HCLTech, India’s third-largest IT services firm, has started implementing salary hikes for its junior workforce, albeit on a modest scale. This move comes against the backdrop of a challenging demand environment and cautious cost management strategies across the IT industry.
Credits: Times of India
Junior Employees See Increment, But Far Below Expectations
For workers in the E0, E1, and E2 levels—typically those with up to 10 years of experience—HCLTech has implemented raises. However, many employees have expressed dissatisfaction with the hikes, which range from 1-2% for ordinary staff to 3-4% for top performers. These figures are far less than the management’s earlier pledge of double-digit rises of 12–15% for top performers and 7% average annual hikes.
Employees at higher levels, categorized under E3 and above, are yet to see any increments. According to sources, some mid to senior-level employees haven’t received salary hikes for the past two or even three years.
Delayed Wage Hikes Across the Industry
The delays in compensation cycles are not unique to HCLTech. Many leading IT companies, including Infosys, LTIMindtree, and L&T Technology Services, have deferred wage hikes this fiscal year. Salaries, which constitute a significant portion of the operational costs, are being closely scrutinized as companies face tightened discretionary spending by clients and economic uncertainties.
In FY25, many IT companies postponed salary reviews to later quarters, diverging from the traditional practice of implementing hikes earlier in the fiscal year. This trend reflects an industry-wide effort to safeguard margins during a period of subdued growth in demand.
What HCLTech’s Management Says
HCLTech has reiterated its commitment to performance-linked pay increments. According to its leadership, the average hike for India-based employees is planned at around 7%, with top performers expected to receive double-digit increases. The rollout of increments is reportedly tied to performance and the timing of employees’ eligibility, particularly for those hired laterally.
Despite these assurances, the actual implementation for junior employees suggests a conservative approach. Moreover, senior employees remain uncertain about when or if their salary revisions will take place, adding to concerns about fairness and morale within the workforce.
A Balancing Act Amid Strong Business Performance
HCLTech’s cautious approach to wage hikes contrasts with its recent financial performance. The company outpaced its Tier-1 peers, such as TCS, Infosys, and Wipro, in year-on-year revenue growth in constant currency during the September quarter. It also exceeded market expectations for EBIT margin growth and net profit, aided by strong deal wins across various verticals and geographies.
Brokerage reports suggest HCLTech’s margins are likely to rise by about 50 basis points in the December quarter, driven by operating leverage and a strong software segment despite the impact of wage hikes and seasonal furloughs. The company is set to announce its quarterly earnings on January 17, which will likely shed more light on its financial health and future strategies.
The Broader Picture for IT Employees
The IT sector in India has been grappling with a slowdown in growth, driven by global macroeconomic uncertainties and reduced client spending. This has forced companies to adopt a cautious approach to cost management, including deferring increments and promotions.
For employees, particularly at junior levels, this trend underscores the increasing pressure to perform under limited financial rewards. Senior employees, on the other hand, face prolonged periods without salary hikes, potentially leading to retention challenges in a competitive market.
Credits: Money Control
What Lies Ahead
All eyes will be on HCLTech’s remarks regarding pay increases and employee remuneration as the business prepares to release its December quarter earnings. Even though its financial performance is still strong, maintaining its leadership in the IT industry will depend on how well it aligns employee happiness with organizational success.
For the time being, HCLTech’s partial pay increases illustrate the fine balance that IT companies need to strike between rewarding staff and preserving profitability in a demanding climate.
