Indian IT firms face rising wage bills as demand for skilled professionals grows
New Delhi: As Indian IT companies experience higher revenue productivity amid slower workforce expansion, HCLTech CEO C Vijayakumar has underscored the sustained demand for skilled professionals, which will contribute to escalating wage costs, media reports said.
"The service industry has a long-term correlation with adding people. While headcount growth may not align directly with revenue growth, the need for skilled and experienced professionals will drive wages higher," Vijayakumar was quoted as saying by The Economic Times.
During a post-earnings discussion, the CEO attributed recent growth to better resource utilization and evolving onshore-offshore workforce strategies.
Although major IT firms have reduced hiring over the past two years, the sector’s revenue per employee rose by approximately 6% year-on-year during the first half of FY25.
HCLTech, for example, revised its fresher hiring target for the year from 10,000 to 7,000 and added 2,134 employees in the December quarter, bringing its total workforce to 220,755.
To address concerns about low pay increases, the company implemented an average salary hike of 7% for eligible employees.
Vijayakumar highlighted how generative AI (GenAI) is reshaping developer workflows, particularly for tasks involving low to medium complexity code.
"Embracing generative AI is the key message for the developer community. It opens new avenues like application modernization, which was previously considered unfeasible," he explained, reported The Economic Times.
Although GenAI is reducing repetitive tasks, it is simultaneously driving demand by enabling projects that were previously unattainable.
HCLTech has observed a gradual increase in proof-of-concept (PoC) conversions into revenue-generating opportunities, reflecting wider industry adoption.
The CEO also noted a trend toward shorter contract terms, which impacts total deal values but sustains a strong annual contract value.
"Shorter durations reflect market dynamics, but year-over-year comparisons of annual contract values show strength," he said, according to the report.
With innovations like generative AI and shifting workforce patterns, Indian IT companies are navigating the evolving landscape by balancing technological progress with increased productivity.
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