TCS, Infosys, Wipro: Expect variable pay cuts, slowdown in hiring in Q4 FY23

The upcoming earnings season comes as a litmus test for Indian IT companies like the Tata Consultancy Services (TCS), Infosys, Wipro, HCL Tech, and others who have been facing headwinds amid rising inflation and the macroeconomic slowdown. The sector’s performance is also reflected in the hiring, fresher onboarding, and variable payouts, which have been dull in FY23 so far, as compared to FY22. Experts believe the same trends will be continued at least for the short term.

Variable pay

Sriram Venkat, an HR firm associate, noted that the variable payouts would be muted in Q4 FY23. He also noted that lower-band employees will feel a limited impact of the cuts while mid to higher-level executives might be paid depending on business unit performance.

“In Q4 we can expect variable payouts to be muted. For lower band of employees, it may range from 85-100 per cent at large cap IT companies. For rest it will most likely depend on business unit performance,” he told Business Today.

Headcount and Attrition

Experts and industry insiders believe that the headcount growth, which slowed down in Q3 FY23, will continue into Q4.

Kalyan Durairaj - Director of HR at FourKites (APAC), said, “The current slowdown has definitely impacted hiring and expansion. Due to economic uncertainties, IT companies are being cautious with their hiring plans, resulting in a slowdown in headcount growth.”

Experts also added that voluntary attrition might moderate due to lack of opportunities because of industry wide layoffs.

Venkat noted, “Q3 was the first time a major IT company like TCS had a negative headcount, this is indicative that they are taking a conservative approach. This approach may remain conservative for this quarter also. Mid cap IT companies might also reduce headcount via layoffs, this will also lead to moderation in voluntary attrition.”

Slowdown in campus hiring and delay in onboarding

As previously reported by Business Today, major IT companies like TCS, Infosys, Wipro, HCL Tech, and others have not been as active in their campus hiring drive during the current placement session.

Vijay Sivaram, CEO of Quess IT Staffing told Business Today, "We will definitely see a drop and pressure in fresher hiring and campus hiring because companies over hired entry-level talent post-COVID, there was a surge in entry-level talent hiring, but it was not seen in the years before. Organizations are reviewing their needs now."

Experts also noted that the pain caused due to the delay in onboarding might extend for some more time.

Venkat said, "The delay might extend for some time as companies. Several big IT companies like Infosys, Tech Mahindra, and TCS currently have huge benches, companies will first try to utilise their existing talent pool, then try to add the ones waiting for onboarding. Since they already have so many students waiting for onboarding, they will slow down entry-level hiring too."

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