As appraisal season approaches, employees in the IT sector eagerly await rewarding salary hikes. However, reports indicate a mixed response from employers and employees regarding the anticipated increments.
One notable case is LTIMindtree, a leading multinational information technology services and consulting company in India. The subsidiary of Larsen & Toubro has sent shockwaves among its employees by planning to introduce a competency test for senior staff members. The proposed test, which includes multiple-choice questions on coding and mathematics, will be a first for LTIMindtree. Results from the test will be assessed alongside project completion performance for the year, according to Mint.
This initiative is part of a new structure called “My Career My Growth,” introduced last year. Initially applicable only to senior executives, it has now been expanded to a larger portion of the firm’s 86,800-strong workforce. In October 2024, LTIMindtree gave its employees an average annual hike of around 4%, delayed by about a month from its usual cycle.
*IT Sector’s Slow Wage Growth*
Across the IT services industry, employees are facing the prospect of flat or slow wage growth. Salary increments in the IT sector are expected to decline from 9.8% in 2024 to 9.6% in 2025. IT-enabled services will see a moderation from 9.2% in 2024 to 9% in 2025. The EY Future of Pay 2025 report attributes this decline to automation and cost optimization.
*Lower Increments*
Infosys employees received a hike of 5%-7% this year, lower than FY24’s 7%-9% and significantly less than the 10.5% hike given in FY22. Tata Consultancy Services (TCS) is working on strategies to provide an average hike of 4%-8% by March end, down from the 9% hike in FY24, reports Economic Times. Wipro implemented merit-based salary hikes in September for FY25, with top performers receiving an average 8% increase. Meanwhile, HCLTech employees received increments of only 1-2% in FY25, according to a MoneyControl report.
*Reason Behind Lower Hikes*
One of the reasons behind the low appraisal rate is that the IT sector is expected to see moderate growth of 6%-7% in 2025 due to global economic conditions, technological advancements, and challenges in Artificial Intelligence and cybersecurity regulations, as per an EY report. Additionally, the Indian IT sector is facing stress from lower optional spending by international firms.
A report by Kotak Institutional Equities warns of downside risks to industry revenue growth, potentially reducing it by 1-2%. Large IT companies rely heavily on market recovery to return to normal growth rates, with a limited growth outlook for FY26.
Stay tuned for further updates on the IT sector’s wage growth and appraisal trends.
