Several IT companies are handing out small increments, postponing raises, while others are simply choosing not to give pay hikes at all this year, according to a report by the Economic Times (ET). TCS has handed out an average hike of six to eight per cent, Wipro has postponed announcements to the third quarter of the financial year, and Tech Mahindra will be deferring the salary of senior-level employees.
Typically, Infosys announces salary hikes in June/July, taking effect from April. However, Infosys and HCLTech have opted not to implement raises at all, according to a report by the Times of India (TOI). HCLTech will skip increments for mid to senior-level employees while junior employees' raises will be postponed by a quarter.
Wipro, too, has chosen to announce its salary increments, if any, in the October to December quarter, whereas last year, the announcement came during September.
TCS has provided six to eight per cent, while top performers received increments in the double-digits. This was consistent with last year's increments at the firm.
Among mid-sized IT firms, Coforge, Persistent Systems, and LTI Mindtree have also announced employee salary hikes.
The variance in decisions made by prominent IT companies reflects the industry trends and the sectors where demand is particularly high. Those that are heavily operating in banking and financial services (BSFI) were impacted by the slowdown in the industry. For example, Infosys has lowered its growth forecast for the financial year 2023-24 to a range of one to 3.5 per cent, down from earlier forecasts of four to seven per cent.
Wipro reported a 2.8 per cent sequential decline in revenue in the June quarter. In February of this year, the firm had cut pay packages of new hires by nearly 50 per cent from what had been initially offered. They also slashed 120 jobs in "an isolated incident" in the United States.
According to ET, CEO Thierry Delaporte stated that businesses across various industries have been reducing discretionary spending in response to the weaker macroeconomic conditions.
HCL CEO and MD C Vijayakumar reiterated this to TOI, stating, "We have had a good wage increase cycle over the last couple of years, and given the macro uncertainty and cost inflation, we made this decision this year."
Meanwhile, Coforge reported a 2.7 per cent sequential increase in revenue for the first quarter and a revenue growth guidance of 13 per cent to 16 per cent in constant currency for the year. LTI Mindtree also reported 8.2 per cent growth in constant currency compared to the same period last year.
Industry experts emphasised that salary hikes are influenced by company and individual performance, as well as the importance of niche skills and resource criticality, added the ET report. Moreover, the divergence in growth among IT players and the level of automation is expected to result in a mixed bag of salary hikes.
Most Indian service providers may aim to slow attrition and hiring while reinvesting in existing talent. However, the situation is mixed outside of India, with top-tier services firms and Big 4 consultancies implementing staff layoffs. Industry veterans anticipate the services industry to experience double-digit growth by early 2024 due to improved economic conditions and the AI revolution, which may result in higher wage hikes.