IT cos chant dry promotion mantra to tame attrition

IT industry is probably giving out dry promotions as the sector grew only 3% last year. Global headwinds and automation are posing significant challenges. Therefore, to keep the spirit high, many companies are giving them promotions with very small hikes, or give one-time bonus or only these dry promotions -- Aditya Narayan Mishra, CEO of CIEL HR, tells Bizz Buzz

Bengaluru: Indian IT industry is witnessing many instances of dry promotions, wherein companies are doling out promotions to their employees without giving any monetary hikes. According to experts and company sources, such trend is being seen as the demand environment in the IT services industry remains tough and companies want to conserve the cash than giving it to employees in the form of salary hikes.

However, they opined that this phenomenon was not new to the industry as companies many times had done this before during crisis period.

“IT industry is probably doing this (giving out dry promotions) as the sector grew only 3 per cent last year. Global headwinds and automation are posing significant challenges. Therefore, to keep the spirit high, many companies are giving them promotions with very small hikes, or give one-time bonus or only these dry promotions,” Aditya Narayan Mishra, CEO of CIEL HR, told Bizz Buzz.

“It is happening in the technology world now, but this practice is not new. This helps in checking the attrition. Employees also understand that such dry promotions are not only given in their companies, but it is a wide-spread industry issue,” he added.

Dry promotion is the term used in the HR industry when it typically involves an increase in job responsibilities or title without a corresponding increase in compensation. Such strategy is followed when the overall industry is not doing good, putting pressure on the balance sheets of firms. So, this approach is a cost-effective strategy for businesses at the time of downturn.

Several mid-tier companies seem to be following this strategy at this point of time when the IT industry is going through a downturn after a demand surge during the post-pandemic period.

“Dry promotion is a growing trend that has spread to mid-scale and small IT companies besides their larger peers. The difference is in strategy and timing of implementation. Big corporations often implement dry promotions in periods of budget tightening or during strategic shifts towards cost optimization. On the contrary, the nimbler smaller IT companies adopt dry promotions to help retain talent by offering career progression, even when the ability to increase salaries is limited,” Priyadarshi Nanu Pany CEO at mid-tier IT firms, CSM Technologies told Bizz Buzz.

He, however, said that clear communication with future financial growth prospects have to be conveyed to staffers if such dry promotions are given. In the absence of such initiatives, attrition may rise.

Salary increments and variable payouts came down drastically last year with most big firms giving only single-digit hikes to their employees. Many mid-tier and small firms even skipped the increment cycle altogether last year. Tepid demand environment, macroeconomic uncertainty and high wage pressure due to record number of hiring and increments are cited as reasons for such promotions being doled out this year.