The traditional April-June period for salary increases within many IT companies has shifted to the third quarter of the year, creating uncertainty as the process now depends on the demand outlook. In recent years, salary increases have become less predictable, with variations in the frequency and timing of these raises across industries and companies.
The time between wage hikes has also become inconsistent, making it difficult for employees to know when they will receive their next pay increase. A TOI report quoted Ray Wang, CEO of Constellation Research as saying that CFOs at service companies sometimes lack clear guidance on the outlook for the upcoming four quarters.
Both Indian and multinational IT services firms have not indicated a complete recovery, instead have been highlighting promising signs in specific areas while emphasizing that discretionary spending is yet to fully rebound.
“The job market is loosening in the US, so employers have a little more leverage. However, in India, the job market is still tight, and GCCs are attracting talent due to these appraisal delays,” Wang told TOI. Appraisals are being postponed as a means of risk mitigation and cost reduction.
When Ravi Kumar became Cognizant CEO last year, he implemented a one-time additional salary increase in April, just six months after the company’s standard cycle.
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This was done to address Cognizant’s high attrition rates, as the company had previously provided a hike in October 2022. During the September quarter earnings press conference, CFO Jatin Dalal said that with the scope to improve utilisation and as attrition has fallen to desirable levels, the time of multiple hikes is over. As a result, Cognizant implemented the annual pay increase in August this year.
HCLTech announced in August that a definitive decision regarding salary increments for this year had not been reached, following the postponement of raises for certain employees. In the past, Wipro has implemented salary increases in a phased manner, typically spanning from April to September.
Motilal Oswal Financial Services, a brokerage firm, said in its pre-earnings report that companies postponing wage increases to the latter half of the fiscal year will experience improved margins in the September quarter. However, firms like HCLTech that have not implemented the yearly hike this year will face margin pressures in the second half. In the past, IT services companies typically rolled out hikes and promotions at the start of the fiscal year. The delay in hikes this year and the previous year reflects the sluggish demand environment in the IT services industry.
According to Sunil C, India country head at Adecco, an HR solutions firm, IT services companies often prioritize short-term project outcomes over long-term gratification, resulting in a disproportionate focus on immediate impact.
“This is especially true for high-demand niche skills and digital skills, where short-term performance metrics dominate the appraisal process. As a result, 8-12% of existing employees receive off-cycle hikes, while 30-40% remain stagnant without any salary adjustments. These factors collectively contribute to the current trends in wage hikes and promotions.”
