BENGALURU: In the past few years, the majority of employees of top-tier IT services companies have received their wage hikes in single digit (4% to 9%), and only top performers have received double-digit hikes.
However, when it comes to wage hikes, generally, mid-sized IT firms such as Coforge, KPIT have provided better hikes (mostly in double-digit) over their larger counterparts.
Though it depends on top performers and specialisation, HR experts say mid-sized companies are growing faster in niche areas and so they offer better hikes.
"Mid-tier IT companies are offering slightly better salary hikes compared to the top IT companies. On average, mid-tier companies have offered 9–11% hikes, while top-tier companies have mostly stayed around 5–8%. This is because mid-sized companies are growing faster in niche areas like cloud, data, and cybersecurity, and need to pay more to attract and keep skilled employees. Also, their salary base is lower, so a 10% hike doesn’t hurt their margins as much. On the other hand, large IT companies are more cautious due to global uncertainties and their focus on keeping profits stable," said Neeti Sharma, CEO, TeamLease Digital.
She added that most IT companies have had single-digit salary increments, mostly due to cost pressures. Salary is the biggest expense in IT services, and organisations with lakhs and lakhs of employees, even a small hike, add up to a big number.
"Also, growth has been slower in the last two years, and clients are pushing for lower billing rates. So, companies avoid large hikes to protect their margins. However, hikes for top performers have been close to double-digit, while the rest get lower hikes," Sharma added.
The country's largest IT services firm, Tata Consultancy Services (TCS), has deferred wage hikes for its employees due to macroeconomic uncertainty.
Every year the company provides hikes, effective April 1, but this year the company will decide when to give wage hikes during the year. During Q4 earnings, many top IT firms said they will decide on hikes closer to the appraisal cycle.
During the company's Q4 post-earnings conference call, Kishor Patil, co-founder, CEO and MD of KPIT Technologies had said they would have more incentive- based payments and the fixed increments will be smaller.
Maya Nair, Executive Director, Search and Selection, GI Group Holding India said mid-tier companies are more agile as they have leaner structure and are able to adapt better to the changing market. This allows them to be more flexible in offering salaries to the right talent they need for their growth.
"Since the mid-size companies have to compete with the bigger organisations, hence to stand out and remain relevant, they need to offer a higher salary to have a cutting edge in innovation and technology. However, now with the increase in remote working, this gap is slowly reducing as the percentage of good talent from smaller cities and towns is visibly increasing across mid and large firms," she said.
HR experts also pointed out that emerging technologies continue to demand a high range in spite of whether the demand is in firms which are mid or large-sized.