IT Services Sector Expected To See Moderate Increases In Salary, Say Experts

Industry expert said that companies are implementing retention bonuses, ESOPs, and project-based incentives instead of salary hikes to compensate individuals.

Attrition rates across the industry averaged at 17.7 per cent in 2024, declining from 18.3 per cent clocked in the year earlier. 

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Salary hikes in the IT services sector are expected to be moderate in the 2024-25 fiscal year (FY25), experts said. The industry worth $250 billion in India is currently navigating several challenges such as global economic uncertainties, an increase in the adoption of artificial intelligence (AI), and evolving skill demands.

Industry experts projected that the average wage is likely to increase in the range of 4 per cent to 8.5 per cent, marking a major step down from the previous years, reported PTI. This change reflects a shift towards more practical compensation strategies.

Outlook For Wage Hike Remains Wary

Krishna Vij, VP, Team Lease Digital, explained that the outlook for salary increases remained quite cautious in the year. “This slowdown is largely due to global economic challenges, reduced discretionary spending, and shifting business priorities. Companies are being more conservative with their salary budgets, and many have even pushed their appraisal cycles beyond the usual April-June period which has made salary revisions less predictable in the current scenario,” she added.

The expert said that organisations are moving to skills-based pay and depending on hiring at Tier-II to save costs. Vij said that companies are implementing retention bonuses, ESOPs, and project-based incentives instead of salary hikes to compensate individuals.

Janoo Motiani, CEO, Reed & Willow, said that amongst the tech companies, TCS has taken the lead and announced salary hikes ranging from 4-8 per cent effective April 2025. However, no final announcements have been made by Infosys, Tech Mahindra, Wipro, and HCL Tech in this regard.

Motiani said that these firms are expecting to see market movements in Q2 before deciding on salary hikes. She noted that this seems like a conservative approach and indicated the tempered growth and changing client demands in the market.

Attrition rates across the industry averaged at 17.7 per cent in 2024, declining from 18.3 per cent clocked in the year earlier. Adecco India projected an average salary hike of 6-10 per cent, however, for mid-level and senior-level employees with in-demand skills and strong performance, the jumps in wages are expected to be higher.