Infosys, one of India's largest IT services firms, recently announced salary hikes for employees, with increases ranging from 5% to 20% based on performance ratings, marking the company's first salary revision since November 2023. The new increments come as the firm aims to reward its talent, albeit with some disappointment from employees who expected more significant raises amid steady financial growth.
According to reports from the Economic Times, the salary adjustments are categorized based on employee performance evaluations conducted from September 2023 to October 2024. Employees classified as having "met expectations" received raises between 5% and 7%. Meanwhile, those who demonstrated "commendable performance" saw increases of 7% to 10%, with the highest performers, known as "outstanding performers," granted substantial hikes ranging from 10% to 20%—a minority group but one rewarded for their exceptional contributions.
On the other hand, employees identified as being under "needs improvement" unfortunately did not receive any salary increments, reflecting the company’s stringent focus on meritocratic assessment. The retroactive pay for Job Level 5 employees, primarily team leaders and below, is effective from January 1, 2024. Job Level 6 employees, mainly managers below vice president level, will see their new salaries take effect starting April 1, 2024.
It is notable, though, the latest raises fall short of the increments issued during the prior pay review, which took place in November 2023, as the current increases are 5% to 10% lower across various performance bands. This has sparked conversations among staff who had hoped for more substantial financial rewards. One employee expressed the prevailing sentiment, stating, "On such days, our MS Teams communicator groups are usually buzzing with chats. The groups have gone quiet this time as they probably expected a bigger hike. We are, of course, also aware the industry is passing through a challenging phase." This comment underlines the sense of muted anticipation surrounding the announcements.
Despite the lower-than-anticipated salary hikes, Infosys posted strong financial results for the October-December quarter, reporting an 11.4% increase in net profit to $800 million and revenue growth of 7.6% to $4.9 billion compared to the previous year. These results showcase the company's resilience and ability to navigate through difficulties affecting the IT sector, offering some reassurance amid uncertain economic conditions.
Chief Financial Officer Jayesh Sanghrajka acknowledged the challenging market environment during the company's earnings call, indicating they were considering salary hikes of 6% to 8% for Indian employees and lower increments for overseas staff. He reiterated the company's commitment to recognizing high performers, ensuring they receive higher rewards compared to their peers, stating, "Of course, the higher performers would get much higher, etc., and the overseas would be low single digit." This insight provides clarity on the company's structured approach to compensation, balancing the interests of performance with the pressures of the industry.
Interestingly, Infosys also reaffirmed its hiring strategy, planning to onboard 15,000 fresh graduates for the fiscal year 2024-25 and aiming for 20,000 new hires the following year. This enthusiasm for expansion falls amid the company's cautious approach to salary increments, indicating strong optimism about future growth prospects within the organization.
The emphasis on performance-based salary increases aligns with industry trends, especially as many IT firms grapple with economic uncertainties, leading to strategic decisions like delayed salary cycles to protect margins. Competition remains fierce for skilled talent, and companies are trying to balance rewards with operational efficiency, highlighted during this recent round of salary reviews.
Overall, Infosys’ salary hike announcement has drawn varied reactions, from appreciation for the performance-based increments to disappointment over the size of the hikes. The feedback from employees mirrors the broader sentiment across the technology sector, as firms navigate through economic hurdles. The road forward for both employees and employers may require careful recalibration, maintaining employee motivation with competitive compensation packages even amid the increasing challenges of the IT market.