Bengaluru-based IT giant Infosys has commenced its much-anticipated salary hikes for employees from February 2024. As per reports, the increments range between 5% and 8%, while exceptional performers are expected to receive a 10-12% increase.
The salary adjustments apply to employees in band JL6 and below, with the revised salaries becoming effective from April 1, 2025.
Performance-Based Increments – Rewarding Excellence
Infosys determines salary hikes based on an employee’s performance rating, categorising them into four bands:
- Outstanding
- Commendable
- Met Expectations
- Needs Improvement
Naturally, employees in the top performance tiers receive the most substantial salary adjustments.
Why Were Salary Hikes Delayed?
Infosys had initially announced 6-8% salary hikes on January 16, 2024, but these were scheduled to be implemented in phases. The first phase commenced in February, while the second phase is expected in April 2025.
The IT sector has witnessed delays in salary revisions across FY25, with most major players—except Tata Consultancy Services (TCS)—postponing increments. This strategic delay helps companies preserve profit margins amidst a challenging economic landscape and declining discretionary spending from clients.
To counterbalance lower salary increments, Infosys has introduced additional allowances and benefits for employees falling under the taxable income bracket. The company, employing over 3.23 lakh professionals, last revised salaries in November 2023.
How a Step-Up SIP Can Help Employees Maximise Salary Hikes
While a salary hike is great news, it often leads to increased expenses. However, a Step-Up Systematic Investment Plan (SIP) can be a strategic tool to convert this salary increase into long-term wealth.
What Is a Step-Up SIP?
A Step-Up SIP allows investors to increase their monthly SIP contributions periodically, usually in line with salary increments. Unlike a fixed SIP amount, this approach helps investors scale their investments over time, aligning with their growing income.
How to Implement a Step-Up SIP With a Salary Hike?
- Determine the Increment: Identify how much your salary has increased. If your hike is 8%, consider increasing your SIP contribution by at least 5-6%.
- Automate the Process: Many mutual funds offer an auto Step-Up SIP option, which gradually increases your investment annually or at a specified interval.
- Align With Your Financial Goals: Whether it is retirement, a house purchase, or wealth creation, linking your Step-Up SIP to a specific goal can provide motivation.
- Leverage the Power of Compounding: Increasing investments over time means higher returns due to compounding, leading to substantial wealth accumulation over the years.
A Practical Example
Let’s assume an employee starts an SIP of ₹10,000 per month and increases it by 10% each year.
- In Year 1, the investment is ₹10,000 per month.
- In Year 2, it rises to ₹11,000 per month.
- In Year 3, it increases to ₹12,100 per month, and so on.
Over a period of 20 years, this incremental SIP strategy can significantly boost wealth accumulation compared to a fixed SIP amount.
The Bottom Line
Infosys employees benefiting from salary hikes have a great opportunity to put this extra income to work. Instead of increasing discretionary spending, adopting a Step-Up SIP strategy can help them achieve long-term financial growth and security.
By simply adjusting investments in line with income growth, employees can harness the power of compounding and ensure a financially secure future.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.