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India’s $250 billion IT sector is bracing for lower salary hikes this fiscal year compared to previous years. Experts point to global economic uncertainties, shifting skill requirements, and the increasing impact of artificial intelligence as key reasons behind the cautious approach. On average, companies are expected to offer raises in the range of 4% to 8.5%, a significant reduction from past trends.
Krishna Vij, Vice President at TeamLease Digital, explains that businesses are tightening their salary budgets. Many companies have even postponed their usual April-June increment cycles. Instead of relying solely on base salary hikes, firms are now leaning toward alternative compensation strategies such as bonuses, ESOPs, and project-based incentives, and are increasingly emphasizing skill-based pay and cost-effective, second-tier hiring.
Janu Motiani, CEO of Reed & Willow, echoes this sentiment, predicting salary hikes between 5% and 8.5%. According to her, the days of double-digit raises are likely behind us—for now at least—reflecting a broader sense of caution within the industry.
On the corporate front, Tata Consultancy Services (TCS) has already announced a salary hike range of 4% to 8% for the financial year. In contrast, other major players like Infosys, HCL Tech, Wipro, and Tech Mahindra have not yet finalized their increment plans, possibly waiting to gauge market trends in the coming quarter.
Motiani also highlights a slight improvement in employee retention, noting that the industry’s attrition rate has dropped from 18.3% last year to 17.7% this year. This reduced turnover means companies might feel less pressure to offer aggressive retention bonuses, leading to varying raises across different employee levels.
Additionally, Adecco India estimates overall salary increases could be between 6% and 10%. They anticipate that middle to senior-level employees, especially those with in-demand skills like AI, will receive higher hikes, while freshers might see more modest increases of 2% to 4%.
