As India’s top-tier Information Technology (IT) companies show early signs of uptick in demand for their core software services and digital technology offerings during the September quarter, employees will have much to cheer this festive season.
While announcing the second-quarter earnings, the nation's largest IT firms, Tata Consultancy Services (TCS), Infosys, and Wipro recently gave out salary hikes for lakhs of their employees.
“Technology as a segment was expected to be one of beneficiaries of the pandemic. And given the performance of some of these bigger companies it is but obvious that the companies would like to keep their top talent motivated as they can more than just afford. This also is key to their retention,” said Rituparna Chakraborty, co-founder and executive vice president, TeamLease Services, adding that “exceptions by way of higher increments would be high possibility for specialised and niche skill sets.”
Bengaluru-based Infosys Ltd. on Wednesday said that it will give salary increases and promotions across all levels, effective January 1. The announcement comes a week after its larger rival, TCS, rolled out salary hikes for its employees, effective October 1. Earlier this week Wipro too announced its plans to offer promotions to high performing candidates and salary hikes from December 1 onwards.
“We are giving 100% variable pay along with a special incentive for Q2. Additionally, we are rolling out salary increases and promotions across all levels,” said Pravin Rao, COO, Infosys, on Wednesday. He added that Q2 laid bare Infosys' strength and resilience and that the salary hikes were a result of that.
"[Infosys'] operating metrics witnessed a healthy increase, broad-based growth, highest-ever total contract value at $3.15 billion, and it reduced attrition to single digits,” Rao said.
Rao, however, did not specify the hikes range but said that the quantum of increase will be “identical” to the previous years. For Infosys employees in India, the average salary hike in FY20 was about 6%, while for overseas it was between 1% and 1.5%. TCS too said that the hikes this year will be in line with the previous years.
During the second quarter of the current fiscal, Infosys posted a 20.5% jump in consolidated net profit at ₹4,845 crore from ₹4,019 crore a year ago. Revenue for the September quarter stood at ₹24,570 crore from ₹22,629 crore, up 8.6% year-on-year. Mumbai-headquartered TCS last week recorded consolidated net profit of ₹7,475 crore for the July-September quarter, as against ₹8,042 crore during the same period last year.
The Indian IT industry is among the country’s largest organised private sector employers, with TCS, Infosys, Wipro, HCL Technologies, and Tech Mahindra forming the largest chunk in the sector. For TCS, the total headcount stood at 4,53,540 employees at the end of September quarter, while Infosys had a total workforce of 2,40,208 employees, and Wipro had 1,85,243 people.
Amid low visibility on future business due to the Covid-19 pandemic, in April all the Indian IT majors suspended promotions, salary increments, and hiring for the year in order to keep costs under control.
Human Resource (HR) consultants point out that in the wake of the pandemic and its economic fallout, these IT companies went for a wait-and-watch approach before plunging into any decisions regarding appraisals. Typically in the Indian IT industry hikes and promotions are rolled out during the first quarter of the fiscal.
Infosys said, during the quarter-ended September, voluntary attrition for their IT services business declined to 7.8% from 18.3% a year ago, while for TCS it was down to an all-time low of 8.9%, a decline of 120 basis points quarter-on-quarter.
HR consultants reason that the decline in attrition rate among IT companies was primarily due to the sluggish economy and a weak job market. The pandemic-induced lockdown further spooked employees and made the prospect of switching jobs unattractive.