Bullish signs in IT as demand picks up
The season of bonuses and increments seems to be back in the global IT industry
The season of bonuses and increments seems to be back in the global IT industry. After showing amazing resilience during the ongoing Covid pandemic period, the market leaders in the cash-rich IT sector are coming back to their normal increment cycle. Tata Consultancy Services (TCS) last week said it would give its employees an average increment of between 6-8 per cent to its over 470,000 employees effective April 1, 2021.
This is the second such hike in the span of six months, cumulatively raising wages by 12-14 per cent during this period. Similarly, global technology major Accenture announced a one-time bonus, equivalent to one week of the basic salary, for all its five lakh staffers across the world. Around two lakh people in India will benefit from this bonus scheme.
Early this month, Cognizant said it would be rewarding employees with bonus payouts, promotions, and merit raises, which would be substantially higher than 2019. Bengaluru-headquartered Infosys has also come back to its usual increment cycle from the third quarter onwards. It has announced that salary increments would be rolled out from January 2021 apart from giving 100 per cent variable pay and a special bonus in the December quarter.
The return to the usual increment cycle is a reflection of the optimism on growth prospects. According to global consultancy firm Gartner, global IT spending is projected to grow 6.2 per cent to $3.9 trillion in 2021 from a decline of 3.2 per cent in 2020. Such forecast indicates IT services companies globally require more hands on deck to execute projects. These companies also need to retain skilled staffers to cash in the emerging opportunities.
Apart from getting prepared for the new demand, IT firms also need to reward their employees for seamless execution of project work during the pandemic period. This was achieved despite 95 per cent of employees working from remote locations. Also, higher utilisation levels of staffers need special attention from human resources personnel failing which burnout will lead to rising attrition once the market comes back to normal.
Utilisation levels of most IT majors are currently at an all-time high. In the October-December quarter, both Infosys and Wipro reported utilisation level of 86.3 per cent. Though TCS and HCL Technologies don't make these numbers public, the scene is not radically different from other peers. Though there is no ideal level of employee utilisation, most firms used to operate with around 75 percent level not long back. Therefore, IT companies are rolling out increments to check future attrition through increments and bonus payouts.
It is heartening that mass layoffs, just like one seen during the Global Financial Crisis in 2008-09, have not been seen in the IT sector this time around despite the scale of the present event. Rather, the technology industry has turned out to be a major beneficiary of the pandemic due to rising digitalisation among enterprises. In this perspective, going back to the usual increment cycle augurs well for both Indian IT firms and their employees.