According to reports, Tech Mahindra has started rolling out salary hikes averaging 7% for employees, with top performers receiving up to 12%. The adjustments come after an 18-month hiatus for senior executives. The company’s move aims to retain employees, amidst high corporate profits and stagnant real wages. These salary changes align with wider trends across the IT industry.
Tech Mahindra Ltd is initiating salary hikes for its employees starting January 2025, a decision influenced by new CEO Mohit Joshi’s efforts to boost employee morale and retention. These adjustments mark the first increase in approximately 18 months for senior executives, addressing government concerns regarding stagnant wages amidst substantial corporate profits.
As reported by an anonymous senior executive, employees average a 7% salary increase, with top performers seeing increments up to 12%. This follows a pattern seen across the industry, where leading software service providers have dealt with diminished pay increases to protect operating margins amidst low demand.
For context, Tata Consultancy Services (TCS) initiated salary hikes between 4.5%-7% in early 2024, while Wipro offered a 4%-8% increase starting from September last year. Analysts recognize that these salary adjustments are imperative for retaining talent, especially after notable departures linked to the prior CEO C.P. Gurnani’s exit.
The Economic Survey for 2024-25 emphasizes that while corporate profits are reaching 15-year highs, real wages remain stagnant, with calls for companies to align wage increases with profit growth to mitigate income inequality. Other industry leaders like Infosys and HCL Technologies have also rolled out competitive salary hikes during the same period.
Tech Mahindra’s salary revision initiative reflects its aim to retain nearly 150,000 employees, especially in the face of a significant revenue decline in the previous year. Joshi’s three-year initiative, Project Fortius, seeks to improve operating margins by targeting a 15% growth by March 2027. The current operating margin stands at 10.2%, significantly trailing that of competitors such as TCS and Infosys, whose margins exceed 20%.
Although these salary hikes are expected to impact the company’s profitability by 1%-1.5% in the current quarter, they also indicate positive trends in operating margins, which have been on the rise. Overall, the compensation letter sent to employees highlights the company’s appreciation for their contributions and signifies Tech Mahindra’s commitment to its workforce during a critical transition period under new leadership.
Tech Mahindra is proactively addressing employee compensation issues by rolling out salary hikes starting January 2025. The decision, guided by CEO Mohit Joshi, aims to enhance employee retention and morale. With a competitive increase aligning with industry standards, the company responds to stagnating wages in the context of rising corporate profits, reflecting a strategic shift towards valuing and sustaining its workforce.
Original Source: www.livemint.com
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