IT staff: I hope IT staff wages will drop 40% in December as the job market slows

Salary expectations for IT staff are down about 40% as of December compared to the same period last year as the demand environment softened due to recession and geopolitical concerns.

This comes after several quarters of a battle for talent that has seen companies make huge salary increases to attract skilled employees.

Attrition has eased from peak levels of 25-30% last year to around 20% in the December quarter, and the resulting delay in salary increases is likely to help companies improve operating margins, which have been under pressure due to the rising cost of talent.

“The main challenges we faced were high attrition of staff resulting in high cost of backfilling, sub-contractors and retention costs. Now this whole cycle is stabilizing,” Samir Seksaria, Chief Financial Officer at Tata Consultancy Services (TCS) told ET recently. The higher salary expectations are much lower now and keeping them won’t be a concern.”

For each of the top four IT service providers, the scale has slid downward on a sequential basis. HR experts attribute this to the challenging macro environment and layoffs among tech giants and global startups.

The salary demands have now largely matched. Average salary expectation for candidates with 3 to 7 years of experience was over 75% (increased) a year ago for a job change, now it has eased to realistic levels of over 30%.” Managed Services and Professional Staff, Adecco India.

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Ramesh added that the reason for the decline is due to stable wages, driven by less demand and a lack of surplus job opportunities to switch, compared to last year, while supply has also increased due to layoffs across the tech industry. C said that with the general tightening of talent requirements, layoffs and global market concerns, employees are more cautious about changing jobs.

As of December 2022, there has been a 40% decrease in salary increase expectations across the market compared to the previous year.

“It is fair to say that the spike when someone changes jobs has been reduced from 70% to 30%,” added Sunil.

Corporations, especially non-tech firms, have welcomed the development as they can finally afford talent that was previously not within their budgets.

“The current salary projections in the market allow many non-IT players to recruit technical talent that they could not recruit in the 2021 cycle due to high compensation expectations in the market,” said Sunil.

Non-tech companies are now snapping up tech talent, albeit at a slower rate, because they were unable to afford the talent auction they experienced last year.

Aside from the overall challenges constraining job changes, companies like Infosys and Wipro have promoted internal candidates which has helped these companies reduce levels of attrition.

CFO Nijanjan Roy said that Infosys’ internal project on “predictability of upgrades” continues unabated and is one of the factors helping to lower the attrition rate.

Cross-city rival Wipro also promoted 10,000 candidates internally in the second quarter and another 6,000 employees in the December-ending quarter.

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