Insights into the Challenges and Strategies Shaping the Future of India’s IT Industry
As 2024 unfolds, India’s information technology (IT) sector stands at a crossroads, bracing itself for what promises to be a year of flat salary hikes and restrained hiring activities. This anticipated trajectory reflects the intricate interplay of global challenges influencing the operational landscape of companies within the industry.
According to data from a report by ET, sourced from a prominent hiring firm, IT companies are expected to extend average salary increments ranging from 8.4 to 9 percent in 2024, echoing the levels observed in the previous year. However, a notable departure from tradition is the likelihood of these increments being deferred until the conclusion of the fiscal first quarter, deviating from the customary timing of salary hikes in April.
The Trends In Salary Increments
Over recent years, the sector witnessed a gradual uptick in salary increments, escalating from 8.8 percent in 2021 to 9.7 percent in 2022, before stabilizing at 8.5-9.1 percent in 2023. Despite this, many large multinational corporations (MNCs) chose to implement modest hikes towards the end of 2023, averaging around 7 percent for most roles.
Selective Increment Rollouts
Notably, companies such as Infosys, Wipro, and HCLTech opted for selective approaches to salary increments in the previous year. Infosys, for instance, offered hikes averaging less than 10 percent, with certain employees receiving single-digit raises, while junior or mid-level employees were excluded from any pay hikes. Similarly, HCLTech and Wipro excluded mid- or senior-level roles from salary adjustments. On the other hand, Tata Consultancy Services (TCS) provided hikes ranging from 6-8 percent, with top performers receiving double-digit increments.
Challenges Faced by IT Companies
The IT firms grappled with challenges such as a decline in revenue growth and shrinking headcounts over the past few quarters. Notably, some leading companies, including TCS and Infosys, refrained from campus hiring activities last year due to prevailing market conditions.
Focus on Cost Management
Given sluggish demand and macroeconomic uncertainties, IT companies are prioritizing efforts to enhance gross margins. Employee expenses constitute a significant portion of total expenses, ranging from 50-60 percent, thereby prompting companies to explore avenues for cost optimization.
Trends in Global Capability Centers (GCCs)
GCCs, which have proliferated in India, are expected to witness average salary hikes of 10-10.1 percent in 2024. These centers play a pivotal role in employing a substantial portion of tech talent in India, with reports indicating that around 80-85 percent of the workforce comprises tech professionals.
Emphasis on Skilling
In response to evolving technology trends such as artificial intelligence (AI), a considerable number of individuals have actively participated in certification or training programs to augment their skills. This emphasis on upskilling aims to fortify career prospects, promote grade development, and facilitate functional growth amidst the rapid adoption of new technologies.
Rise of Tech Talent in Banking and Financial Services
The banking and financial services sector have emerged as significant drivers of salary increases, with upper-end hikes projected to reach approximately 11.1 percent in 2024. This trend underscores the escalating demand for tech talent across sectors beyond traditional IT domains.
