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Mint
03-07-2025
- Business
- Mint
IT's pay puzzle: Wipro, TechM median salaries drop despite rise in headcount
Median remuneration to employees at Wipro Ltd and Tech Mahindra Ltd fell simultaneously for the first time in eight years in FY25, despite both companies expanding their workforces. Analysts said that this indicates that the two IT service providers likely added more freshers as well as hired replacements at lower salaries to boost profitability. In FY25, Wipro and Tech Mahindra reported a decline of 0.6% and 6.52% in annual median salary, respectively, according to their annual reports. At Wipro, median salary totalled ₹9.78 lakh (around $11,000), whereas median salary at Tech Mahindra worked out to ₹18.3 lakh for males and ₹15.4 lakh for females. Median salary is the mid-point of a set of salaries arranged in ascending order, where half the salaries are higher and half lower. In contrast, the country's two largest IT outsourcers—Tata Consultancy Services Ltd and Infosys Ltd—increased their median salary to employees by 6.3% and 9.6%, respectively. Median salary at the country's third-largest software services provider HCL Technologies Ltd is not yet known as the company has yet to release its annual report for FY25. Wipro and Tech Mahindra—India's fourth and fifth-largest IT firms—last reported such a simultaneous decline in median salary in FY17. Individually, Pune-headquartered Tech Mahindra has seen its median remuneration decline six times in the past 10 years, whereas it is the third such instance for the Bengaluru-based Wipro. Median remuneration to employees at Wipro does not include whole-time directors. TCS and Infosys reported such a decline only once in the past decade, in FY21 and FY15, respectively. HCLTech is the only company among the country's top five software services firms to have never seen its median salary decline. Emails sent to Wipro and Tech Mahindra remained unanswered till press time. The fall in the median remuneration comes at a time when profitability of the country's largest IT outsourcers has been under pressure. These companies are exploring various ways to improve operating margins and one such way is to hire junior employees at lower costs. Lower median remuneration at Wipro and Tech Mahindra could imply that the companies added more freshers and/or hired candidates at lower salaries to replace talent at mid-management and senior levels, which led to a decline in median salaries, analysts said. 'Firms such as Wipro and TechM are following the lead of TCS by moving work to tier-4 locations and increasingly hiring from universities which are less prestigious. This is significantly lowering the cost of these employees and bringing down the average wages paid," said Peter Bendor-Samuel, founder of Everest Group, a Dallas-based tech research firm. He added that this was done to boost operating margins. 'The relentless focus on reducing cost is having its desired effect of allowing these firms to post higher margins," said Bendor-Samuel. TCS, Infosys and HCLTech reported operating margins of 24.3%, 21.1% and 18.3%, respectively, in FY25, respectively. TCS's margin declined by 30 basis points, while Infosys and HCLTech's margins grew by 40 basis points and 10 basis points, respectively. Wipro and Tech Mahindra improved their profitability the most last year. Wipro increased its operating margins by 100 basis points to 17.1%, whereas Tech Mahindra's profitability jumped 360 basis points to 9.7%. Hiring more employees can increase the median, or the mid-level salary. If a company adds headcount, the median salary is expected to increase because there are more employees in the company. Still, if the median salary goes down, it means that the number of employees earning salaries below the median amount has increased and that middle and senior-level employees have decreased. Both Wipro and Tech Mahindra added headcount last year by 732 and 3,276 employees, respectively. Wipro ended with 233,346 employees whereas Tech Mahindra ended with 148,731 employees. TCS added 6,433 employees to end with 607,979 people, whereas Infosys added headcount by 6,338 to 323,578 people. In contrast, HCLTech reduced staff by 4,061 to end with 223,420 people, becoming the only IT outsourcer of the top five to cut headcount last fiscal. A second analyst said churn at the top may also have contributed to the decline in median salaries at both Wipro and Tech Mahindra. 'The reduction in median remuneration to employees is a reflection of the fact that the companies may have hired more freshers and/or let go of lateral and senior staff," said a Mumbai-based analyst on the condition of anonymity. Both Wipro and Tech Mahindra have seen churn at the top. Mint reported on 26 June that Tech Mahindra saw at least 20 senior management movements at leadership levels, including service lines and geography heads, since March 2024. Even at Wipro, despite chief executive officer Srinivas Pallia's emphasis for promoting internal candidates to top roles, the company has seen significant leadership churn. Over the past two years, at least 30 senior executives at the level of senior vice-president and above have exited, driven either by better opportunities, or limited growth prospects under Pallia's predecessor Thierry Delaporte, who stepped down last year after four years at the helm. However, a third expert attributed the falling median salary to experienced employees accepting roles at lower salaries in a challenging job market. 'Because growth has been flat for these companies, they are refocusing on investing in their experienced staff while also lowering the overall wage bill. During this challenging market, there are also many experienced workers available, and it's easier to hire experienced talent at lower wage levels," said Phil Fersht, chief executive of HFS Research. He added that this trend is not a one-off and that IT outsourcers are looking at hiring employees at lower costs. 'There is a lot of flux in global services at the moment, with many providers laying off staff, which is making the talent pool of experienced people larger and bringing down wage demands," said Fersht. Wipro and Tech Mahindra were the only two companies in the top five Indian IT firms to see a second successive full-year revenue decline in FY25. Wipro and Tech Mahindra reported revenue declines of 2.72% and 0.21% to $10.5 billion and $6.3 billion, respectively, in FY25.
