The performance appraisal cycle for FY25 is set to bring modest salary increments for IT employees, with an average hike of around 5% for the bulk of the workforce. However, professionals with expertise in high-demand areas such as artificial intelligence (AI), machine learning (ML), big data, and blockchain are expected to receive significantly higher salary increases in the range of 10-12%, according to staffing experts.
IT services firms have witnessed a surge of over 50% in hiring demand since mid-January, driven by global clients seeking faster deliveries and AI/ML-driven solutions. However, companies are becoming increasingly selective about salary hikes, prioritising professionals with niche skills while keeping general IT salary increments restrained.
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“On average, employees in in-demand profiles could see hikes of around 10-12%, while those in basic IT roles may receive as little as 5%. Those on the bench are likely to get even lower increments, in the range of 0-3%,” said Karthikeyan Kesavan, director – permanent recruitment at Adecco India.
Retaining specialised talent remains a key focus for IT companies, as hiring new talent with niche skills has become increasingly expensive, exacerbated by competition from Global Capability Centres (GCCs) and tech arms of non-IT companies in sectors such as automobiles.
“Companies often offer retention bonuses with conditions that employees must stay for a specific period, typically 12-18 months. Balancing the bonus amount and tenure is becoming crucial to talent management strategies,” Kesavan added.
Staffing experts also indicated that fresher hiring is likely to remain strong, while mid-level professionals with three to seven years of experience may see lower hikes as IT firms seek to optimise employee costs.
“Senior roles may experience lower variable payouts as firms focus on cost efficiency. Additionally, return-to-office mandates and upskilling initiatives are influencing salary decisions, with companies prioritising employees who align with evolving business needs,” said Krishna Vij, vice-president, TeamLease Digital.
Tata Consultancy Services (TCS), recently announced annual wage hikes in the range of 4-8% for FY25, lower than previous years and below market expectations. Other IT firms are expected to adopt a similar approach.
“IT companies are carefully distributing employee costs, balancing investments in hiring for niche skills with extensive upskilling programmes for existing employees.
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