BENGALURU: Indian IT employees have had a mixed bag with increments this time around, reflecting the softer business environment. Infosys and HCLTech have not rolled out hikes yet. Infosys normally announces the hike in June/July, and it’s effective from April. HCLTech is skipping increments for mid to senior employees this fiscal and has deferred hikes to junior employees by a quarter. Wipro has committed to giving a salary increase, but the same would be announced sometime in the third quarter (October-December), as against September last year. Tech Mahindra has given increments to junior and mid-level employees, but has deferred the same for senior roles by a quarter.
TCS has given hikes of 6% to 8% on an average, about the same as the year before, with double digit hikes to top performers. Among the midcaps, Coforge, Persistent Systems,, and LTIMindtree have rolled out salary hikes.
The divergent moves by companies is partially reflective of the demand trends in IT. Those that depend heavily on the banking and financial services industry are perhaps impacted more. Infosys has been impacted adversely by the BFSI slowdown and has lowered its growth forecast for the 2023-24 financial year to between 1% and 3.5%, down from 4% to 7% that the company had guided for in the first quarter.
If the actual growth stays within this range, it will be one of the lowest growth rates the company has seen. Wipro’s revenue declined 2.8% sequentially in constant currency in the June quarter. Wipro CEO Thierry Delaporte told TOI then that in almost every industry, businesses have been reducing discretionary spends in response to the weaker macro environment. Wipro had also reduced its headcount by 9,000 in the June quarter.
Asked why HCL deferred hikes, CEO and MD C Vijayakumar in the June earnings call said, “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.”
Coforge’s revenue in the June quarter was up 2.7% sequentially and 18.4% year-on-year in constant currency. The firm has provided a revenue growth guidance of 13% to 16% in constant currency for this year. LTIMindtree grew 8.2% in constant currency in the June quarter compared to the corresponding period last year. Sequentially, growth was flat at 0.1%.
Ramkumar Ramamoorthy, partner at growth advisory firm Catalincs, said wage hikes are driven largely by company performance and individual performance. “In some cases, niche skills and criticality of resources may dictate the contours of wage hikes. Given that there is a divergence in growth among IT players—some growing at a decent clip and others seeing muted growth—wage hikes will also be a mixed bag, reflecting that sentiment. Having said that, irrespective of the level of growth, all companies will continue to reward their high performers and those with niche skills.”
Ray Wang, CEO of Constellation Research, said the largest increases in IT costs come from wage inflation and labour. “Depending on the IT services firms, the level of automation, and how they have bid contracts, we will continue to see a variation of hikes as well as attrition rate,” he said.
Phil Fersht, CEO of HfS Research, said most service providers have made it a priority to slow attrition and slow hiring and reinvest in the existing people in India. “However, outside of India, it is a mixed bag with most of the top-tier services firms and Big 4 consultancies laying off staff. This has been a constant situation all year, and it will likely continue throughout the year-end. The Great Resignation outside of India is well and truly over. We expect the services industry to pick up double-digit growth by early 2024 driven by better economic conditions and the AI revolution, which will surely lead to higher wage hikes.”
TCS has given hikes of 6% to 8% on an average, about the same as the year before, with double digit hikes to top performers. Among the midcaps, Coforge, Persistent Systems,, and LTIMindtree have rolled out salary hikes.
The divergent moves by companies is partially reflective of the demand trends in IT. Those that depend heavily on the banking and financial services industry are perhaps impacted more. Infosys has been impacted adversely by the BFSI slowdown and has lowered its growth forecast for the 2023-24 financial year to between 1% and 3.5%, down from 4% to 7% that the company had guided for in the first quarter.
If the actual growth stays within this range, it will be one of the lowest growth rates the company has seen. Wipro’s revenue declined 2.8% sequentially in constant currency in the June quarter. Wipro CEO Thierry Delaporte told TOI then that in almost every industry, businesses have been reducing discretionary spends in response to the weaker macro environment. Wipro had also reduced its headcount by 9,000 in the June quarter.
Asked why HCL deferred hikes, CEO and MD C Vijayakumar in the June earnings call said, “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.”
Coforge’s revenue in the June quarter was up 2.7% sequentially and 18.4% year-on-year in constant currency. The firm has provided a revenue growth guidance of 13% to 16% in constant currency for this year. LTIMindtree grew 8.2% in constant currency in the June quarter compared to the corresponding period last year. Sequentially, growth was flat at 0.1%.
Ramkumar Ramamoorthy, partner at growth advisory firm Catalincs, said wage hikes are driven largely by company performance and individual performance. “In some cases, niche skills and criticality of resources may dictate the contours of wage hikes. Given that there is a divergence in growth among IT players—some growing at a decent clip and others seeing muted growth—wage hikes will also be a mixed bag, reflecting that sentiment. Having said that, irrespective of the level of growth, all companies will continue to reward their high performers and those with niche skills.”
Ray Wang, CEO of Constellation Research, said the largest increases in IT costs come from wage inflation and labour. “Depending on the IT services firms, the level of automation, and how they have bid contracts, we will continue to see a variation of hikes as well as attrition rate,” he said.
Phil Fersht, CEO of HfS Research, said most service providers have made it a priority to slow attrition and slow hiring and reinvest in the existing people in India. “However, outside of India, it is a mixed bag with most of the top-tier services firms and Big 4 consultancies laying off staff. This has been a constant situation all year, and it will likely continue throughout the year-end. The Great Resignation outside of India is well and truly over. We expect the services industry to pick up double-digit growth by early 2024 driven by better economic conditions and the AI revolution, which will surely lead to higher wage hikes.”