India’s $160 billion IT industry is going through a tough time for its workforce. With the new-age business model, employee compensation has heavily impacted.
Domestic IT firms are facing unique challenges in the competitive environment. The new shifts in the business model and higher onsite costs have affected the salary hikes this year. IT workers have reported getting a single-digit salary hike. Most of the big names including the top three IT giants have offered less than 10% salary hikes.
Tata Consultancy Services (TCS), Infosys and Wipro have offered an annual raise of 6-7% to its workforce. On the other hand, French IT firm, Capgemini employees received just 0.5% to 1% raise. The move comes as most IT firms have recorded a low revenue contribution traditional business channels.
Infosys, which records the highest employee attrition rate has effected a salary hike for 85 of its employees ranging mid-single digit to high-single digit. The salary hike is effective April 1st while for mid and senior management, compensation hike will be effective July 1st.
Pravin Rao, Infosys’s COO said, “For a majority of the people in India, the wage hike will be in the range of mid-single digits. Continuing with the past trend, we will differentiate people on wage hike based on their performance and contribution.” The company has committed to pay $10 million in bonuses to its employees.
TCS, the largest IT firm that recently crossed $100 billion market cap has announced salary hikes in the range of 2-6% depending upon the geographical locations of employees. Wipro is no exception to this trend, the company has given 6-7% of average increment to most of its employees.
A senior HR expert said, “If you see, actual employee cost is reducing for the IT firms as headcount growth is low. Further, within the current employee strength, employees with standard commoditized skillsets are getting low wage hike. Those who have re-skilled themselves with high-value skillsets are getting higher raise. Firstly, local hiring is more expensive. So, though the salary hike is lower in percentage terms, it is higher in absolute terms for onsite employees. Secondly, even if you hire an Indian origin person for onsite work, he/she would expect higher pay hike due to demand for his/her skillsets.”
The lower pay hike is one of the major reasons behind low attrition rate. TCS has reported an attrition rate of 11.80% in FY18. Wipro’s attrition rate is more or less same at 16.6%.