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MUMBAI : Entry-level salaries in Indian software services companies are set to rise after nearly a decade amid a covid-induced boom in demand that has sparked high attrition and a race for fresh talent.

According to industry insiders, the sector will see salaries rise by at least 15% and, in some cases, by as much as 60% for fresh hires.

“The salaries for entry-level engineers has been revised to 4.25 lakh this year from 3.65 lakh. We are also tying up with engineering colleges for courses in analytics and digital content and students who take the courses and clear them will join HCL at 6 lakh salary," said Apparao V.V., chief human resources officer, HCL Technologies.

HCL’s strategy to raise salaries may prompt rivals such as Infosys, Cognizant, Wipro and TCS to follow suit. A senior industry executive said TCS is working on raising salary packages for graduates of the 2022 batch.

TCS and Infosys did not immediately respond to queries. Wipro is maintaining a silent period and will not entertain media queries, while and Cognizant did not respond till press time.

Tech companies are revising the salaries as part of their new hiring strategies to retain talent and stem attrition, which has been at record levels for the past two quarters.

“We started this for the batch of 2022 who passed out this year, and from here on, we will make this programme more organized," said HCL’s Apparao.

Noida-based HCL plans to hire 45,000 freshers in FY23, almost doubling from last year’s 23,000. In FY22, Infosys recruited 85,000 freshers and plans to hire 50,000 college graduates this year. TCS onboarded close to 78,000 freshers in FY22 and aims to hire about 40,000 graduates from across campuses this year.

As India Inc. tries to keep pace with rising digital adoption and surging demand for cloud-based services, there is growing requirement for experts in programming languages such as Java, Javascript, Python and SQL. Industry body Nasscom said the sector roped in a record 450,000 employees in FY22.

Executives at top IT companies said hiring and training freshers is the only sustainable way to fill demand, as the battle for candidates at senior levels has led to poaching, despite non-compete clauses between the companies to stop candidates from joining a rival firm for roles wherein the project and client details are similar. According to industry estimates, 1.5 million-1.8 million IT engineers graduate every year.

“Talent continues to remain a key competitive advantage for the Indian technology industry. As of FY22E, India’s technology industry employed over a 5.1-million talent pool of which nearly 1.6 million were digitally skilled. In FY22, 450,000 people were hired, majority of which were freshers," said Sangeeta Gupta, senior vice president and chief strategy officer, Nasscom.

“Companies are widening the spectrum of talent acquisition through pronounced efforts in skilling university graduates with present-day in-demand new tech courses, increasing focus on on-campus fresher hiring, providing financial incentives and ramping up talent strategies to build digital capabilities in smaller towns. This is creating significant dividends in amplification of the talent supply and catalysing the next decade of growth and innovation for India."

On a trailing-12-month (TTM) basis, Infosys’ attrition rate jumped to 27.7% in the fiscal fourth quarter from 15.2% a year ago, and 25.5% in the December quarter. TCS had the lowest attrition rate in the industry, which rose to 17.4% in the March quarter from 7.2% a year ago and 15.3% in the December quarter.

HCL’s attrition rate was 21.9% at the end of March against 9.9% a year ago.

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