After a dream run for the last two years, salary hikes in IT companies in the country are falling to single-digit percentages. For many IT professionals, excluding a select club of top performers and those with niche skills, salary increases have moderated in the range of 5% to 9% in financial year 2023-24.
Three of top five Indian IT companies have seen a decline in their annual salary increments as clients exercise caution and reduce discretionary spends.
The challenging economic landscape has compelled companies to adopt a more discerning approach when it comes to rewarding employees with good hikes.
Infosys, known for having the highest average annual increments among competitors, saw average hikes drop to 9% in FY24, compared to 14.6% in FY22. The average hike for FY23 was 9.9%.
Similarly, TCS implemented an average hike of 7-9% in FY24, down from 10.5% in FY22. Wipro employees saw a 9.4% increase in the median remuneration compared to the previous year.
Tech Mahindra and HCLTech have maintained average hikes between 5% and 7%. HCL’s annual reports showed that the company rolled out an average hike of 6.8% in FY22, which dropped to 5% last year. Tech Mahindra’s average increment was 5.6% in FY24, compared to 6% in the previous year and 5.2% during the pandemic-hit year when other firms provided double-digit hikes.
Reducing margins as workforce and overall business costs continue to rise, and the availability of talent at the entry level, where most of the workforce in these organisations possesses generic tech skills are the main reasons behind this muted hike, say industry experts. Companies still want to maintain a good cost arbitrage and wage is one of their biggest costs. Even marginal cuts in the same lead to a bigger absolute impact, they said.
As salaries moderate, companies are using differential hikes to retain critical talent. Professionals in the deep tech domain have been able to secure higher upticks in the range of 12-15%.
As companies across sectors continue to focus on digital transformation initiatives, these professionals are becoming more relevant, and organisations are seeing the value in investing in them. In the next fiscal year, there is likely to be more green shoots in compensation as talent requirements in specialisations like AI, ML, cybersecurity, cloud computing, and data analytics will continue to grow.
