Infosys Postpones Salary Increments To Q4FY25: What It Means For Employees?

India’s second-largest IT services provider, Infosys, has announced that it will delay its annual salary increments until the fourth quarter of the current financial year (Q4FY25). This decision comes after the company implemented its last pay hikes in November 2023. Typically, salary hikes are scheduled earlier in the year, and this delay signals broader challenges within the global demand environment, especially in discretionary IT services.

The delay in salary increments is not an isolated decision by Infosys. Rival IT giants, including HCLTech, LTIMindtree, and L&T Tech Services, have also chosen to withhold salary hikes during the second quarter of the financial year. This collective action indicates the ongoing challenges faced by IT firms as they grapple with subdued discretionary spending, delayed client budgets, and rising cost pressures in the current economic climate.

Infosys had initially announced plans to implement partial wage hikes in January 2024 and complete them by April 2024, as confirmed by Chief Financial Officer Jayesh Sanghrajka during the company’s Q2 earnings call. However, the global economic uncertainty has led to a rethink, pushing the planned pay hikes to Q4FY25.

In its Q2FY25 earnings, Infosys reported a 2.2% quarter-on-quarter rise in net profit, reaching ₹6,506 crore. While this figure represents modest growth, it did not meet market expectations. Margins saw a slight improvement of 10 basis points, driven by reduced onsite costs, better utilization rates, and operational efficiencies.

Despite these positive trends, analysts from Motilal Oswal Financial Services warned of margin pressures in the December quarter due to seasonal furloughs and fewer working days. However, Infosys is taking steps to counter these pressures through cost-saving measures like subcontractor optimization, pricing improvements, and its margin improvement initiative, Project Maximus.

The delayed salary increments are unlikely to lead to a significant increase in attrition, as analysts pointed out that the job market in the IT sector remains stagnant. In this economic climate, many employees view job security as a bonus. Furthermore, selective salary increments for top performers, particularly those in high-demand areas like artificial intelligence, continue within specific delivery teams.

Infosys and its peers are focusing on cost management strategies to sustain profitability while adapting to the shifting global market conditions. While the decision to delay pay hikes might be disappointing to many employees, it highlights the company’s efforts to maintain financial stability in uncertain times.

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