Infosys to give 5-7% salary hikes in FY15

Much below expected 10-12%; experts say attrition might increase

Infosys, the information technology services giant, told its employees in India on Wednesday they would get pay increments of five to seven per cent in FY15, a source told Business Standard.

Though the second pay rise in nine months, analysts say it is much below the sector average and could lead to several more staffers resigning in the coming months at the Bangalore-based company, especially with the recent improvement in demand. “Everyone was expecting at least 10-12 per cent more. Five to seven per cent is really low,” said an analyst with a domestic brokerage house. “Already the company is seeing elevated levels of attrition and this is more bad news for that front.”

Despite the earlier salary rise of an average eight per cent, announced soon after co-founder N R Narayana Murthy returned to the company as executive chairman, staff attrition has continued to be steep. For the October-December 2013 quarter, it was 18.1 per cent, highest among peers and in marked contrast to close rival Tata Consultancy Services’ 10.9 per cent.

Infosys refused to share details about the development and said, “We will announce the salary increments for FY15 during our financial results announcement on April 16. The new salary hikes come nine months after we announced our last salary increases in July 2013.”

Some media reports had earlier claimed Infosys, after several senior-level exits in recent months, would look at giving double-digit raises to boost employee morale. While the Indian IT services sector has seen subdued pay rises in the past two years, amid a slump in the business environment globally, experts and employees had high hopes this year. For, demand in the key markets of America and Britain had started showing sign of recovery and most companies have said they expect 2014 to be better than 2013. Experts had said Indian IT services companies might give double-digit raises, going as high as 18 per cent in 2014, against the tepid three to nine per cent in previous years.

Their optimism was fuelled after Nasscom, the sector body, had earlier this month said it expected 13-15 per cent growth in the Indian software and business process outsourcing export segment during 2014-15. In 2013-14, it estimated the growth at 12-14 per cent; the sector managed 13 per cent. In 2012-13, the growth was 10.2 per cent, compared to the original prediction by Nasscom of 11-14 per cent. “IT firms are expected to be quite positive on compensation this year, with expectations of salary hikes to be an average of 11-18 per cent,” Surabhi Mathur-Gandhi, senior vice-president at TeamLease had said earlier this month. “We will definitely see a skew of hike considerations on the basis of experience levels, skills specialisation and demand generation by individual firms; ranging from eight to 10 per cent on the lower spectrum to as high as 18-22 per cent on the higher end.”