Winning Bizness Desk

Mumbai. The second quarter of FY 2024 has not proved to be better for IT companies as major IT companies like TCS, Infosys and HCL Technologies have had weak quarterly results. Due to weak results and reduced demand, wage hikes in IT companies may be avoided this year. Delays in decision-making by customers and cuts in discretionary spending have affected revenue growth of IT companies due to lower demand. While some companies have suspended payments, others have stopped it altogether. Anshuman Das, CEO and co-founder of leading recruitment firm CareerNet, said, “Some companies may choose not to raise wages, while others may offer very small increments. This adjustment will depend entirely on the current demand and supply. In 2021-22, companies have responded to the demand for top talent by offering significantly higher pay hikes, which are now being streamlined."

Strong correlation with supply & demand dynamics

Das further said, “Notably, despite low inflation in 2021, wage growth was substantial, while in 2023, despite high inflation, wage growth is not clear. This highlights the fact that wage growth in the IT sector has a weak correlation with inflation and a strong correlation with supply and demand dynamics.

For example, Accenture will not raise the wages of its employees in India and Sri Lanka this year. However, as an exception in certain critical skill areas and where it is legally mandated, those employees will get the benefit of the wage increase. The decision comes at a time when Accenture has forecast a slower revenue guidance of -2 to 2 percent for the first quarter of fiscal 2024. Accenture follows the September-August fiscal year. In March 2023, Accenture announced that it was laying off 19,000 employees.

What companies have announced?

Infosys CFO Neelanjan Roy while announcing the company's second quarter earnings said that Infosys will increase wages from November 1. Infosys announced pay hikes for employees below senior management in April and above in July. Wipro will start implementing the annual merit pay increment (MSI) for its employees from December 1 after postponing the hike by a quarter due to macroeconomic concerns and margin constraints. Noida-based HCL Tech is all set to start increments for junior employees from October. Amid challenging business environment, compensation review for middle to senior management staff will be completely waived in FY 2024.