India’s top IT companies, including Tata Consultancy Services (TCS), Infosys, and Wipro, witnessed a rise in their wage bills during the 2024 financial year (FY24) even as their revenue growth dipped according to report published in Techgig.
TCS, Infosys, and Wipro saw their average wage costs increase by over 5.5% in FY24 compared to the previous year.
This rise comes in contrast to their year-on-year revenue growth, which averaged a slower 3.6%.
The cumulative rise in wage costs for these companies amounted to Rs 18,036 crore in FY24.
- Lateral Hiring: Companies are actively hiring experienced professionals in high-demand areas like AI, machine learning, cloud, and engineering services. These lateral hires often command salary hikes of 20-30%.
- Salary Increments: Despite being in the lower single digits, annual salary increments continue to contribute to the rise in wage bills.
- High Attrition: The high base salaries offered during the peak of the COVID-19 pandemic, coupled with high attrition rates, continue to impact IT companies’ wage structures.
Also read: Top 3 Indian IT companies see exit of 64,000 employees in FY23-24
- TCS, with the largest workforce (over 600,000 employees), saw the highest wage bill increase of 9.5% year-on-year.
- Infosys and Wipro reported lower increases of 5% and 2.4% respectively.
- It’s important to note that these wage bill increases happened even as the companies experienced a record drop in headcount of around 64,000 for FY24.
While lower attrition rates are positive, they also contribute to the slower normalization of wage bills. Experts predict this normalization to occur by the end of the current fiscal year.
- Despite rising wage costs, companies like TCS and Wipro managed to improve their operating margins in FY24. This can be attributed to factors such as:
- Reduced onsite expenses due to deploying fewer employees overseas.
- Hiring slowdowns and reduced subcontracting costs.
- TCS witnessed a headcount decline of 2.1% (13,249 employees) in FY24, but their employee benefit expenses still rose by 9.2%.
- Infosys saw a 7.5% decrease in headcount (25,994 employees) but employee benefit expenses increased by 5.4%.
- Wipro’s headcount dropped by 24,516 employees, yet their employee benefit expenses grew by 2.1%.
Overall, the Indian IT sector faces the challenge of balancing rising wage costs with slower revenue growth. While cost-saving measures are being implemented, the high demand for specific skillsets continues to exert upward pressure on wages. The coming months will reveal how effectively IT companies can navigate this complex situation.
Source: content.techgig
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