• Tech Mahindra begins salary hikes for employees starting January 2025. • Average increases are 7%, up to 12% for top performers. • Increments address talent retention post-Gurnani’s exit. • Operating margins improved but are still among the lowest in the sector. • Salary hikes align with rising corporate profits, as noted in the Economic Survey.
Tech Mahindra Ltd. employees are set to experience salary increases as the company initiates company-wide hikes starting January 2025 under the leadership of new CEO Mohit Joshi. This decision comes after a prolonged period of wage stagnation for senior executives, who have not seen pay raises for more than 18 months, particularly after the departure of former CEO C.P. Gurnani.
Reports indicate that on average, employees will receive a salary hike of approximately 7%, with top performers seeing increases of up to 12%. Such increments are a response to the broader market trends as several IT firms also adjusted salaries after a period of low demand and economic uncertainty. Companies like Tata Consultancy Services and Wipro have previously implemented varying increments amidst similar market pressures.
Analysts suggest that the salary adjustments are aimed at retaining talent, especially in the wake of exits that followed Gurnani’s departure. “Hikes were pending because Joshi had to do a better job at retaining people,” noted a Mumbai-based analyst. The importance of salary increases is underscored by a recent Economic Survey, which highlighted the discrepancy between corporate profits and stagnant real wages.
Meanwhile, Tech Mahindra commenced the distribution of compensation revision letters in late December 2024, signaling a positive shift in employee relations. The internal memo conveyed appreciation for employees’ contributions and marked a new chapter in the company’s direction. Joshi’s new strategies, including the ambitious Project Fortius, aim to enhance operational margins and accelerate growth over the next three years.
Despite current operating margins being the lowest among major competitors, Tech Mahindra’s financial health appears to be improving following a long decline. Recent reports indicate an operational margin increase from 4.7% in September 2023 to 10.2% by December 2024, even with increased wage costs projected to affect profit margins in the short term. Thus, this proactive wage policy is a critical aspect of the company’s strategy to boost morale and foster employee loyalty as it navigates future challenges.
In summary, Tech Mahindra’s decision to implement salary hikes reflects a strategic shift under new CEO Mohit Joshi aimed at employee retention and satisfaction amidst a competitive IT landscape. These adjustments come in response to economic pressures and are intended to align employee compensation more closely with the firm’s financial performance, reinforcing a commitment to workforce morale while addressing operational improvements and growth objectives.
Original Source: www.livemint.com
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