Top Indian IT Firms Expect Reduced Pay Increases in FY24 Top Indian IT firms are bracing for a slowdown in pay increases for the fiscal year 2024 (FY24). This expected decline in salary increments is a departure from the previous year when employees enjoyed more generous raises. Several factors, including a global tech spending slowdown, are influencing this shift in compensation strategies.
Key points related to the anticipated pay increases and their underlying reasons:
Expected Pay Increase Range: IT industry experts anticipate that pay increases at top Indian IT firms will fall in the range of 6-10% for FY24. This is notably lower than the 12-18% pay hikes seen in the previous fiscal year.
TCS’s Experience: Tata Consultancy Services (TCS), one of India’s leading IT companies, already saw its average salary hike drop to 6-9% in FY23. This decline reflects the broader challenges faced by the IT industry, including margin pressures and increased competition.
Cost and Revenue Discrepancy: Over the last three years, IT firms have increased their compensation costs by 64%, while revenues have grown by just over 57%. This discrepancy emphasizes the need for a more sustainable and balanced approach to cost management.
Industry-Wide “Course Correction”: Human resources (HR) firms have noted a “course correction” in the IT sector, marked by a decrease in salary hikes to an average of 10.8%. This shift reflects a focus on cost optimization and more conservative increments.
Industry Challenges: IT companies are grappling with tight margins and industry-wide challenges, which have led to delays or cancellations of annual increments. Additionally, many firms are hiring less, which is contributing to a tighter job market for IT professionals.
Despite these challenges, IT salaries are expected to remain relatively stable. Randstad’s Viswanath suggests that, while pay increases are decreasing, the IT sector will continue to offer competitive compensation packages to attract and retain talent.
This shift in the IT industry’s compensation trends is a response to evolving market conditions and the need for sustainable financial management. As the sector adapts to these changes, it will be essential for both companies and employees to find common ground in compensation expectations, all while considering the industry’s long-term growth and stability.
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