This article first appeared on Business Standard on June 30, 2017
Most employees in software firms in the country will get low salary hikes this year, with the sector struggling to overcome a slowdown in business. Increased automation, pricing pressures from clients, and a shift to digital and cloud have adversely affected the revenues of the information technology (IT) companies over the past year. At most of these firms, senior managers will have to contend with salary hikes and promotions being deferred by at least three months. Turnaround in business is likely to bring salary increases quickly. Average increment across companies is largely in proportion with the revenue growth, varying between 6 per cent and 8 per cent. Tata Consultancy Services, the largest IT-services firm in the country, would give 8-10 per cent hikes to employees. Infosys, the second-largest firm in the sector, will give only 4-9 per cent increase to 85 per cent of its employees. Senior employees will get their hikes only after at least three months. At Wipro, hikes effective from June 1, will be low for most.
Top performers will, however, have been rewarded with relatively higher increments.“For offshore employees, the hike percentage is mid-single digit; onsite employees have low- to mid-single digit hike percentages, depending on their location,” said a company spokesperson. Tech Mahindra is also giving single-digit percentage hikes to junior and mid-level employees, with five to eight years experience. Senior employees might not get any hike at all — it would depend on recommendations of respective managers, a source in the company said. Cognizant Chief People Officer Jim Lennox has informed employees that hikes and promotions have been deferred by three months to October 1. Junior employees will see a marginal increase in base salary; senior managers will get a one-off cash payout. The IT services industry is bracing for a higher cost of operations as it plans to add more people locally in their largest market in the US. At a time when transformation towards digital technologies such as cloud, artificial intelligence or automation are yet to offset the decline in traditional IT infrastructure business of these firms, most of them would experience cost pressure for the next three to four quarters because of increased global hiring. This, analysts said, might have forced companies to offer single-digit increment this year. The companies, however, are not “bothered” about spending a dollar extra to keep the right talent away from competition. “Earlier higher increment was offered to keep employees within the company. However, with a slowdown in the market, these companies can get away with a lower salary hike,” said an IT industry analyst requesting anonymity.