ET could not independently verify the share of the employee base that received these hikes but sources confirmed that a majority of junior to mid-level employees have received similar hikes. This comes after the company deferred roll out of annual hikes from April to August.
LTIMindtree has conducted performance appraisals for employees at every level, aligned with industry norms, said a company spokesperson responding to queries. “The percentage of salary increments for each employee is determined by their individual performance, length of service with the company, and market competitiveness,” said the spokesperson.
Delays in deal closures hurt LTIMindtree in the June quarter, helping explain its underwhelming revenue and profit scorecard despite an encouraging order pipeline, ET had reported in July.
A source who did not wish to be quoted said that in multiple projects, even top performers had received hikes as low as 0.1%. “Few people have received up to 2% hikes but not more than that,” said the person.
Tata Consultancy Services had announced annual hikes with effect from April, including 12-15% for “exceptional” performers. It also assured 100% variable pay for 70% of the staff while the rest will depend on the business unit’s performance.
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But TCS has been an outlier. HCLTech has foregone wage hikes for senior management in the current fiscal. Infosys and Wipro are yet to roll out their annual hikes. Infosys last rolled out annual hikes in July 2022. Although Wipro has stated that the hikes will be rolled out in the October-December quarter. LTIMindtree had said, after Q1 results, that promotions and annual hikes will be rolled out in July itself however, it was rolled out in August. It did not share guidance on fresher hiring for the rest of the year.
The company reported 4.1% growth in net profit for the first quarter, missing estimates amidst a “challenging macroeconomic environment”. Revenue came in at Rs 8,702.1 crore, up 13.8% year on year, which also missed estimates.
The company’s voluntary attrition for the first quarter stood at 17.8% compared with 20% last quarter. Headcount was 82,738, down by 1,808 over the quarter amidst an uncertain macro environment. The company had also redeployed around 1,000 employees from delivery team to sales and support team as a one-off exercise. According to another source that ET spoke to, such changes have only added to the current discontent with hikes.
“Despite efforts to consolidate the work culture of the two former companies, the policies of Larsen & Toubro have taken precedence, leading discontent among a section of employees. The low annual hike payoff has only made it worse,” said the person, adding that the company is likely to witness higher attrition in the coming quarters due to this situation.
Q1 was the first quarter when the two merged companies – Larsen & Toubro Infotech and Mindtree – consolidated their bench (employees who are available to join client projects) post-integration in December 2022.
“One priority was that before we start hiring people very aggressively, we need to make sure that our internal deployment is done efficiently,” said CEO Debashis Chatterjee post Q1 earnings.
“We expected quite a few deals to close in Q1, but (those) got dragged into Q2,” Chatterjee told ET. “The decision making process- there has been consistent delays across all the sectors.
During the quarter, the company has reported a loss of five active clients but the management called it “insignificant” as the company will target top-100 accounts for deriving more business.
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