IT cos sweetening pay packages for freshers

Demand Hots Up

- For FY23, Infosys plans to add 50,000 freshers

- TCS will hire 40,000 freshers

- HCL Tech plans to add 45,000 freshers

- In FY22, top-3 IT cos hired over 2 lakh fresh graduates

- TCS hired 1 lakh fresh engg graduates

- Infosys hired around 85,000 freshers

- HCL Tech hired 23,000 freshers

Bengaluru: Freshers passing out of engineering colleges are up for another good run in 2022 as Indian IT services firms are not only planning to continue their aggressive hiring, but also have started increasing the base salaries for these greenhorns.

IT firms including Tata Consultancy Services (TCS), Infosys, HCL Technologies, Mindtree, L&T Infotech, L&T Technology Services have indicated that their hiring plans for freshers remained robust for this financial year.

Moreover, India's third-largest IT firm HCL Technologies has informed during the fourth quarter announcement last week that it has hiked the salary package of freshers from the previous Rs3.5 lakh per year to Rs4.25 lakh per year. To sweeten the deal for freshers, the Shiv Nadar-promoted firm is in talks with educational institutions where the company is urging certain technology studies as part of curriculum. Subsequently, it is selecting freshers from those institutions and let them finish these courses. After completion, HCL Technologies is hiring these engineering graduates for Rs6 lakh per annum.

"Freshers' salary has already seen an upward trend. We have seen the base salary being increased across the board for all players. This indicates that Indian IT firms are attracting these new talent base to contain high attrition along with an attempt to right-size the employee pyramid," said Aditya Narayan Mishra, director and CEO at CIEL HR Services.

In the last financial year, the top three IT companies hired more than two lakh fresh graduates. While market leader TCS hired 1 lakh fresh engineering graduates, Infosys hired around 85,000 freshers. In comparison to its peers, HCL Technologies hired 23,000 freshers in FY22. For this financial year, Infosys plans to add 50,000 freshers to its current workforce, while TCS has plans to hire 40,000 freshers. But the hiring growth will be the highest for HCL Tech which plans to add 45,000 freshers in FY23, which would be double the numbers it hired in FY22. Market experts believe that despite the aggressive hiring plans and salary hikes, first half of this financial year would not bring much respite to Indian IT industry in terms of attrition. This, in turn, will affect the operating margin of most Indian IT services players in FY23. "Talent shortage will continue to put pressure on demand fulfilment in spite of decadal strong hiring trend last year. We believe most tailwinds for margins will be back-ended – such as pyramid optimisation, pricing power, reduction in sub-con costs," ICICI Securities said in a note.

Most large and mid-tier IT services firms' projected operating margins range for this financial year have been lower than that of last fiscal.

While Infosys has projected to have an operating margin band of 21-23 per cent for FY23, HCL Tech has set a margin range of 18-20 per cent for FY23 as compared to 19-21 per cent for last fiscal.

Higher wage cost, rising attrition and more expenses on subcontracting are putting pressure are likely to put pressure on operating margins during this fiscal year. Entry of higher number freshers is seen as an effective measure to support the operating margin levels in this fiscal year.

Freshers' salary has already seen an upward trend. We have seen the base salary being increased across the board for all players. This indicates that Indian IT firms are attracting these new talent base to contain high attrition along with an attempt to right-size the employee pyramid

- Aditya Narayan Mishra, Director & CEO, CIEL HR Services