The salary hikes and bonuses hitting the roof is finally tempering down for the Indian IT services sector, reports the Business Standard. This softening corresponds with the fall in hiring among the big four IT services players in India (Wipro, Infosys, TCS and HCL Technologies). HR experts believe that the compensation packages are already down and will stay at these levels even for FY24. According to data from staffing firm Xpheno, the IT Services sector has registered a 41% drop in hiring action since April 2022. Tech startups have slowed down their hiring by 63% and the software products sector has dropped hiring action by 58%. This overall drop in hiring action has softened the talent war. Xpheno’s data suggests an overall drop of 60%-70% in the number of offers chasing talent.

“The hiring volume and velocity drop has resulted in drop in offer negotiations and counteroffering. Talent in the market that earlier juggled with 7 to 8 active offers are now having to choose between 2 to 3 offers max,” Kamal Karanth, co-founder Xpheno, said. Karanth shared that the outlook for compensation hikes this year are muted in comparison to the last year's figures and he says that they will remain at this level for FY24 as well.

When it comes to compensation, most of the IT firms have announced single digit average salary hikes, however they maintain that some segments will see double digit hikes. For instance, TCS announced a salary hike of 6-8%. Cognizant rolled out salary hikes of 7-10%. Companies have said that the need for giving out large hikes has come down.