Wipro and HCL Tech Opt to Delay Salary Hikes, Implement Reductions in Variable Pay
Check the Q1 FY24 financial results of Wipro and HCLTech, which missed estimates, leading to deferred salary hikes and reduced variable pay. Read about the actions taken by these companies and TCS' contrasting approach in handling their workforce
Last week, both Wipro and HCL Technologies announced their financial results for the first quarter of FY24, which fell short of analysts' expectations as well as the companies' own projections. In response to the challenging performance, both companies have implemented measures such as deferring salary hikes for employees and reducing variable pay.
HCL Technologies decided to postpone the annual salary increments of senior employees to October, whereas in previous years, these hikes were typically rolled out in the July-September quarter. The company's CFO, Prateek Aggarwal, expressed confidence in returning to the 18-19 per cent range, attributing it to the actions taken, which include deferring wage increments for senior staff and making a decision on junior staff increments in October. Additionally, variable pay for employees will be determined in line with company policies and results.
Wipro's Chief Human Resources Officer, Saurabh Govil, mentioned that the variable pay for employees will be capped at 80 per cent for Q1 FY24. In contrast, Tata Consultancy Services (TCS) has already implemented its annual salary increase for all its employees starting from April 1, 2023.
During Q1 FY24, Wipro's consolidated net profit increased by 12 per cent YoY to Rs 2,870.1 crore, but it experienced a sequential decline of 6.65 per cent. The income from operations for the quarter stood at ₹22,831 crore, showing a YoY growth of 6 per cent but a QoQ decline of 1.5 per cent.
TCS reported decent results for Q1 FY24, with revenue reaching $7.2 billion, remaining flat QoQ in constant currency (CC), slightly below analysts' estimate of 0.3 percent CC. