India’s second largest software services exporter, Infosys Technologies Ltd, said it sees wages continuing to be firm in the year ahead as demand for offshore services continue to be strong from global customers. Other software services vendors such as Tata Consultancy Services Ltd (TCS), Wipro Ltd and Satyam Computer Services Ltd expect annual wage hikes for software programmers to be tempered.
“We don’t see any softening in wages and there’s nothing in the environment to say that,” said V. Balakrishnan, chief financial officer of Infosys. Infosys will announce its annual hike to employees in India in the April-June quarter; the increase has traditionally been in the range of 12-15%.
On Wednesday, The Economic Times reported that TCS had scaled back the variable component of salaries of its employees as the company couldn’t meet business targets in the December quarter. A TCS spokesman confirmed the cut.
TCS, Infosys and Wipro have made a total of 54,000 campus offers for fiscal 2009, indicating that they see a robust demand for offshore services despite the possibility of a cut in technology spending by clients due to a subprime credit crisis-induced economic slowdown in the US. The Indian information technology industry has witnessed an annual wage bill rise of 12-15% for the past several years, which in turn has impacted the profitability of these firms to a certain extent.
“Wage inflation will be more moderate than in previous years. I will be surprised if it continues at the same levels,” said Pratik Kumar, corporate vice-president of human resources (HR) at Wipro.
S.V. Krishnan, head of HR at Satyam, said the wage inflation will marginally cool down as economic indicators such as inflation were largely stable.
“The pace of rise in wages is not sustainable. Overall, there will be some conservativeness,” Krishnan said. But small niche and boutique companies, which need specific skills, may continue to pay higher than the industry average at 15-20%, he added.
Wipro, Infosys, Satyam and HCL Technologies, which also have variable pay structures, don’t intend to do any adjustments as they pay the variable component towards the end of the quarter. An HCL spokesperson said the company had no plans to reduce employee salaries and that it was business as usual for the company.