Pay hikes at IT cos to be flat despite turnaround

Jan 28 2013, 00:02 IST
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SummaryIndia’s showpiece information technology and business process outsourcing industry has started to show early signs of a strong turnaround after a long period of uncertainty but employees in the sector will not have much to cheer as salary increases will most likely remain flat for the coming financial year.

Polls peg hikes at half of what was given last year

Debojyoti Ghosh &

India’s showpiece information technology and business process outsourcing industry has started to show early signs of a strong turnaround after a long period of uncertainty but employees in the sector will not have much to cheer as salary increases will most likely remain flat for the coming financial year. The IT & BPO sector, which broadly gave a salary increase in the range of 6-8% in 2012-13, will most likely opt for a smaller hike for 2013-14, industry executives and third-party observers have said.

Nandita Gurjar, senior vice-president and group head, human resources, Infosys, said: “According to surveys, there will not be double-digit increases in the industry this year and they expect it to be half of what we gave last year. For Infosys we have not decided anything yet.” The Indian IT industry for long has enjoyed double-digit salary increases every year, sometimes even a biannual hike, but the situation took a dramatic turn since the 2008 financial crisis that engulfed the global economy. Since then, employees have either seen a single-digit hikes in salaries or nothing at all.

Given that 50% of the operating costs of any IT company may be attributed to wages, the industry is wary about giving any salary increase as any change in this parameter could have a wide-ranging impact on them.

“Increments will be low across all industries this year and IT industry is not an exception. The increment will range between 7% and 8%,” said Sangeeta Lala, senior vice-president, sourcing, at HR services company TeamLease Services.

“Some companies may also hold back hikes and push it by a quarter or two. Depending on the business clarity they will take a call. Companies will finish the appraisal procedure on time, but the actual hike might not happen during the April quarter,” she added.

Experts point out that with rising wage costs dealing a heavy blow to profitability margins, coupled with sluggish business growth, IT companies can no longer afford double-digit increments across the board.

“If you look at the industry in the past 10 years, we have given two salary increases in a year as there was a lot of demand for professionals and attrition was high,” said Saurabh Govil, senior vice-president, HR, Wipro Technologies.

“That is not the scenario currently. The increases which we were giving 10 years back were different. Obviously, things will come to normal at sometime, that is how the industry life cycle works,” said Govil.

However, the salary increases in the coming financial year will be more focused and given largely to the strong performers. Suparna Rao, co-founder & CEO, Excellence4u, an employee assessment firm, said that IT companies are likely to be give hikes for specific business verticals or teams that have performed well during the year and very unlikely to go for any across the board hike.

FY13 has been tumultuous for employees as many companies had either deferred their hikes or gave increases in the low single-digit range. Infosys took the dramatic step of deferring salary increases, which was met with all-round surprise and resentment, but later announced a 6% hike. Its peers like Wipro, Tata Consultancy Services and HCL Technologies provided a 6-8% increase in salary for its India-based employees while it was 2-3% hike for onsite personnel.

Asked about the next salary hike, Gurjar of Infosys said, “The company has not decided on the next increment date. In March and April we will see the market and then decide.”

Firm hold

* The IT & BPO sector broadly gave a salary increase in the range of 6-8% in 2012-13

* The Indian IT industry for long has enjoyed double-digit salary increases every year

* Firms wary of giving hikes as 50% of the operating costs of IT cos attributed to wages

* Some companies may also hold back salary hikes and push it by a quarter or two

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