According to The Economic Times, the consulting firms Tata Consultancy Services (TCS), Infosys, and Wipro saw a large increase in wage expenses in the fiscal year 2023–24 (FY24) despite a fall in revenue growth. With an additional compensation cost of Rs 18,036 crore overall, wage expenditures increased by more than 5.5% on average from the previous year.
The main reason of the wage hike is an ongoing trend of lateral hiring in high-demand industries including online computing, engineering services, machine learning (ML), and artificial intelligence (AI). The staffing rush managed increase the wage base despite the fact that it provided salary increases in the low single digits. This pattern is a hangover of the Covid-19 pandemic’s high attrition and growing demand, which presents difficulties for IT companies in managing their wage bills.
With over 600,000 workers, TCS reported a substantial rise in its salary bill of 9.5% year over year, while Infosys and Wipro saw increases of 5% and 2.4%, correspondingly. This is in contrast to the past few years where quite a few of businesses recorded flat or even negative sales.
Infosys saw a 40 basis cent decreases, to 21.7%, in its operating margin in FY24, while TCS and Wipro saw a 50 basis point year-over-year growth. However, the difference stayed outside the 20–22% range that Infosys estimated for FY24 and FY25.
Pay Increases and Expectations
Starting in the month of April, TCS is going to announce wage increases ranging from 4.5% to 7%, with larger increases for outstanding achievers. Still, Infosys and Wipro have not yet released the evaluations and hiring numbers. Employees at Wipro and Infosys both received annually raises during the past fiscal year, although a postponed assessment cycle.
Infosys has suggested that implementing a flexible recruiting approach and staff utilisation will impact hiring practices in the future. Wipro, on the contrary hand, has focused on fulfilling offers extended to students during the worldwide outbreak.
High worker turnover rates and decreasing economy
By the end of FY24’s fourth quarter, the rate of attrition for TCS, Infosys, and Wipro dropped to 12.5%, 12.6%, and 14.2%, respectively, per ET. This indicates a reduction from 20.1%, 20.9%, and 19.4%, accordingly, one year prior.
Even with fewer layoff rates, the three business organizations had a record-breaking fall in personnel for FY24—roughly 64,000.
TCS’s workers reduced by 13,249 workers (2.1%) in FY24, while its employee benefit costs increased by 9.2% to Rs 1,40,131 crore. By the end of FY24, Infosys had 25,994 fewer workers—a 7.5% fall.
whereas 5.4% more was allocated on employee benefits. Wipro had 234,054 workers at the end of FY24—a drop of 24,516—while its employee benefit expenses increased by 2.1%.
In summary, TCS, Infosys, and Wipro are facing an enormous increase in their salaries due to lateral hiring and salary hikes, even if their revenue growth has slowed down. These IT huge companies continue to prioritize the problem of striking a balance amid wage expenditures and revenue, even if they have been able to substantially limit attrition rates.