Double-digit wage hikes likely for IT employees for FY15

With Nasscom bullish on growth, experts peg wage hikes at 11-18% in 2014

After nearly two years of marginal increments, employees at the Indian IT services companies may be in for double digit salary hikes in 2014 amid improving business environment and as companies look to retain talent.

According to experts, Indian IT services companies may look at giving double-digit salary hikes with the average increments going as high as 18% in 2014, as against the tepid 3-9% in the previous years. Additionally, specialisations and expertise of employees may attract a premium.

“Despite the economic slowdown of 2013, the Indian IT sector did exceedingly well last year. The improved global economic situation has given an added thrust to the IT sector,” said Moorthy K Uppaluri, CEO of human resource consulting firm Randstad India. Uppaluri expects Indian IT services companies to give 12-15% salary hikes this year.

Companies may also be forced to reward employees better, as an uptick in demand environment usually means acceleration in wage pressure and a spike in attrition, some experts said.

“With these developments, we are currently seeing a trend where IT employers are being proactive and sharing rewards with their employees to retain key talent and encourage high performance. They are also promoting performance-based pay and incentive systems to keep their attrition rates lower," Uppaluri said.

The optimism among experts got fueled after industry body Nasscom on Tuesday said it expects a 13-15% growth in Indian software and BPO export industry during the next financial year (2014-15). The estimate is quite bullish compared with Nasscom’s expectations over the last couple of years.

For 2013-14, the industry body had started off by pegging the growth at 12-14%. The industry managed a growth rate of 13%. In 2012-13, the industry clocked a growth of 10.2%, much lesser that the original prediction by the body at 11-14%.

That there has been a revival in demand over the past six months has not only been reiterated by large and mid-sized IT services companies, but it has also started reflecting in the activity across the sector.

For example, in view of the uptick in demand, India’s largest IT services company Tata Consultancy Services raised its campus hiring plan by 5,000 to 55,000 for the financial year ending March 2014. Also, the second largest player in the sector Infosys in January kicked off and off-campus recruitment drive after a gap of over two years. The company said it was the “need of their business” to do so.

In 2013, Infosys and Wipro had given average increments of 8%, and 6-8%, respectively.

“IT firms are expected to be quite positive on compensation this year, with expectations of salary hikes to be an average of 11-18%,” Surabhi Mathur-Gandhi, senior VP at TeamLease said. “We will definitely see a skew of hike considerations basis the experience levels, skills specialisation and demand generation by individual firms; ranging from 8-10% on the lower spectrum to even as high as 18-22% on the higher end.”