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IT companies putting salary hikes on hold to cut employee costs

IT companies

Coping with margin pressure and rising employee cost, an array of IT companies are left with no option but to tighten salary budgets and leverage variable pay for high performers. The condition is following growing need for high-cost digital skills and pressure to hire local talents in the US and other countries.

According to reports, India’s second-largest outsourcer Infosys has delayed salary hikes for a section of its senior and middle management employees. Salary hikes to senior employees have been postponed. Title holders — associate VPs, SVPs and EVPs, of which are 971 — have not been given their annual bonus of $25,000-35,000. The company is even cutting on travel, unless it is very essential.

Infosys revenue growth fell to 20.5% in the last quarter, below its targeted 21-23% for the year, and much below the 24-25% that it was at just a few years ago.

According to a recent research by HR consulting firm Aon, the average salary increase in IT service companies was between 4 and 6% in the past couple of years and it is projected to be even lower in 2020.

Industry insiders hold many reasons, like growing need for new digital skills to the US putting pressure on the IT work that is being outsourced to other countries through imposing visa restrictions, responsible for the growing trend.

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