CALCULATE YOUR SIP RETURNS

Infosys Defers Annual Wage Hike to Q4FY25: Reasons Behind the Delay

Updated on: Jan 6, 2025, 2:40 PM IST
India’s second-largest IT firm, Infosys, defers annual wage hikes to Q4FY25 due to weak discretionary spending and macroeconomic uncertainties.
Infosys Defers Annual Wage Hike to Q4FY25: Reasons Behind the Delay
ShareShare on 1Share on 2Share on 3Share on 4Share on 5

India’s second-largest information technology services firm, Infosys, has postponed its annual wage hikes to the fourth quarter of the current financial year (Q4FY25). This marks a significant shift from its usual practice of implementing salary revisions earlier in the year. The decision reflects broader industry trends amidst economic uncertainties and sluggish global demand for IT services. The share price of Infosys is trading marginally down by 0.16% as of 12:14 PM on January 6, 2025, in an otherwise fragile market.

Reasons for the Deferred Wage Hikes

  1. Global Demand Uncertainty
    Infosys has faced pressure from a weakening demand environment, particularly in discretionary IT services. Clients have delayed budgets, leading to slower decision-making and project rollouts.
  2. Macroeconomic Challenges
    Ongoing macroeconomic concerns, including inflation and geopolitical instability, have compelled IT firms to adopt cost-control measures to sustain profitability.
  3. Industry-Wide Cost Management
    Rivals such as HCLTech, LTIMindtree, and L&T Tech Services have also deferred salary increments, highlighting a sector-wide focus on maintaining margins amidst revenue pressures.

Company Statement and Strategy 

During its Q2FY25 earnings call, Infosys’ Chief Financial Officer, Jayesh Sanghrajka, stated that wage hikes would be implemented in a phased manner, with parts becoming effective in January and the balance in April. This phased rollout aims to balance costs while retaining key talent.

Financial Performance and Cost Optimisation Measures

  1. Q2 Performance Highlights
    • Infosys reported a net profit that missed market expectations.
    • Margins improved by 10 basis points, driven by lower onsite costs and enhanced utilisation rates.
  2. Project Maximus
    • To bolster margins, Infosys launched Project Maximus, a cost-optimisation initiative focusing on improving efficiency and reducing subcontractor expenses.
  3. Selective Hikes for Top Performers
    While company-wide increments are deferred, selective raises are being offered to top-performing employees, particularly in high-demand areas like artificial intelligence. This ensures the retention of critical talent.
  1. Retention Strategies
    Despite delayed hikes, the job market’s current conditions have given IT companies confidence that this move will not trigger widespread resignations.
  2. Performance-Based Rewards
    Specific delivery teams continue to reward exceptional performers, reinforcing talent retention through performance-linked incentives.

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. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Jan 6, 2025, 2:40 PM IST

We're Live on WhatsApp! Join our channel for market insights & updates

Open Free Demat Account!

Join our 2.5 Cr+ happy customers

+91
Enjoy Zero Brokerage on Equity Delivery
4.4 Cr+DOWNLOADS
Enjoy ₹0 Account Opening Charges

Get the link to download the App

Get it on Google PlayDownload on the App Store
Open Free Demat Account!
Join our 2.5 Cr+ happy customers