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Which IT company gave highest salary hike to employees? A comparison of 5 firms

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Coforge, L&T Infotech (LTI) and Persistent Systems (PSYS) hiked salaries in double-digits in FY22, the highest in the past four years, as per a report by brokerage and research firm Elara Capital, adding that FY22 median wage rise was 2.4x five-year average wage increase for midcap Indian IT companies as acute supply-side strain necessitated roll-out of substantial salary hikes.

Coforge hiked salaries the most at 27.2% year-on-year (YoY). The chart below further shows the L&T Infotech hiked its employees’ salaries at 18.3%, followed by Persistent Systems at 14.5%, Mphasis at 9% and Mindtree at 7%. On FY17-22 salary CAGR (compound annual growth rate), LTI/Coforge are at the top with Mindtree and Mphasis at the bottom, showed the research by Elara Securities.

Source: Elara Capital

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Source: Elara Capital

Meanwhile, employee pyramid restructuring was evident for all such companies in FY22, with Mindtree (MTCL) leading the pack. The pyramid restructuring model is having a larger number of employees with less experience and fewer employees with more experience, which will lead to a reduced wage bill and can be implemented as part of the firms’ strategy to cut costs.

In FY22, employee growth has exceeded the median salary growth, implying faster fresher addition (pyramid flattening) versus the past four years, the report added.

In a comparative analysis of tier-II IT companies’ annual reports – L&T Infotech, Mindtree, Mphasis (MPHL), Coforge and Persistent Systems within Elara’s IT universe – a few common theme-threads have come to the fore, it said in a note on the Indian IT companies.

“IT companies are favorably positioning themselves on engineering capability/R&D service, as such service lines may emerge as key growth drivers in the next few years – Information Services Group’s (ISG) Q2CY22 ER&D grew 41% and most plays saw double-digit YoY growth in median employee compensation in FY22. Further, offshoring spiked sharply and travel expense, as a percentage of revenue, has spiked for most plays, but is still far below pre-Covid level,” the note stated.

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