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Peer plans may put Infy under pressure

K Rajani Kanth & Bibhu Ranjan Mishra  |  Hyderabad/ Bangalore 

With Tata Consultancy Services (TCS) announcing a wage rise for its employees this year and most other industry peers going ahead with their wage increase plans, pressure is expected to mount on Infosys to reconsider its earlier decision.

TCS, India’s largest information (IT) services company with a headcount of 239,000, on Monday announced a wage rise of six-eight per cent for employees in India and two-three per cent for those in developed markets.

On April 13, Infosys had announced its decision to hold back wage increases in the wake of its lacklustre performance, citing global uncertainties. The country’s second-largest IT services company gives wage rises to its employees with effect from April.

“If others start giving wage hikes, definitely it will be a pressure on Infosys. Because of the market situation, most companies are growing and have announced their hiring plans. So clearly, employees will have opportunities outside. It will be difficult to retain talent without giving a wage hike,” Amneet Singh, country head – India, Everest Group.

Company Hike in
2011 (%)
Expected hike
in 2012 (%)
TCS   12-14 6-8
Infosys    10-12 Deferred
Wipro 12-15 5-10%
Mahindra Satyam 10-15 10-15
iGATE- Patni  9-10 10
Source: Companies

Apart from TCS, most other major IT employers in India are understood to be going ahead with their salary increase plans. Nasdaq-listed iGate has already announced that it would give a pay rise of around 10 per cent to its employees. According to a company spokesperson, iGate Patni is in the process of issuing the letters to its employees, but it will be effective from April 1.

Mahindra Satyam is said to be considering a pay rise, expected to be in the range of 10 to 15 per cent. “Going by the talks doing around within the company, the wage hike will be the same as last year, between 10 and 15 per cent, across the board,” said a senior official of Mahindra Satyam. The company’s annual appraisal process, ASPIRE, begins in April and ends in June.

Mid-tier IT services company MindTree, according to sources in the company, has also given positive indication of effecting a wage hike. As a precursor to that, the company has announced it would give 100 per cent variable pay across the board and even more than that to performers.

Sources in Wipro say the company has already started its annual appraisal cycle, expected to be closed by the end of May. HCL Technologies, India’s fourth-largest IT services company, said it would take an appropriate decision at the end of its accounting year in June. The company usually announces pay rises in June.

Infosys, for the time being, has given promotions to 15,000 people, with effect from July 1. Analysts say this will somehow address the challenge of losing its top performers to competitors. The company has said it will revisit the decision every quarter now on, and will take a decision at the appropriate time.

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First Published: Tue, April 24 2012. 00:55 IST