Infosys confirms 10-13% hike; embarks on wage cost battle

However, with falling attrition rates, Infosys is also trying to rein in wage costs by increasing utilization levels, reducing lateral hires and lowering the number of on-site employees.

“It would vary between 10% and 13%, and in some cases, top performers have got 20-25%,” said Krish Shankar, executive vice president and group head of human resources at Infosys.

The increments will depend on an employee’s grade, with the senior management receiving lower salary hikes as their salaries are higher. In May, Mint reported about Infosys’s plan on salary increments to retain employees.

Mint had written earlier that rival Wipro has rolled about 10% average increments, 15% for top performers and quarterly promotions for its employees. . “If you look at it as an industry, when you hire from outside, you must pay a minimum of 20-25% premium. Therefore, we got to also ensure that our internal top performers are not losing out,” Shankar said in an interview.

In 2021, a major skills gap forced IT services firms to announce bumper salary hikes and counter offers. Infosys also announced two hikes, in January and in July. But now that the frenzy is ebbing and attrition is declining (27.1% in Q2 from 28.4% in Q1), the company, which employs 345,218 professionals, is looking to rein in high wage costs.

“If you want to really improve wage costs for us, it is a big driver of margin. How do you improve your margin? It is basically reducing on-site ratios and reducing lateral hires,” he added.

For Infosys, wage costremained flat at 53.2% for the first and second quarters of FY23. September quarter earnings results showed, wage costs as a share of revenue fell for two of the six top firms—Tata Consultancy Services Ltd and HCL Technologies Ltd at 56.1% and 54.6%, respectively—sequentially.

Reducing on-site headcount will be a big move for Infosys, which has 75,143 employees abroad.“They (on-site) have high cost of movement. If you have more here (in India) as a percentage, then your wage costs will come down,” he added.

Infosys clocked utilization (including trainees) of 76.6% in Q2 compared to 77.6% in the June quarter. Utilization in IT services is the number of people who have started working on projects. The fall in utilization translates into higher bench strength.

The firm is focussing on ways to retain talent, including “faster and predictable promotions”, wherein top performers are encouraged to join career development programmes and advance their promotions, say, from 10-12 years to 7-9 years. “We will ensure you become a project manager from a software engineer in about nine years. For good performers, nine years, and if you’re outstanding, it can be even shorter, say about seven years. That’s what we were doing, reducing the time from what it was by 20-30%,” Shankar said.