According to a report by brokerage and research firm Elara Capital, Coforge, L&T Infotech (LTI), and Persistent Systems (PSYS) all increased compensation by double digits in FY22, the greatest increase in the previous four years. According to the report, severe supply-side pressure forced midcap Indian IT companies to roll out significant salary increases, which resulted in a median wage increase in FY22 that was 2.4 times higher than the five-year average wage growth.
Coforge increased pay the most, by 27.2% on an annual basis (YoY), L&T Infotech increased employee pay by 18.3%, followed by Persistent Systems by 14.5%, Mphasis by 9%, and Mindtree by 7%. According to study by Elara Securities, LTI/Coforge are at the top of the salary CAGR (compound annual growth rate) for FY17–22, while Mindtree and Mphasis are at the bottom.
In the meantime, all of these businesses displayed staff pyramid restructuring in FY22, with Mindtree (MTCL) topping the pack. With more employees with less experience and fewer employees with more experience, the pyramid restructuring model will result in a lower salary bill and can be used as part of a company’s cost-cutting plan.
According to the research, in FY22, staff growth exceeded median salary growth, indicating faster fresher addition (pyramid flattening) than in the previous four years. Over the past two years, as demand for services like cloud computing, digital payment infrastructure, cybersecurity, and cryptocurrency transactions increased, IT companies have paid premium salaries to entice competent staff.
A few common theme-threads have emerged in a comparative review of the annual reports of tier-II IT companies, including L&T Infotech, Mindtree, Mphasis (MPHL), Coforge, and Persistent Systems inside Elara’s IT universe, it said in a note on the Indian IT companies.
“IT companies are favourably positioning themselves on engineering capability/R&D service, as such service lines may emerge as key growth drivers in the next few years – Information Services Group’s (ISG) Q2CY22 ER&D grew 41% and most plays saw double-digit YoY growth in median employee compensation in FY22. Further, offshoring spiked sharply and travel expense, as a percentage of revenue, has spiked for most plays, but is still far below pre-Covid level,” the note stated.
