Expect pay hikes and promotions, Infosys tells employees

Infosys Technologies has told its over one lakh employees that they can expect pay hikes and promotions by October, joining India’s top tech companies in lifting wage freezes and signalling rising optimism for the software industry’s growth prospects.

India’s second-largest software exporter has kicked off a performance appraisal process right in the middle of the festival season, saying in an email last week to staff that hikes and promotions will be effective next month.

“Yes, we are giving hikes this October. It will happen across the board,” Infosys group HR head Nandita Gurjar told ET NOW over phone from Poland on Tuesday. She did not say what the extent of the salary increase would be.
India’s largest Software company TCS, third-ranked Wipro, as well as Cognizant and HCL, have already announced a return to salary hikes and their ranks have been joined by smaller rivals such as MphasiS-EDS, Sonata Software and Symphony Services.

Som Mittal, president of software industry grouping Nasscom, said IT services providers have been winning large deals in recent months and investments in new markets are beginning to pay off, driving the revival.“The downturn has been severe but the industry has worked to see that the impact is minimal. They have done well in the first quarter. This is a people-led industry, so lot of companies are selectively rewarding employees who have worked hard,” he observed.

Infosys’ Ms Gurjar said the company decided to skip the promotion cycle in April this year as employee utilisation and billing rates were low. But a sharp rise in utilisation rates since made it decide to reward staff.

While improved demand and natural attrition have pushed up the utilisation rate at Infosys, operating margins are also seen well ahead of its target of 30%. Infosys’ wage bill is estimated at 45-46% of sales, and the company has projected that FY10 revenue will grow by 3.1-4.6% to $4.45-4.52 billion.

Nasscom has projected that the $60-billion IT services industry, which employs about 2.5 million, will grow by just 4-7% this fiscal, hit hard by a recession in its main market, the US.

“The downturn is bottoming out, and we will do a review of the growth target in December. But this 4-7% target also factors in selective promotions and hikes,” Mr Mittal said.

In a normal year, employees in tech firms get pay hikes of 5-15%, but this time companies such as Wipro are being selective about who gets rewarded and restricting pay-raises to only the best performers. MphasiS and Sonata Software, on the other hand, are linking pay hikes to the companies’ performance.