IT companies salary hike cycle shift to June-Sept cycle: Report

Salary increment period in IT companies, which usually was around April-June period, has now shifted to the third quarter of the year, that is, the June-September period.

This process has been influenced by demand outlook, thereby introducing a level of uncertainty, as per a TOI report.

With the frequency and timing of these raises that vary across industries, increment in salary have become more unpredictable in recent years.

The time period between hikes in wages have also become less consistent, thereby making it difficult for employees to anticipate their next pay rise.

Last year, just six months after the company's regular cycle, Ravi Kumar after taking over as CEO of Cognizant, announced a one-time additional pay raise in April.

The last salary hike in Cognizant took place in October 2022, hence this measure was taken looking at the high attrition rates experienced by the company.

CFO Jatin Dalal, in the last earnings press conference for the Sept quarter, said that with the scope to improve utilisation and as attrition has fallen to desirable levels, the time of multiple hikes is over. Following this, Cognizant implemented the annual pay rise in August this year.

Similarly, in the month of August, HCLTech also said that a firm decision had not been taken on salary increments this year after deferring the hike for some employees.

The publication further mentioned that earlier Wipro too has rolled out salary hikes in a staggered manner between the months of April and September.

CEO of Constellation Research, Ray Wang told TOI, "The job market is loosening in the US, so employers have a little more leverage. However, in India, the job market is still tight, and GCCs are attracting talent due to these appraisal delays."

Motilal Oswal Financial Services in its pre-earnings report stated that the margins for companies that defer salary hikes to the second half of the financial year will see an uptick in the Sept quarter.

The firm further added that for firms like HCLTech that haven't rolled out the annual hike this year, the margin pressures will show up in the second half.

IT services earlier usually rolled out their promotions, hikes at the beginning of the financial year. The delay in hikes witnessed this year and the previous year affirms the sluggish demand environment for the IT services industry, the firm stated.

IT services companies often focus on short-term project outcomes rather than long-term gratification that leads to a skewed emphasis on immediate impact, said India country head at HR solutions firm Adecco, Sunil C.

He thereby added, "This is especially true for high-demand niche skills and digital skills, where short-term performance metrics dominate the appraisal process. As a result, 8-12 per cent of existing employees receive off-cycle hikes, while 30-40 per cent remain stagnant without any salary adjustments. These factors collectively contribute to the current trends in wage hikes and promotions."