ncrease salary across board - Infosys plans

Bangalore: Software exporter, Infosys, plans to offer salary increment to its staff this April for the financial year ending March 2011. Infosys skipped the promotion cycle in April 2009 and gave out hikes only in October, reports Chandra Ranganathan from the Economic Times.

"Yes, we are considering a wage hike in April. We expect business to be normal in the coming year and as in a normal year, we give hikes every April. The hikes will be across the board," an Infosys spokesperson confirmed the development and told ET NOW. This move by Infosys, one of the biggest private sector employers with a payroll of over a lakh, underlines the other positive signals from the IT sector. Nasscom said the sector will grow at 13-15 percent for 2010-11, compared with the single-digit growth of 4-7 percent that it had projected for 2009-10 and Cognizant, the only IT major that has given guidance for 2010, said it will grow by 20 percent.



This growth also brings with it a problem that was hibernating during the troubled times, attrition. Infosys CFO Balakrishnan told analysts in New York, "We are also seeing the environment improving, so to some extent the wage pressure could come up and we are seeing some attrition." But Balakrishnan said that the positive sentiment all around was driving the decision, rather than rapid recovery in demand. "The demand has not increased but the perception has changed because the country is growing at 8-9 percent, there is demand all around and most of the companies in the industry are talking about increasing the wages. So, there is a general perception building around where people are thinking that the overall wage level is going to go up. That could have some pressure."

Infosys was, however, tight lipped about the range of hikes for 2010-11 or the impact that this would have on margins. Sources in the industry said that the range of hikes could be 3-12 percent, with an average of 7-8 percent.

The hikes signal that things are getting back to normal in the IT sector, but it's a new normal, because compared with earlier years, the average this time is smaller, something that could continue for the next couple of years. Pre-crisis, IT employees usually got double-digit hikes.

As reported by the Economic Times, the April wage hike could impact the company's margin by 200-250 basis points, but higher growth could cushion margins. And if Infosys can boost utilisation rate and work with a higher and fresher mix, then it will be able to manage margins well.