Time of India
22-06-2025
- Business
- Time of India
With AI on the rise, developer rates decline
Bengaluru: The 2025 Accelerance Global Software Outsourcing Trends and Rates Guide showed a global decline in software developer hourly rates, with decreases ranging from 9% to 16% across many regions. Tired of too many ads? go ad free now Latin America is the notable exception, where rates have remained steady. The report highlighted harder client negotiations, off-rate card deals, and cost takeout deals increasingly being offered by outsourcing partners to get projects over the line. Developer hourly rates declined across several key regions, with Eastern Europe seeing a 9% drop, and both South Asia and Southeast Asia experiencing steeper reductions of 16%. The 2025 edition of the report reviews data from 2024, comparing it to 2023 figures. It analyses median pricing across all software development roles, based on the latest survey results. This downward trend highlights a softening demand environment, driven by restrained enterprise IT budgets and increased discounting by software development firms competing for limited business in a crowded market. Peter Bendor-Samuel, founder and chairman of the Everest Group, said, "Over the last month, we are seeing much more aggressive pricing shifts than these as firms seek to capture the benefits of AI and are using AI aggressively with their internal teams, reducing the need for external support. The reason that Latin American rates are holding up is that in the new AI-driven apps world, time zone proximity is increasingly important, and we are seeing that translate into higher productivity, which in turn allows for higher or at least sustained rates. " Ray Wang, chief executive of Constellation Research, said AI has driven down the cost of software development. "In fact, we just saw a new firm, Soul of the Machine, headed by the legendary Sunil Karkera, beat out a major who bid a project with over 100 people and a 12-month timeline. Tired of too many ads? go ad free now He won a bid with less than 10 people in half the time. This is AI native scale." About 50% of Accelerance's respondents anticipate raising their rates by 1% to 5% within the next six months. This signals a departure from the double-digit growth in developer rates that defined the pandemic years. While inflation and ongoing shortages in high-demand tech roles will continue to drive price increases for some specialised skills, outsourcing providers are also offering more discounts and off-rate card deals. The integration of AI is reshaping various aspects of the software development lifecycle. Last year, Amazon CEO Andy Jassy announced a demonstration of the tangible value of the Amazon Q Developer agent for code transformation. With its help, Amazon successfully migrated tens of thousands of production applications from Java 8 or 11 to Java 17. This effort saved more than 4,500 years of manual development work across over a thousand developers and delivered performance gains amounting to $260 million in annual cost savings—underscoring the powerful impact of AI-assisted modernisation at scale. AI will play a much larger role in software development, with estimates suggesting that up to 70% to 90% of development tasks could be AI-driven by 2025 to 2027. Phil Fersht, CEO of HfS Research, said, "Our research shows 83% of US enterprises are increasing their investments in automation and AI because of the current tariffs and geopolitical instability." He said, "The market didn't twitch last Monday after Israel's attack on Iran, but I wonder what they will do on Monday, especially now the Strait of Hormuz is closed. . Trump's 90-day window on tariffs is also about to close with no real deals anywhere, and traditional 'big deals' business is very slow now in our industry."
New Indian Express
09-06-2025
- Business
- New Indian Express
IT firms double down on GCC expansion to tap growing opportunity
BENGALURU: Many Indian IT services firms have now started focusing on Global Capability Centres (GCC) by appointing a separate head to lead and expand the company's GCC capabilities. After Infosys and Wipro, HCLTech recently announced the appointment of Kiran Cherukuri as Global GCC Practice Leader. HCLTech plans to double down on this fast-growing segment with a sharp focus on India. "The GCC's build, operate and transfer (BOT) market is one of the few fast-growing sectors in an otherwise slow market. Firms are increasing their investments to capture their share of this attractive market and as they increase their focus and investments, they are appointing new leadership," Peter Bendor-Samuel, Founder and Executive Chairman of Everest Group told TNIE. He added that as Accenture and other industry leaders announce significant wins in GCCs, it has become obvious to all that they must increase investment and put some of their stars into competing in this space. Last year, Accenture made an equity investment in GCC platform ANSR. Though the company did not disclose the investment amount, it is said that Accenture will be investing close to USD 170 million. According to Everest Group, GCCs account for about USD 13 billion of revenue to IT services companies across various engagement models, including setups, transformation, and operational support and that the GCC in India is a $65 billion market and has been growing at 8%. Experts anticipate that this market will accelerate to double-digit growth.
