Infosys delays annual wage hikes to Q4 FY25 amid uncertain global demand

Infosys, the prominent IT giant, has decided to push back its periodic pay envelope hikes to the fourth quarter of the current financial time (Q4FY25), as reported by Moneycontrol on Monday. This marks a detention since the company's last payment increase, which took place in November 2023.

The postponement of Infosys wage hike points directly to the growing uncertainty in global demand, particularly for IT services. With IT firms grappling with a variety of pressures—such as low discretionary spending, delayed client budgets, and an unpredictable macroeconomic climate—this decision is hardly surprising.

And Infosys isn't alone in this. Competitors like HCLTech, LTIMindtree, and L&T Tech Services have also pushed salary increments to a later date, specifically the second quarter, as they work to protect profitability amid these challenges.

On October 17, Infosys had been contemplating a phased approach to its wage increases, with some part expected to kick in by January and the remainder following in April, according to CFO Jayesh Sanghrajka. This decision came after the company's Q2 results were released.

In addition to Infosys wage hike delay concerns, Infosys took steps in November to roll out performance bonuses for eligible employees in the quarter ending September 30, 2024.

Still, for Infosys, Q3FY25 profit growth is anticipated to be just 0.1 quarter- on- quarter, substantially due to the seasonal impact of redundancies. Despite this, the company is likely to maintain its full- time profit guidance between 3.75% and 4.5%.

Looking ahead, brokerage firm Motilal Oswal predicts a weaker second half of the year (H2) compared to the first, with growth front-loaded in the first half. Operating margins are also expected to dip by around 30 basis points due to the seasonal furloughs, though this may be balanced out by gains from pricing improvements, cost optimization through sub-contracting, and the ongoing Project Maximus initiative.

The road ahead looks uncertain, but with these calculated adjustments, the tech major is striving to weather the storm and maintain its position in an increasingly volatile market.