After six months of “will they, won’t they”, information technology (IT) firms have announced they will roll out hikes for all employees, a move expected to benefit around 10 lakh people. In most companies the raise is effective October 1, some have staggered it over the next few months.
Most of India's top IT firms suspended hikes and promotions in April, with the coronavirus outbreak battering the economy and bringing business activity to a standstill. Some firms even went for salary cuts. Analysts had estimated that the industry would see negative growth in 2020.
In October, growth is back to pre-COVID-19 levels, according to IT majors' commentary that accompanied their earnings report for the September quarter. Most companies reported record deal wins as people shifted to remote working, relying heavily on IT.
Infosys signed total contract value worth $3.15 billion in Q2 and TCS $8.6 billion. Tech Mahindra reported $421 million in new deals.
Tier II firms, too, saw an increase in new deals in the September quarter. Hexaware, for instance, reported that net deal wins in Q3 were more than those for the entire FY19. The company follows the calendar year for its fiscal.
With the business looking good, IT majors decided to lift the suspension on salary hikes. According to staffing experts, apart from the deal momentum, these hikes are necessary to retain top performers.
Aditya Narayan Mishra, founder, CIEL HR Services, said in a recent interaction that though the companies were not completely out of the woods, with clients continuing to prioritise spending, they needed to meet the aspirations of performers they wanted to retain.
Season of joy
With the market opening up, high performers would now be able to switch jobs. In addition, there was a general discontent about companies not offering hikes and promotions when the market was reviving.
These hikes and promotions are being rolled out keeping all these factors in mind, experts pointed out.
Wipro was the first IT major to announce promotions for its top performers effective December 1 till B3 band, covering about 80 percent of its employees. The company employs about 1.85 lakh people.
The country's India's top IT major TCS announced a hike effective October 1 for all its employees. The company employs about 4.5 lakh people. Infosys, which has 2.4 lakh employees, will roll out hikes from January 2021. The two companies said the quantum of hikes will be at pre-COVID-19 levels.
HCL Tech will begin implementing salary hikes to its 1.53 lakh employees in two installments, October 1 and January 2021. For those till the E3 band (Junior Associates to Project Managers), the salary hike would start from October 1, 2020. For others, it would take effect from January 2021. Average salary hikes stand at 6 percent for offshore employees and 2.5 percent for onsite employees.
Most recently, Tech Mahindra, too, said it will implement salary hikes. “We are looking at early 2021 for appraisal and salary hikes. But the management team has not really sat down to decide the quantum of hikes,” CEO CP Gurnani said in an earnings call on October 23,
The way it is going to work out, Gurnani explained, was that the junior-most employees will get the salary hike the fastest and the senior-most employees will get it later. “But it is part of my budget and part of my planning to do salary hikes for junior-most employees in FY21 (before March 2021) and for the rest in calendar year 2021 (before December 2021)," he added.