The insane salary hikes and bonuses, combined with high attrition, are finally cooling off in the Indian IT services sector. This corresponds to a decrease in hiring among the big four IT service providers. HR experts believe that compensation packages are already down and will remain so through FY24.
According to Xpheno, a specialist staffing firm, the IT Services cohort has seen a 41% decrease in hiring activity since April 2022. Tech startups have reduced hiring by 63%, while the Software products cohort has reduced hiring by 58%. This overall decrease in hiring activity has cooled the talent war. According to Xpheno’s data, the number of offers chasing talent has dropped by 60%-70% overall.
The decrease in hiring volume and velocity has resulted in a decrease in offer negotiations and counteroffering. Talent in the market who previously had 7 to 8 active offers must now choose between 2 to 3 offers at most. After a period of talent-controlled job markets, the pendulum has clearly swung in favour of the employer,” said Kamal Karanth, co-founder of Xpheno.
When it comes to compensation, most IT firms have announced single-digit average salary increases, but they insist that some segments will see double-digit increases. TCS, for example, announced a 6-8% salary increase. Cognizant announced salary increases ranging from 7% to 10%. Of course, these are average hike numbers, and in some bands, this can reach double digits. However, companies have stated that the need for large raises has diminished.
Following the results, Milind Lakkad, CHRO of Tata Consultancy Services (TCS), acknowledged the trend. “We’ve seen wage normalisation over the last few months.” “Things are also settling down in terms of salary increases,” he added.
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