Average salary increase in Indian IT services companies expected to fall

This is the effect of increasing margin pressure, rising employee costs, growing need for niche skills and the pressure to hire locals in the US and other foreign nations.

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In the last few years, the average salary hike in IT services companies, that majorly depend on outsourced work, has been four to six per cent. Next year, the hike is expected to be even lower, as per estimates by Aon, an HR consulting company, whereas the projections for the hi-tech and IT sectors were 9.9 per cent, and for the ITES sector it was 9.8 per cent.

This is because, the demand for new digital skills is fast growing and also because the US has imposed visa restrictions. This has put pressure on the work that is being outsourced to other countries.

A significant part of the IT service sector employees receive fixed salaries. They are not used to cash payouts and one-time bonuses. But now that the pressure has mounted, companies are being forced to play with the variable component, which forms about 10 to 15 per cent of the salary of middle-level managers and 30 to 35 per cent of the remuneration of senior managers.

Companies are now increasingly giving increments on the basis of merit, niche skills, emerging technologies, and so on. Organisations are giving a lot of thought to the increments instead of just doling out an average hike. They are relying on cash payouts and one-time bonuses, as these do not put any pressure on the recurring costs.

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