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(News) TCS, Infosys & Wipro are set to hike salary in 2011

Submitted by admin on Mon, 2010-12-27 18:59

TCS, Infosys & Wipro are set to hike salary in 2011

Top Indian IT companies are set to award more promotions and bigger salary hikes in 2011 as they make a determined effort to retain the best talent amidst intense competition from their domestic and multinational rivals.

Coming out of last year’s recession when these tech firms trimmed their payroll and tightened perks to cope with the crisis, the top three software exporters alone plan to add nearly 100,000 new staff in 2011, much higher than the 20,000 they added last year.

TCS, the country’s biggest software exporter, plans to double the number of promotions next year. Both Infosys and Wipro are set to hand out at least 100% variable pay along with double-digit salary hikes in 2011. Double-digit wa GE inflation is set to make a comeback next year for the first time since 2005-2007 when the industry offered 13-15% increases.

“It’s a dogfight, and it’s no more about fresher hiring anymore. We want employable engineers, ideally with 1-3 years’ experience. Double-digit salary hike is set to become the norm next year,” said the CEO of one of the top ten Indian tech firms.

Over the next 12 months, India’s IT industry is expected to hire 200,000 new staff, much higher than nearly 80,000 gross employee additions the sector reported last year.

TCS has kicked off an initiative to increase the number of promotions to be announced next year, especially for mid-level grades where attrition is critical. “TCS could double the number of promotions, the details are being fleshed out,” said a person familiar with the company’s HR strategy. TCS declined comment.

Hiring and retaining engineering and project management staff to address rising demand is the top worry for companies such as TCS, which saw employee attrition rise to 14.1% during the September quarter, despite giving an average wage hike of 10% six months ago.

In an effort to retain employees, the company also paid out a quarterly variable pay of 150% for the second quarter.

While the biggest battle is for engineers with 1-3 years’ experience, professionals with experience of managing complex projects for large customers are also among the most sought.

“If I want to retain one of the project managers involved in delivering $50-100 million project, and that account has potential to grow much bigger, even 20-25% hike is not a bad idea,” the CEO quoted above said. His company counts GE among its top customers.

According to a CLSA research titled ‘Manpower Crunch’, employees in the 3-8 years experience band account for 40-43% of wage costs of delivery staff. This translates into roughly 15-16% of revenues and inflationary pressures in this band could potentially impact margins adversely, the report warned.

These measures have to be seen in the light of the actions of multinational rivals such as Accenture and IBM which want to increase their proportion of workforce based in cheaper locations such as India. Accenture, for instance, plans to hire nearly 40,000 staff over the next 18 months.