Wage costs of IT firms ease

Let-up follows clampdown on excessive spending such as counteroffers, significant increments to retain talent

- Manjul Paul & Devina Sengupta

• 60.5% of revenue spent on employee benefits by Wipro

India’s leading information technology (IT) services companies witnessed a consecutive decline in employee costs as a percentage of revenue for the second time in the December quarter.

The gradual reversal in wage costs indicates a deliberate effort to clamp down on excessive spending on talent, including measures like counter offers and substantial increments to retain talent. Besides, the steady drop in employee costs also reflect a hesitancy among job seekers, suggesting a shift towards an employers’ market for the next few months.

According to Mint analysis, Wipro, which had the highest wage burden among Indian IT companies, spent 60.5% of revenue on employee benefits, down from 61.4% in Q1FY24 and 61.5% in Q2FY24. Tata Consultancy Services (TCS) spent 57.3% of revenue for employees in Q3, compared to 58.8% in Q2, and 59.2% in the first quarter of the current fiscal year. HCL Technologies allocated 55.8% to employee costs in Q3, down from 57.2% in Q2 and 57.1% in Q1, while for Infosys it was at 53.2% in Q3, declining from 53.8% in Q2 and 54.3% in Q1.