Will Indian IT staff get a salary increase in 2024?
In 2024, Indian IT sector employees are advised to prepare for stagnant salary hikes and postponed increments due to the global challenges impacting company operations. The sector, valued at $250 billion and renowned for its significant employment contribution in the country, is expected to witness a slowdown in both salary appraisals and hiring activities.
According to data from a leading hiring firm, average salary appraisals in IT companies are anticipated to range from 8.4% to 9% in 2024, mirroring the increments observed in 2023. Munira Loliwala, AVP - strategy and growth at Teamlease Digital, noted that many companies are likely to defer these increments until the end of the first fiscal quarter, deviating from the usual practice of April salary hikes.
The current focus within the IT sector revolves around stabilizing headcounts, with projections indicating either flat or negative growth for the year. Despite a gradual increase in salary increments from 8.8% in 2021 to 9.7% in 2022, it decreased to 8.5-9.1% in 2023. Loliwala highlighted that many large multinational companies implemented moderate hikes towards the end of 2023, averaging around 7% for most roles. Notably, companies like Infosys, Wipro, HCLTech, and TCS have followed different approaches regarding pay hikes, with some opting to skip or selectively roll out increments based on employee tenure.
For instance, Infosys announced raises averaging under 10% in December, effective from November, with certain employees receiving minimal single-digit increases. HCLTech and Wipro excluded mid- or senior-level employees from salary hikes, while TCS implemented hikes ranging from 6-8%, with exceptional performers receiving double-digit increments.
IT firms have been grappling with a significant downturn in revenue growth and a decrease in headcount over recent quarters, with major players like TCS and Infosys refraining from campus recruitment last year. The decline in global demand amidst macroeconomic uncertainties and inflation in developed markets has led to an unprecedented slowdown in technology spending. Consequently, IT companies are exploring ways to enhance gross margins, with employee expenses representing a significant portion, comprising 50-60% of total expenditures.
Loliwala pointed out that Global Capability Centres (GCCs) of multinational corporations are influencing subdued hiring trends in the Indian IT sector. GCCs in India are expected to witness average salary hikes of 10-10.1% this year, showcasing their impact on the industry. Reports suggest that GCCs currently employ approximately 1.66 million individuals, with a majority consisting of tech talent. Additionally, a significant number of individuals in the sector are engaging in certification and training programs to upskill themselves, aiming for better appraisals and career growth.
The rise of tech talent in Banking and Financial Services is identified as a key factor contributing to higher salary increments within the sector, with projections indicating upper-end hikes of around 11.1% this year.