Home / Companies / News /  Infosys employees get salary hikes, may increase hiring target

Infosys is giving competitive compensation revisions to its employees. Not just that, the IT major is also planning on increasing its hiring target ahead. Although, the employees' salary hikes and net hiring may lead to a further spike in cost which is likely to impact the company's margin in the near term, however, it believes the move will bring down its attrition rate which rose by 70 basis points sequentially in the quarter ending June 30, 2022 (Q1FY23). Infosys has already made the highest hiring in Q1 compared to its peers like TCS, Wipro, and HCL Tech. In the latest quarter, the company's aggressive hiring led to lower utilisation that impacted operating margins.

In Q1FY23, Infosys employees count is at 3,35,186 - a net addition of 21,171 from 3,14,015 headcount as of March 31, 2022. Net addition has increased by 67,233 counts from total employees of 2,67,953 as of June 30, 2021.

The net hiring in Q1 is slightly lower compared to the hiring of 21,948 employees in the preceding quarter.

Furthermore, the company's IT services attrition rate has increased to 28.4% in Q1FY23 expanding by 70 basis points from 27.7% in Q4FY22. In Q1FY22, the attrition was at 13.9%.

Nilanjan Roy, Chief Financial Officer said, "We are fueling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions. While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth. We continue to optimize various cost levers to drive efficiency in operations"

Roy added, "Continued high focus on cash led to strong FCF to net profit conversion at 95.2% and improvement in ROE to 31.0%."

He also said that the company's margin was impacted by 160 basis points due wage hike.

In Q1FY23, Infosys' operating margin was impacted to 20.1% - down by 3.6% from 23.7% in Q4FY22 and below 1.4% from 21.5%. Operating profit stood at 6,914 crore up by 4.7% from 6,603 crore in Q1FY22 and sequentially down by 0.6% from 6,956 crore in Q4FY22.

Mitul shah - Head of research at Reliance Securities said, "EBIT de-grew by 1% QoQ (up 5% YoY) to Rs69.1bn while EBIT margin stood at 20.1% (down 149bps QoQ /down 361bps YoY), 63bps below our estimate of 20.7%, due to higher employee cost and sub-contracting expenses. Aggressive hiring resulted into lower utilisation for the quarter impacting overall operating margins."

Highlighting that Infosys missed margins, Aditi Patil - a research associate at Prabhudas Lilladher said, "BIT margin came at 20%, a decline of 160 bps QoQ (Ple: 20.7%, Cons: 21%). LTM IT services attrition increased to 28.4%, 70 bps QoQ. Strong net-headcount addition of 21,171, 6.7% QoQ. EBIT margin guidance band is retained at 21-23% for FY23. Management expects margins to be near the lower end of guidance."

Compared to its peers, Infosys hired 19,082 employees more than HCL Tech, while its hiring was higher by 5,725 employees from Wipro and 7,035 employees from TCS in Q1FY23.

In the first quarter of FY22, TCS net hiring was 14,136 employees, Wipro's net addition was 15,446 employees, and HCL Tech's lowest at 2,089 employees.

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