Mid tier IT companies may give small increment in 2013

Faced with continuing uncertainty in their largest markets, US and Europe, mid-sized technology outsourcing companies will give out tepid pay hikes and cut down on their campus hiring in 2013.

Coming out of a slow year when the IT industrysaw slowing revenue growth thanks to clients being more cautious about technology spending, software services exporters such as Infinite Technologies, Mastek, Mahindra Satyam andInfotech Enterprises said the pay hikes could be as low as 5% this year.
Compared to double-digit pay hikes till a few years ago, salary increments in India's $100-billion (Rs 5.5 lakh crore) IT industry has been consistently declining since the financial crisis of 2008, from which US and Europe is yet to completely recover. "Wage hikes for IT employees will be lower than last year due to slowdown in the US and European markets and pricing pressure from clients there," said BVR Mohan Reddy, chairman and managing director of Hyderabad-based Infotech Enterprises, which employs about 10,000 people.

It had given out average pay hike of 15% to its offshore employees and 3% to employees in onsite locations in US or Europe. "Hiring too will be lower compared to last year," Reddy said.

Indian IT companies typically give out salary increases during the first three months of the financial year that starts in April while campus job offers are made in November-December. IT firms hire close to 1.5 lakh students from campuses every year. But with large companies unable to predict near-term growth with any degree of certainty, industry watchers say they are doubtful about robust growth among larger IT companies, let alone tier-II firms.
"There are no signs of de-growth as of now, but companies have clearly become more selective about hiring," said Aditya Narayan Mishra, head of staffing business at human resources firm Randstad India.

Hyderabad-based Mahindra Satyam, for instance, said it plans to cut down on its campus hiring by 50% in the coming year due to the unpredictable business environment.

"You can be sure that it will be a muted year," said Hari Thalapalli, chief people officer at Mahindra Satyam, which gave 6.5% hike to offshore and 1.5% to onsite employees last year.

Thalapalli's concerns are echoed by other executives in the industry such as Farid Kazani, chief financial officer at Mumbai-based Mastek who said that as of now things look "quite muted."

"We don't expect a major increase (in pay hike) due to the on-going pressure in the IT sector," Kazani said. With large firms such as Infosys and Wipro offering meagre hikes and postponing hiring decisions, Kazani said mid-tier IT firms find it easier to retain employees. "There is no pressure to hire or offer wage hikes." Mastek said it will take a final call on pay hikes in a month's time.

Last year, the country's second-largest IT exporter Infosys had delayed joining dates of over 20,000 freshers and did not give pay hikes to its over 150,000 employees during the normal schedule, citing volatility in business environment. Its cross-town rival Wipro gave 8% average wage hike to its offshore and 3% to onsite staff. This year it will be below 10%," said Upinder Zutshi, chief executive officer at Infinite. "The coming year will be challenging.