Minimal Salary Hikes: IT Sector Employees Brace For Tough Appraisal Season

Siddharth*, a systems engineer at Infosys Ltd., makes only Rs 30,000 a month, despite having three years of experience.

"My salary hikes haven't even beat inflation.”

He rues that even with an "overachiever" rating, he has received only 4-5% salary hikes, and gotten no promotion. 

Employees across top IT firms in the country, who NDTV Profit spoke to, echo Siddharth's concerns. The IT industry, one of the largest white-collar job providers, and traditionally the most sought-after job provider in India, in the recent past, has not been able to provide competitive salary hikes, as it sees slowdown in business growth. What's more? This year the situation is unlikely to get better.

Since FY21, annual pay hikes given by top IT companies — Tata Consultancy Services Ltd., Infosys, HCLTech and Wipro Ltd. — have largely remained in single digits and have further dipped after Covid, data sourced from market intelligence firm UnearthInsight shows. 

TCS is reportedly set to roll out annual pay hikes in the range of 4-8% for the year, which is less than its usual average hike rate of 8% every year. Similarly, Infosys too will be rolling out 6-8% salary hikes for Indian employees, while overseas employees will get even lower single-digit increases. 

“Only my expenses have gone up in the last two years — rent, car maintenance, medical bills, and everything else, but my salary has been more or less the same. Even if I want to switch companies to get better money, I am not finding a good role in my domain,” said Prashant*, another employee at a top IT firm.

Even employees at a senior grade are struggling to see growth prospects.
Recently, TCS cut variable pay for its senior employees for at least two quarters, leaving even experienced IT professionals with little-to-no headroom to grow.

This level of deduction is for employees who have been following and complying with complete corporate guidance, like coming to the office daily, being 100% learning and certification compliant, and being allocated on projects continuously, said an associate consultant at TCS on condition of anonymity.

Any associate who is not complying with either of these needs is facing more deductions, the person said.

“The trend of slower wage hikes in recent years can be attributed to cost optimisation and margin pressures. As competition intensifies and clients demand cost-effective solutions, IT services firms focus on optimising costs to maintain profitability. This includes controlling wage growth, reducing variable pay, and restructuring compensation models,” said Gaurav Vasu, founder of UnearthInsight. 

Lower wage hikes are linked to the rise of cost-focused contracts, shorter deal cycles, and outcome-based pricing, which push IT firms to prioritise cost efficiency and productivity, limiting salary increases. Increased automation and outsourcing also reduce the demand for traditional roles, impacting wage growth, he added. 

After the pandemic, as demand for digital services surged, these companies offered significant salary hikes, with averages ranging from 10% to 14.6%, and even higher for roles requiring niche skills, noted Krishna Vij, vice president at TeamLease Digital. This was driven by the competitive need to attract and retain talent in high-demand areas like AI, cloud computing, and cybersecurity. However, as the global economic landscape evolved and client spending became more cautious, salary hikes began to decline. For FY25, projections suggest salary hikes will remain in the 4% to 8.5% range. 

“Despite this, high performers and those with specialised skills can still expect double-digit hikes, ranging from 15% to 18%, depending on individual performance and retention needs. Companies are now more focused on strategically investing in critical talent,” she added. 

* Names changed on request.