For salary hikes, IT firms now considering tenure along with performance

The IT majors are making changes in their pay increment structure to maintain margins at a time when the sector is going through a tough time globally

With the Information Technology (IT) sector going through a sharp downturn, companies have become selective in giving yearly increments to their employees, according to a report in The Times of India (TOI). The increments are now being based not only on performance, but also on how long the employee has been with the company.

India's major IT firms, Infosys, Wipro, and HCL have deferred their increments this year. Usually, the increments come into effect in April or July. However, the companies have delayed the process by several months.

Infosys has announced that salary hikes will be effective November 1. Junior and mid-level employees who joined Infosys after October 2021 have been excluded from the increment cycle. Senior employees, who joined after October 2020, have also not been considered for salary hikes.

Shaji Mathew, head of Human Resources at Infosys, was quoted in the report as saying that the company is focusing on tenures and high-performance employees for the compensation review cycle.

Another IT major, HCL, has rolled out salary hikes only for junior employees. The increased salaries would be effective October 1. HCL has not said anything about salary hikes for middle and senior-level employees.

Wipro has hiked salaries for its employees effective December 1. The TOI report, however, states that high-performing employees with lucrative packages have been excluded from the appraisal cycle.

Tata Consultancy Services, the biggest IT company in the country, has made it mandatory for mid-level employees to acquire certification in new tech skills, as the firm added the same to its variable pay structure. TCS did this under its mid-level transformation programme.

Increasing focus on margins

The IT firms are making changes in their pay increment structure to maintain margins at a time when the sector is going through a tough time globally. The report suggested that these companies are also hiring fewer freshers, working on improving employee utilisation, reducing subcontractor expenses and reducing the expenses on lateral hires that had increased during the Covid-19 pandemic.

Experts suggested, in the report, that while the business slowdown is a major reason behind the changes, the changes in the business and technology ecosystems are also driving this shift.

Ray Wang, chief executive officer at Constellation Research, said that the world has changed from humans competing against each other to humans competing with artificial intelligence (AI) and bots.