Business

IT salary increments expected to remain subdued

Salary increments announced by Infosys, India’s second largest IT services company, last week may have surprised many who were expecting a steeper increment from the company this time given its high attrition rates. However, industry experts and senior HR officials believe, things are going to be no different at other IT companies. On an average, they estimate wage hikes across the industry this year to range between six and nine per cent, which is more or less at the same levels as last year.

“Years of double digit salary growth have gone. I don’t expect any company this year to offer more than 5-6 per cent average wage hike given that there is clear trigger signaling a steep rise in demand and increasing automation has started impacting the hiring outlook of the industry,” said a senior official at one of the top five Indian IT services companies pleading anonymity.

Last week, Infosys said it would give out pay hikes in the range of 6.5 – 9.0 per cent to employees in India for the financial year 2015-16, effective April 1, 2015. For Onsite employees, Infosys said the salary hike would be around 2 per cent.

The numbers are similar to what the company offered last year when it effected a raise of 6-8 per cent to offshore employees and around 1-2 per cent for employees located in onsite locations.

Apart from Infosys, larger peer Tata Consultancy Services (TCS) also follows the April cycle for its annual wage hike. Bangalore-based IT services company Wipro gives its annual raise in two phases -the regular one in July for junior and middle level employees and in October for only senior employees. HCL Technologies also follows the same cycle.

According to sources at TCS, the company is in the process of finalising its increments, announcements for which would start coming towards the end of this week or at the beginning of next week. However, the increments are not going to be much different this year with high performers who are in ‘A’ band expecting to get a hike of around 10 per cent while it is expected to be between 5-8 per cent for employees who are in ‘B’ and ‘C’ bands.

“It is a demand-supply mismatch, as the supply is much higher than the demand,” said Kris Lakshmikanth, chairman of Headhunters India. “Most IT services companies have not been hiring in big numbers over the last two years, which reflects that automation has definitely started showing an impact.”

Even as most IT services companies are growing at a decent rate, the sector is not in a high growth phase. In fact, in its annual strategic review announced in February this year, industry body Nasscom has pegged sector’s exports growth at 12-14 per cent for FY16, which is lower than 13-15 per cent projected for FY15.

Experts, however, said employees with specialised or niche skills could attract far steeper hikes, just like in the previous year.

“I believe, there will be pockets where hikes would be higher. People with highly specialised skills will definitely benefit more as organisations will openly articulate that they are willing to reward certain skills vis-a-vis others,” said C K Guruprasad, principal at Heidrick & Struggles. “

Additionally, experts believe that automation has started to replace human effort more effectively than before and thus most companies are looking to remain lean, for which they are neither hiring in big numbers nor giving big hikes to retain employees.

Highlights

* Infosys announced average wage hike of 6.5% for offshore staff, 2% for onshore; top performers to get 9% raise

* TCS is in the process of announcing wage hike

* Experts believe increments in other IT companies to be in line with Infy

* High supply-low demand of manpower leading to subdued increments

* Increased automation leading to need for lesser manpower

* Niche, specialised skills to attract higher hikes