Why Narayana Murthy's Infosys, Noel Tata's TCS and other IT giants will roll out lower salary hikes this year? Reason is...

As appraisal season approaches, employees across the IT sector are eagerly awaiting salary hikes. However, reports suggest mixed reactions from both employers and employees regarding wage increases this year.

One of the most surprising developments comes from LTIMindtree, a leading Indian IT services firm. The company, a subsidiary of Larsen & Toubro, is reportedly planning to introduce a competency test for senior employees. Project leads, managers, and lead architects may be required to take a multiple-choice test on coding and mathematics. The results of this test, combined with project performance, could influence their appraisals, according to a report by Mint.

This move, part of LTIMindtree’s “My Career My Growth” program introduced last year, has created uncertainty among employees. Initially applicable to senior executives, the program has now expanded to include a larger portion of the company’s 86,800 employees. LTIMindtree had previously given an average annual hike of around 4% in October 2024, delayed by a month from its usual cycle.

IT Sector Sees Lower Salary Hikes

The broader IT industry is witnessing slow wage growth. According to the EY Future of Pay 2025 report, salary increments in the IT sector are expected to decline from 9.8% in 2024 to 9.6% in 2025. Similarly, IT-enabled services will see a drop from 9.2% to 9%. The report attributes this trend to automation and cost-cutting measures.

Companies like Infosys, TCS, and Wipro are offering lower hikes compared to previous years. Infosys employees received a 5%-7% raise, down from 7%-9% last year. TCS is expected to provide 4%-8%, lower than FY24’s 9%. Wipro’s hikes are merit-based, with top performers receiving around 8%. HCLTech reported the lowest increments, at just 1%-2%.

Why Are Salary Hikes Declining?

Experts cite slower industry growth, global economic challenges, and reduced discretionary spending by international clients as key reasons. According to an EY report, the IT sector is expected to grow at a moderate 6%-7% in 2025. Additionally, a Kotak Institutional Equities report warns of a potential 1%-2% drop in industry revenue growth.

With limited growth projections for FY26, IT professionals may have to brace for another year of modest salary increments.