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IT firms roll out their promotion cycle. What does this trend indicate

But the nature of these promotions would be muted. Only those who are exceptional in either their domain or technology expertise are likely to be eligible for promotions.

September 30, 2020 / 06:20 PM IST
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While most other industries are probably cutting down on staff strength, IT firms are rolling out promotions for their employees to hold on to top talent amid the pandemic as the business begins to stabilize, say industry watchers?

This comes as somewhat of a surprise, especially since IT firms had said they are suspending promotions and hikes due to uncertainty around the pandemic in April. TCS then said that it would give promotions selectively.

Bengaluru-based IT firm Wipro announced on Wednesday said that it will kick off its promotion cycle in December. Cognizant's promotion cycle will start on October 1. Infosys is mulling promotions too, according to reports.

The recent announcements indicate couple of things, say analysts.

For one, the companies have churned out better than expected results. Their deal momentum has been good, on par or better than pre-COVID levels. For instance, TCS reported order booking of $6.9 billion for the quarter ending June, compared to $6 billion in December quarter. For quarter ending March, the order booking stood at $8.9 billion.


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HCL Tech increased its revenue guidance from the 1.5-2.5 percent it announced in July to 3.5 percent in September as it saw momentum across the service lines.

The positive sentiment is what has reflected in the rally in IT stocks. Stock prices of the  top four IT firms increased by 50 percent on average between April and September.

That, however, does does not mean that the industry would see the growth levels it saw before the pandemic. The sector analysts pointed out that though the momentum is positive, the IT industry will contract by 4-5 percent globally and a revival can be expected only in early FY21.

So what explains the promotions? According to HR executives, the idea is to satisfy the top performers these companies want to retain. And that's important, given that the industry is looking at a talent crunch in emerging technologies.

Aditya Narayan Mishra, founder, CIEL HR Services, said, “If you look at the IT services industry, clients are still look at refining the existing projects and prioritizing their investments. Projects are volatile and there is not much visibility.”

Some of the existing projects are getting shorter and clients are cautious about investing that is resulting in increased bench workforce. A senior IT employee with 15 years of experience in a top IT firm pointed out that global projects that are coming in are for shorter duration and he has been on bench for a month now waiting for another project.

But that does not mean that they can suspend promotions overall. “For, they also need to meet the aspirations of top performers, who they want to retain,” Mishra added.

With the market opening up, high performers would now be able to shift unless the company meets their expectations, which companies cannot afford to. In addition, there is a general discontent about companies not offering hikes and promotions when the market is reviving.

A technology consultant with a top IT firm agreed. “These companies are cash rich. Even if their profits dipped, they are not in the negative. Based on the company commentary, if they are doing well, it is only fair that they share it with the employees too,” the consultant added.

But the nature of these promotions would be muted. Only those who are exceptional in either their domain or technology expertise are likely to be eligible for promotions. Hikes too would come down to 5 percent on average. While top performers would continue to command 10-15 percent hikes, for others it is likely to come down.
Swathi Moorthy
first published: Sep 30, 2020 06:20 pm
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