TV Mohandas Pai, member of the board and director, human resource, Infosys Technologies Ltd, on Thursday said contrary to expectations based on solid revenue growth of IT firms, salary hikes in 2011 are unlikely to be as high as it was last year.
Techies expecting steep salary hikes this year on the back of double-digit revenue growth in the information technology (IT) sector are in for some disappointment.
TV Mohandas Pai, member of the board and director, human resource, Infosys Technologies Ltd, on Thursday said contrary to expectations based on solid revenue growth of IT firms, salary hikes in 2011 are unlikely to be as high as it was last year.
“That’s because, even though business volume has grown, pricing has not kept pace. I don’t see a hike of more than 8% to 10% in the industry,” Pai said along the sidelines of an event to announce Infosys’ third-quarter results. Usually, in peak years, average salary hikes are around 15% and can rise as high as 20-21%. Pai’s prediction was backed by human resource consultants and placement firms.
“Salary hikes were enormous in 2010, so there is little room this year because the overall salary budgets have dried up. Also, one must take into account the industry growth. Though, there has been recovery, the industry growth has not reached its peak. It is growing at 20%. There is no linear growth in prices and margins are depleting,” reasoned Amitabh Das, founder and CEO of Vati Consulting. E Balaji, CEO of MaFoi Consulting, does not expect wage increases to be more than single digit this year.
“There is lot of margin pressure on the companies (this year),” he said. So, will the smaller wage hike push up the industry already-high attrition rate further? Unlikely, say experts. “Many employees switched companies in 2010. So, I see a lower attrition rate this year because companies have their hands full,” said Kris Lakshmikanth, CEO & managing director of The Head Hunters India. The domestic IT services industry has been grappling with very high attrition rates ever since growth returned last year. It has ranged between 15% and 23% and caused wage inflation that has put tremendous pressure on operating margins of local tech firms.
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