex had a different story, saying that vendors were in the process of being sent out, and senior employees in the C and D bands got salary cuts up to 15 per cent, and cancelled bonuses.

Transport charges, free snacks and free food for support staff that were earlier the norm have also gone, the report said, depicting a picture different from that projected by company management.