HCLTech to roll out 7% salary hike in October, top performers to receive up to 15%

HCL Tech

Information technology firm HCLTech will implement a 7 percent salary hike starting October. Top performers are set to receive raises of up to 12-15 percent. The company expects the wage hikes to have a minimal impact on its operating margins in the December quarter, said the company’s Chief People Officer Ramachandran Sundararajan.

“We have decided to go ahead with the increase. It will be similar to what we did last year, which means the increases will be effective October, i.e., this month,” Sundararajan said during the company’s Q2 earnings conference.

However, performance-based increments will see top performers receiving double-digit increases. "Top performers will continue to see double-digit increases in the range of 12-14%," Sundararajan noted.

India's third largest IT services major’s headcount stood at 2,18,621 as of Q2.

Brokerage firm Jefferies had anticipated a 110 basis point (bps) sequential expansion in operating margins mainly due to a shift in the wage cycle and the usual seasonal uptick. Several major Indian IT companies have shifted wage hikes to the third quarter of FY25 to manage costs and sustain profitability amidst a sluggish demand environment.

Apart from HCLTech, services exporters such as Infosys, LTIMindtree, and L&T Tech Services have also deferred salary hikes, according to recent brokerage reports and analysts.

The number of HCLTech employees eligible for hike will depend on the company's review cycle and the proportion of lateral hires who become eligible after completing a year of service, Sundararajan added. “The number of individuals eligible for increases during a given cycle is a function of that, plus the performance,” he explained.

Sundararajan acknowledged that the salary hikes would slightly affect operating margins but the company is actively working to offset this through efficiency measures.

These increments follow HCLTech's established annual compensation review process, similar to previous years.

The Noida-headquartered firm’s headcount decreased by 780 employees in the second quarter ended September 30, 2024.

For the quarter, net profit rose 11 percent on-year to Rs 4,235 crore, beating Street expectations. Revenue from operations rose to Rs 28,862 crore, up 8.2 percent from a year ago.

On a sequential basis, HCL Tech's Q2 net profit fell by a marginal 0.5 percent, while revenue grew about 3 percent on-quarter.

EBIT margin came in at 18.6 percent, growing 149 basis points sequentially.