India's IT sector is likely to face a slowdown in salary hikes and hiring activities in 2024. This shift reflects the impact of global challenges on IT companies' operations.
Stagnant Salary Growth :
An ET report based on data from a leading recruitment firm predicts average salary appraisals to range between 8.4% and 9% in 2024. This mirrors the levels seen in 2023, with a concerning twist: these increments may be delayed until the end of the first quarter, deviating from the usual April hike schedule.
A Look Back at Salary Trends :
The sector witnessed a gradual increase in salary increments, rising from 8.8% in 2021 to 9.7% in 2022. However, the growth tapered off to 8.5-9.1% in 2023. Notably, many large MNCs implemented modest hikes around 7% in December 2023.
Selective Hikes: Not Everyone Gets a Raise :
* Major players like Infosys, Wipro, and HCLTech adopted a selective approach to salary increments last year. Infosys offered hikes averaging below 10%, with some employees receiving minimal raises or no increase at all (particularly junior and mid-level roles). Similarly, HCLTech and Wipro excluded mid or senior-level positions from adjustments.
* TCS, however, offered increments ranging from 6-8%, with top performers receiving double-digit raises.
Challenges for IT Companies :
Several factors are contributing to the slowdown, including declining revenue growth and shrinking headcounts in recent quarters. Leading companies like TCS and Infosys even paused campus hiring in 2023 due to market conditions.
Cost Management Takes Center Stage :
With sluggish demand and economic uncertainties, IT companies are laser-focused on improving profit margins. Employee expenses, a significant portion of total costs (ranging from 50-60%), are under scrutiny, prompting companies to find ways to optimize.
A Brighter Spot: Global Capability Centers (GCCs) :
A glimmer of hope for some! GCCs, concentrated in India, are expected to see average salary hikes of 10-10.1% in 2024. These centers employ a substantial portion of the country's tech talent – estimates suggest around 80-85% of the workforce comprises tech professionals.
Upskilling for Growth :
Recognizing the ever-evolving tech landscape, a significant number of individuals are pursuing certifications or training programs to enhance their skillsets. This upskilling initiative aims to boost career prospects, promote grade advancements, and position individuals for success as new technologies are adopted.
Tech Talent Boom in Banking & Financial Services :
Interestingly, the banking and financial services sector is emerging as a key driver of salary hikes, with projections of upper-end increases reaching 11.1% in 2024. This trend highlights the growing demand for tech talent beyond traditional IT domains.
The Indian IT sector is at a crossroads. While the slowdown presents challenges, it also underscores the importance of upskilling and exploring opportunities in emerging sectors like banking and finance.
