Priya Ganapati in Bombay

In the information technology industry, if you haven't been asked to take a hike yet, chances are that you aren't getting that much-desired pay hike either.

April, which normally brings joy to the IT programmers in terms of salary raise and incentives, has this year turned into a month of gloom.

Employees at many top notch IT companies are facing the prospects of a bleak year thanks to the insignificant amounts being holed out as increments, while many others are still waiting for some news about their raise.

The last few months have been tough for the IT industry. First, there was the dot-com bust. Then there was the depths to which the Nasdaq sank plunging technology stocks in India too into depression. Then, traditional IT companies started downsizing and issuing profit warnings.

While Indian IT companies largely escaped the slowdown that hit the IT industry in the US, the consequences of the decay are manifesting themselves here slowly.

Salary increments the first casualty

The first visible indications are in the form of the squeeze on the increments of IT workers as companies clamber to cut costs and maintain that much needed profitability to meet market expectations.

Most IT companies in India have the annual reviews for their employees around January-February and disburse the hikes and incentives about a month after the initial appraisals are done.

Till the pessimism set into the industry, software programmers used to get generous dollops of increments in a bid to retain the much-needed talent that would give one IT company an edge over the other in a market that has cut-throat competition.

And, in those times of plenty, God forbid if an IT company did dare scrimp on increments, programmers always had the option to move to a dot-com, another tech company or just take off to the US.

But now, despite noticing a massive drop in their pay hikes employees are quiet. All of which has only emboldened companies to tighten the squeeze on increments further.

Infosys sets the trend

Flagging off the trend this year was Infosys. Unofficial estimates pegged the increments handed out at Infosys this year at a paltry 6 per cent as opposed to a generous 25-27 per cent it was reported to have given last year.

Infosys officials declined to comment on the exact quantum of the hikes granted this year citing unavailability of a spokesperson.

However, the company issued a statement saying, "There is an average salary increase of 15 per cent even though there is softening of employee salary raises in the market. This is to show our commitment to one of the important segments of our shareholders which is our employees. A portion of this increase is likely to be linked to the company's performance in the next fiscal year."

But an ex-employee of Infosys refuted, "The increments being offered this year are definitely lower than what they had given last year. The average last year was a 27 per cent increase."

Infosys' reaction is significant for two reasons. For stripped off the jargon, the statement clearly says that there has been a general 'softening' of salary raises in the IT industry and that it indicates that if the company does not perform as well as expected this year due to a general slowdown in the market, salary increments would be the first one to take a hit.

Earlier, Infosys had reported uninspiring fourth-quarter results that sent the scrip crashing to a new 52-week low. For the fourth quarter ended March 31, 2001, the company reported a mere 94.5 per cent growth in net profit to Rs 1.8 billion and a 100 per cent growth in total revenue to Rs 5.72 billion.

The company has projected a mere 30 per cent revenue growth for the next fiscal. However, it has added nearly 920 employees last quarter and consistently denied reports that it would resort to any layoffs.

Others follow suit...

A similar tale extends across most of the other IT companies. In trying to walk the tightrope between making profits in a market that has slackened considerably and fears severe recession IT companies seem to have resorted to cutting corners on the easiest target in the game: salary increments.

Consider the Wipro case:

The company holds its annual employee review in October every year. Based on the appraisals and the general market conditions, it offers its employees hikes and incentives.

While Wipro employees have not been immediately affected by the slowdown in the last few months as they had got their due raise last October, sources in the company said that employees have been forewarned about this year's raise.

"At an annual meeting called about two weeks ago, we were told that there would probably be no more hikes in salary this year. We were even asked to be prepared for a cut in salary if the market continued to show signs of a slowdown we would have," an employee at Wipro revealed.

At Satyam Computer, the tale of woe continues. The employees there are yet to get a raise. While Satyam officials declined to make any comments on the raise being doled out, the mood among the employees is not too upbeat.

"We have not heard any news about the pay hike. But we think that it will definitely be less than what was offered last year," a Satyam employee said.

Satyam officials are staying tight-lipped. "We have just finished our appraisals in April and have not yet decided on the quantum of the raise that has to be offered. We would not like to comment on it right now as any statement would have a direct bearing on employee morale," S V L Narayan, vice-president, corporate communications, said.

When probed further Narayan said, "The raise offered to employees has nothing to do with the recent slowdown that the IT industry has been experiencing. It is a factor of the general market conditions and the demand and supply equation. Naturally, if there is a shortage, the compensation will be adjusted to balance that."

So do market conditions - where the bellwethers of an industry concede that the impact of the US slowdown would hamper their growth - portend an ominous future for employees so far as a raise is concerned?

Narayan refuses to stick his neck out but he tacitly admits, "Yes. The general market conditions can affect incentives." Satyam hopes to announce its hike by the middle of the month.

"We have not even met yet to discuss the raise that should be offered. We have to consider the situation across departments and also apply all the equalisation factors," he said.

Meanwhile, employees at Oracle Corporation's India Development Center in Hyderabad are keeping their fingers crossed. Oracle has a bi-annual review, held in January and June, for its employees. While the appraisals this year went off as scheduled in January, the hike has not yet come through.

"All we have been told is that the hike is tentative. The proposal for it has been sent to our HQ (Oracle headquarters in the US). But the general feeling here seems to be that the hike this time is dicey and might not come through. This year there seems to be an uncertainty about the whole affair," a nervous Oracle employee said.

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