Last week, the Q1 FY 2023-24 earnings season for the Indian IT sector began with the announcement of quarterly results of Tata Consultancy Services, HCLTech, and Wipro. A major trend observed in the results was the cut backs on variable pay and deferment of salary hikes.
On Wednesday, HCLTech announced its Q1 FY24 results. The results missed analyst estimates as well as the IT firm’s own projections. The company’s management noted that they are taking active steps to get on track to match their previous projections. One of these steps is deferment of salary hikes for a section of the staff.
In an exclusive interaction, Prateek Aggarwal, Chief Financial Officer at HCLTech told Business Today that the IT services company has deferred the annual salary hikes of senior employees to October. Until last year, the salary hikes were rolled out in the September ended quarter.
The CFO said, “Based on the actions we have announced, we are confident in returning to the 18-19 per cent range. The actions include wage increment deferrals for senior staff and a decision on junior staff increments to be made in October.”
HCLTech reported 7.6 per cent rise in consolidated net profit at Rs 3,534 crore for the quarter ending June 30, 2023 as against Rs 3,283 crore in the year-ago period. The company’s consolidated revenue rose 12 per cent to Rs 26,296 crore in Q1FY24 as against Rs 23,464 crore in the year-ago period.
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“Variable pay will be determined in line with company policies and results,” Aggarwal added.
Similar developments were observed at Wipro. The IT major announced its results on Thursday. The company noted that they would also be deferring the annual salary hike of employees by a quarter.
In a press conference held after the announcement of its results, Jatin Dalal, the company’s Chief Financial Officer said: “We did our last salary increase in September of last year, and we plan to do that for this year sometime in quarter three.”
Not just annual salary hikes, the IT services company also announced cutbacks on variable pay of employees. The Chief Human Resources Officer of the company, Saurabh Govil, said that the variable pay of employees would be capped at 80 per cent for Q1 FY24.
The CHRO said, “Our variable pay will be around 80 per cent in Q1 in spite of this environment. We will continue to do what is required for our employees but continue to calibrate with the business requirement.”
For Q1 FY24, Wipro reported a 11.95 per cent year-on-year (YoY) rise in consolidated net profit at Rs 2,870.1 crore. Revenue for the quarter rose 6.04 per cent YoY to Rs 22,831 crore. It is worth noting that the numbers fell short of analyst estimates.
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