Infosys, Wipro announce single-digit salary hike

Infosys, on Thursday, announced a wage hike for the current fiscal for its employees in India and abroad.

Infosys, on Thursday, announced a wage hike for the current fiscal for its employees in India and abroad, effective July 1, 2013. The move coincides with rival Wipro?s annual hike announcement, which will be effective this month. The hike given by the IT majors is in single digit, but a steep decline from their heydays. During the fourth-quarter results, Infosys had not given any clear indication on wage hike for financial year 2013-14, causing a lot of heart burn for employees at that stage.

Infosys on Thursday said that the average wage increase for employees based in India will be 8%, while employees based in other geographies, who have not been covered by salary increase in February 2013, can look forward to an average hike of 3%. The global sales team will see an average increase of 8%, effective May 1, 2013, the software-services company noted in a statement.

The country’s third-largest IT-services exporter Wipro, annoucning the wage hikes, said, ?Commensurate with industry standards, Wipro has announced an average wage hike of 6-8% for offshore employees and 2-3% for onsite employees, effective June 2013. In line with the practice of rewarding high performers, Wipro has awarded double-digit hikes for these employees.?

The companies feel this is an indicator of the larger macro situation. ?The overall market is not great with pressure on return on investments (ROI) and operating margins. The compensation hikes are moving towards the global average which is largely in single digit,? said Sangeeta Lala, senior vice-president, sourcing, TeamLease Services.

The $108-billion Indian IT industry for long has enjoyed double digit salary hike, sometimes even multiple hikes, but ever since 2008 financial crisis, the scene has not been the same. Since then, employees have either seen a single digit hike or nothing at all.

In FY13, the sector broadly gave a salary increase in the range of 6-8% and industry experts projected a similar trend this year. Last year, Infosys took the drastic step of withholding wage hikes till it gained more clarity on its business; an announcement that was met with much criticism. Usually, Infosys effects appraisals in the beginning of the fiscal effective April. However, later in October 2012, it doled out an average 6% hike for employees in India and 2-3% outside the country. For its onsite workforce, salary increment was implemented from January 1, 2013.

Recruitment firm Vati Consulting CEO Amitabh Das said ?The Indian IT industry has matured and we will not see many double digits hikes now. With oversupply of labour and the pricing pressure by the clients along with increasing costs, the fundamentals have changed in the industry.”

The top four Indian IT firms ? Tata Consultancy Services, Infosys, Wipro and HCL Technologies ? together account for a combined workforce of over 6,50,000. The Indian IT industry is among the country?s largest organised private sector employers, but industry watchers point out that while the overall wage hike in the sector has dropped to single digits, the salaries of freshers, has remained stagnant in the past three to four years.

Thanks to increasing margin pressure, demand-supply imbalance, declining business volumes and rising training costs, pay packages at the entry level have not seen an upward swing in the recent past. This is at a time when prices in the country have grown by more than 8% in each of these years. Companies point in the current market, on an average, a fresher in the software services industry draws a salary in the range of Rs 2.75-3.5 lakh per annum compared with R2.75-3.3 lakh offered in 2008-09.

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First published on: 14-06-2013 at 01:00 IST