India's information technology (IT) sector is bracing for a challenging year ahead, with flat salary increments and subdued hiring anticipated, according to a Teamlease Digital report quoted by the Economic Times. The industry, long regarded as a key contributor to the country's economic growth, is expected to witness a more cautious approach to compensation and recruitment strategies.
According to Munira Loliwala, AVP - Strategy and Growth at Teamlease Digital, the average salary appraisals in the IT sector are projected to range between 8.4% and 9% in 2024. This marks a slight dip from the previous year's average increments of 8.5% to 9.1%. Teamlease report says that most companies are likely to defer salary hikes until the end of the first quarter of the fiscal year, deviating from the traditional practice of implementing increments in April.
Livemint could not independently verify the report.
Loliwala said that the emphasis in the IT sector is on maintaining a stable workforce, indicating that the industry may experience flat or even negative growth in terms of employee numbers this year. She added that many large multinational companies (MNCs) in December 2023 rolled out modest hikes averaging around 7% for most roles.
The ET report highlighted that major IT players adopted cautious approach in 2023. For example, Infosys, Wipro and HCLTech either skipped or deferred increments by several months or rolled them out selectively based on employee tenure. Infosys implemented hikes averaging less than 10% effective November, excluding junior or mid-level employees, while HCLTech and Wipro excluded employees in mid- or senior-level roles. According to the report, Tata Consultancy Services (TCS) rolled out increments ranging from 6% to 8%, with top performers receiving double-digit hikes.
Despite the challenges, Loliwala noted that the IT sector remains a significant contributor to salary disbursements compared to other sectors. Global Capability Centers (GCCs) of multinational companies operating in India are also expected to play a crucial role in hiring, with average salary hikes projected at around 10% to 10.1% this year.
Meanwhile, the Banking and Financial Services sector could see higher increments at the upper end, with Loliwala estimating an average of 11.1% hikes.
