Indian IT firms to offer up to 8.5% salary increase in FY25

MUMBAI, INDIA — India’s leading IT firms are expected to offer average salary hikes ranging from 5% to 8.5% in fiscal year 2025.
According to industry experts, this development is a relief for employees who have faced delayed hiring and layoffs in recent years. The anticipated salary increments reflect the current economic conditions and strategic cost management by these companies.
In an interview with the Business Standard, TeamLease Digital CEO Neeti Sharma noted that they have been hearing talks of a possible 7-8% average salary increase among top-tier firms in the country.
“Of course, the top performers will continue to see double-digit hikes ranging from 12-18%,” he added.
Revenue growth and cost control strategies
The decision to moderate salary hikes aligns with the recent financial performance of India’s top IT firms.
Kamal Karanth, founder and CEO of Xpheno, highlighted that “the collective of the top seven IT services companies registered a 3.4% annual revenue growth in the quarter ending June 2024, compared to June 2023. Accordingly, the collective has controlled compensation costs with a 2.8% annual growth for the same period.”
This suggests that while revenue growth has slowed, companies are managing their expenses prudently.
Uncertainty surrounds implementation timing
Despite the positive news of impending salary hikes, there remains uncertainty about when these increments will be implemented.
Tata Consultancy Services (TCS) is currently the only major player to have announced salary hikes this year, with increases ranging from 4.5% to 7% for FY25. Other giants like Infosys, HCLTech, Wipro, and Tech Mahindra have yet to finalize their plans.
Most IT companies have indicated that salary increment decisions will be made in the second quarter of FY25. This cautious approach reflects broader economic uncertainties and the need for firms to align compensation strategies with market conditions.
Impact on employee morale and retention
The anticipated salary hikes are likely to play a crucial role in employee morale and retention within the IT sector. With many firms having offered substantial raises during the economic boom of 2021-22, current increments may seem modest by comparison. However, they are essential for maintaining competitive compensation packages amidst rising inflation and cost pressures.
Sharma noted, “In IT services, employee costs are the highest expense. With business slowing, companies will look to control this. However, top performers will continue to receive double-digit hikes.”