Shocking Salary Secrets: The Unbelievable Truth About IT Pay Raises!

BENGALURU: Indian IT professionals are facing a diverse landscape of salary increments this time around, reflecting the relatively subdued business environment. Infosys and HCLTech have yet to implement any salary hikes. Typically, Infosys announces its salary hikes in June/July, becoming effective from April. However, this year, HCLTech is forgoing salary increments for mid to senior-level employees and has postponed increases for junior employees by a quarter.

Wipro has committed to providing a salary increase, but the announcement is expected in the third quarter (October-December), in contrast to last year when it was announced in September. Tech Mahindra has granted salary increments to junior and mid-level employees but has deferred increases for senior roles by a quarter.

TCS has provided average salary hikes ranging from 6% to 8%, similar to the previous year, with double-digit increases for top performers. Among mid-cap companies, Coforge, Persistent Systems, and LTIMindtree have implemented salary hikes.

These divergent actions by companies partially reflect the demand trends in the IT sector. Those heavily reliant on the banking and financial services industry may be more affected. Infosys has been negatively impacted by the slowdown in the BFSI sector and has lowered its growth forecast for the 2023-24 financial year to a range of 1% to 3.5%, down from the 4% to 7% forecasted in the first quarter.

If actual growth remains within this range, it will mark one of the lowest growth rates the company has experienced. Wipro’s revenue declined by 2.8% sequentially in constant currency in the June quarter. Wipro CEO Thierry Delaporte stated that businesses across nearly every industry have been cutting back on discretionary spending in response to the weaker macroeconomic environment. In the June quarter, Wipro also reduced its workforce by 9,000 employees.

When asked about HCL’s decision to defer salary hikes, CEO and MD C Vijayakumar, during the June earnings call, explained, “We have experienced a significant wage increase cycle over the past few years, and given the macroeconomic uncertainty and cost inflation, we made this decision this year.”

Coforge’s revenue in the June quarter increased by 2.7% sequentially and 18.4% year-on-year in constant currency. The company has provided a revenue growth guidance of 13% to 16% in constant currency for this year. LTIMindtree grew by 8.2% in constant currency in the June quarter compared to the corresponding period last year. Sequentially, growth remained flat at 0.1%.

Ramkumar Ramamoorthy, a partner at the growth advisory firm Catalincs, emphasized that salary hikes are primarily driven by company performance and individual contributions. Given the varying growth rates among IT firms, with some experiencing robust growth and others seeing more muted performance, salary hikes will naturally reflect these differences in sentiment. Nevertheless, irrespective of growth levels, all companies will continue to reward high performers and individuals with specialized skills.”

Ray Wang, CEO of Constellation Research, highlighted that the most significant increases in IT costs are associated with wage inflation and labor. He stated, “Depending on the IT services firms, their level of automation, and their contract bidding strategies, we can expect to see variations in salary hikes and attrition rates.”

Phil Fersht, CEO of HfS Research, pointed out that most service providers have made it a priority to slow attrition, reduce hiring, and reinvest in their existing workforce in India. However, outside of India, there is a mixed situation, with many top-tier service firms and Big 4 consultancies conducting layoffs. This has been a consistent trend throughout the year and is likely to continue into the year-end. Fersht noted that the Great Resignation outside of India has largely concluded, and he expects the services industry to experience double-digit growth by early 2024, driven by improved economic conditions and the AI revolution, which will inevitably lead to higher wage hikes.

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