Salaries of technology professionals reflect the global trend. Both IT industry and technology-powered startups hired technology professionals with steep hikes and handsome compensations during the pandemic and post-pandemic period. However, things have started to go the other way from 2023, which was a washout year for tech startups and the technology industry, as a whole. Tech giants like Meta, Amazon and others fired several of their employees globally. On the other side of the spectrum, the startup ecosystem has been going through a funding winter, which has led to huge layoffs. According to available data, globally 1,160 technology companies laid off more than 26 lakh staffers in 2023, while in India it took a toll of 20,000 staffers due to cost optimisation moves by domestic startups. These measures were an outcome of ongoing funding winter, growth slowdown and over-hiring during the pandemic. Ironically, 2024 is yet to see much of a change in this trend. Last month, more than 34,000 employees were laid off, including in Google, Amazon and hundreds of other tech firms, according to tech layoffs tracker, Layoffs.fyi.
A bigger impact has been that salaries and increments of such professionals have taken a big hit since last year. Increments announced by top IT firms in India were all in single digits in 2023. This trend is unlikely to change in 2024. According to staffing sector experts, salary offers for India’s information technology professionals have plummeted by 30-40 per cent, from around the Rs. one crore per annum that they commanded a year ago. This was the result of global macroeconomic headwinds and IT sector slowdown. According to Nasscom’s latest projections, the overall growth of the country’s IT industry is expected to slow down to 3.8 per cent in FY24 as compared to 8.4 per cent posted in FY23. The total revenue of the Indian IT industry would touch $253.9 billion, according to its annual strategic review report. Experts in the know said that many senior professionals were joining other companies for lower compensations because of the slowdown. Salary cuts have emerged as a norm in the IT industry. Even in case of replacement hiring of mid-level professionals, gone are the days when companies used to offer around 100 per cent pay hikes.
Hikes during new hiring have come down to a more realistic 20-30 per cent or less. Needless to say, this slowdown has impacted IT freshers the most. With many companies halting fresher hiring, all hopes of the much-needed hike after a decade long stagnancy have been dashed. In this context, the CXO-level salaries will also be impacted in FY24. Though total compensations of CEOs, CFOs and other top-level executives will be known after the release of annual reports, all indications are that performance-linked compensation is likely to be adversely impacted this year. Usually, 30-40 per cent of total compensation of top-level executives is linked to overall company performance and share price movement in the stock markets. As both continue to languish, there is no doubt that compensation for top-tier professionals will take a beating this year.
