Infosys defers annual hikes to the fourth quarter

Infosys

India’s second-largest information technology services firm Infosys has deferred annual wage hikes to the fourth quarter of the current financial year (Q4FY25). The Bengaluru-based company last implemented salary hikes in November 2023.

Typically, implemented earlier in the year, the wage hike delay reflects the broader uncertainty in the global demand environment, particularly for discretionary IT services. IT companies face pressure from weak discretionary spending, delayed client budgets and ongoing macroeconomic uncertainties.

Rivals HCLTech, LTIMindtree, and L&T Tech Services also skipped salary increments in the second quarter to manage costs and sustain profitability.

The company had on October 17 said it was “planning” wage hikes in Q4 in a phased manner. “Some part of that will be effective in January and the balance will be effective in April,” chief financial officer Jayesh Sanghrajka said during a press conference after Q2 results.

In the second quarter, Infosys’ net profit increased 2.2 percent quarter-on-quarter to Rs 6,506 crore, missing Street expectations. Margins improved by 10 basis points, largely attributed to lower onsite costs, improved utilisation rates and better operational efficiencies.

Despite the absence of a wage hike, brokerage firm Motilal Oswal Financial Services, in its pre-earnings note, said Infosys’ margins would take a hit in the December quarter on account of furloughs and fewer working days. This, however, will be offset by pricing gains, subcontractor cost optimisation and Project Maximus.

Project Maximus is Infosys' margin improvement plan, aimed at optimising costs.

Employee Options?

Analysts told Moneycontrol that a stagnant job market has given IT companies confidence that the withholding of hikes is unlikely to lead to resignations.

Certain delivery teams within these large enterprises , however,continue to offer salary hikes selectively to top performers. This is because each unit has a budget to reward exceptional talent, especially in areas like artificial intelligence.

As the industry saying goes, retaining a job itself feels like a bonus in the current climate.

Also read: Indian IT CEO pay soars 160% in last 5 years, while fresher salary rises only 4%