Infosys is considering double-digit pay raises as chairman NR Narayana Murthy looks to keep the workforce of 1.5 lakh motivated, people aware of discussions in the company said.
Although growth is showing signs of picking up, several senior executives have left the Bangalore-based company in recent months, making it imperative for attractive pay raises to keep employee morale high.
"Not only have they decided to hand out bigger pay increases, there will also be more promotions," said a senior industry executive on condition of anonymity. "Hikes could fall in the 8-12% range to motivate employees," the person said.
Infosys usually announces pay increases in June. A spokeswoman for the company declined to comment. Last year, Infosys raised salaries for staff in India by 8% on average, shortly after founder Murthy returned to lead the company as executive chairman in June.
"I think Murthy's going to offer higher wage hikes because a combination of hikes and other factors will be critical to retaining people," said Ajit Isaac, managing director and chief executive of Ikya Human Capital Solutions, a staffing company that serves the Indian IT sector.
Analysts said the decision to offer higher pay hikes is a welcome one although it could impact the company's margins. "At this point, improving employee sentiment matters more than worrying about dip in margins," an analyst with a foreign brokerage firm said on condition of anonymity as he is not authorized to speak to the media.
Attrition at Infosys was 17.3% at the end of the September quarter, the highest among the tier-1 Indian IT providers, illustrating that the company had become fertile poaching ground for rivals, as demand picked up for the $108 billion outsourcing industry.
In comparison, Tata Consultancy Services, which had announced a 5-10% pay increase in April, had an attrition of 10.9% at the end of second quarter.
Last June, Wipro said it was raising salaries by 6-8% for its employees.