HCLTech rolls out salary hikes for junior employees, senior staff await increments

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India’s third-largest IT services company HCLTech partially started rolling out wage hikes for junior employees in the October-December quarter. While many of them got around 1-2 percent increments, top performers were given a raise of about 3-4 percent, sources told Moneycontrol.

This stands at odds with the management’s commentary of offering 7 percent average annual pay hikes and 12-15 percent hikes to the top performers.

In FY25, most top IT companies with the exception of Tata Consultancy Services (TCS) delayed wage hike cycles, which typically happen earlier in the fiscal year. Salaries are a significant part of the companies' wage bills and by delaying it, they are trying to defend margins amid uncertainty over discretionary spending and a challenging demand environment.

According to sources, HCLTech started rolling out hikes for the E0, E1, and E2 level staff, which are predominantly junior employees with roughly up to 10 years of experience.

The employees in E3 band and above (mid to senior level) are yet to get hikes. Two E3 level employees told Moneycontrol that they haven't got any increment in at least the past two fiscals.

HCLTech’s management, too, said in FY24 that it skipped compensation reviews for senior to management level employees for the year.

“E0-E2 got their letters in December last week. They got only about 1-2 percent hikes and even top performers got maximum 3-4 percent hikes. Employees in the E3 band and above are still awaiting appraisals, many of them didn’t get hikes for the last two years at least, and even three years for E4 levels,” an employee told Moneycontrol.

Responding to Moneycontrol’s queries, a HCLTech spokesperson later said that the information being shared is incorrect and that the company is proceeding as per the plan shared during the Q2 earnings commentary.

The company, however, didn’t share any updates but reiterated its commentary from Q2 earnings conference, saying, “Typically, every year when you look at the review cycle, given the fact that we have a higher proportion of people who come in laterally into our system, who will become eligible for increases at the point of completing a year, the number of individuals eligible for increases during a given cycle. It is a function of that, plus the performance.”

“If I look at the average for all our colleagues in India, it will be in the range of about 7 percent. But, as is always the case, increases are linked to performance, and top performers will continue to see double-digit increases in the range of 12-15 percent. So, that’s the way we have planned our increases. It will all take effect from this month onwards. We have our own comp review cycles, which we follow every year,” the company’s chief people officer Ramachandran Sundararajan had said earlier during the conference.

Not just HCLTech, Infosys, too, as reported by Moneycontrol, has deferred hikes to the fourth quarter of the current financial year.

Moneycontrol earlier reported that companies including LTIMindtree and L&T Tech Services had also delayed increments in FY25 to manage costs and sustain profitability.

HCLTech outperformed its Tier-1 peers in the September quarter, even as it offered lower-single digit hikes. In terms of year-on-year (YoY) revenue growth in constant currency (CC), HCLTech led the pack beating TCS, Infosys and Wipro.

The company also managed to beat market estimates for EBIT margin growth and net profit, driven by well-distributed deal wins across verticals, geographies, and offerings.

In the third quarter, HCLTech’s margins are expected to rise by around 50 basis points sequentially due to operating leverage and a strong software quarter despite a wage hike impact and furloughs, a pre-earnings note from brokerage firm Motilal Oswal Financial Services said. HCLTech is to announce its December quarter earnings on January 17.