Indian IT sector braces for 3-6% salary hikes in FY26
NEW DELHI, INDIA — India’s $250 billion IT sector is projected to offer salary appraisals of 3-6% in FY26, according to HR experts. This comes amid rising attrition rates, which are expected to reach 12-13% in FY25.
Despite higher turnover at major firms like Tata Consultancy Services (TCS), Infosys, and Wipro, experts argue that this does not signal a demand-driven market shift.
Kamal Karanth, co-founder of staffing firm Xpheno, stated, “Higher hike rates are indicative of a buoyant revenue outlook.” Still, Karanth warned most employees to brace for “moderated hikes” aligned with inflation adjustments.
Appraisal cycles see delays across firms
The traditional April to June appraisal window is being pushed back by many companies to September to October due to economic uncertainties.
However, TCS has maintained its annual cycle and announced average salary hikes of 7-8% for FY25, with top performers receiving double-digit raises. Infosys has implemented a phased approach, offering junior employees 6-8% increments in January and extending appraisals for others to April.
Meanwhile, attrition rates continue to rise across the sector. Wipro reported a Q3 FY25 attrition rate of 15.3%, up from 14.5% in the previous quarter, while HCLTech saw an increase to 13.2%.
Hiring slows as companies focus on cost control
The IT sector’s hiring activity remains sluggish, with active job openings stagnating at approximately 122,000—a significant drop from the post-pandemic peak of 140,000-150,000. Experts attribute this slowdown to global economic pressures and a cautious approach by companies prioritizing cost control over aggressive hiring or salary hikes.
Krishna Vij, Vice President at TeamLease Digital, noted that firms are focusing on selective pay hikes and variable compensation to retain top talent.
“I think most of the IT services companies will look at selective pay hikes and be more inclined towards variable pays rather than fixed salary hikes,” she said.
Variable pay takes a hit amid demand pressures
Variable pay has also been impacted by the subdued demand environment. Senior executives at TCS saw reductions of up to 30%, while junior employees received full payouts based on attendance and performance.
As the IT sector navigates these challenges, employees may need to temper their expectations for salary growth. While high performers could see selective increments, overall pay adjustments are likely to remain modest, reflecting the broader economic outlook and industry performance trends.
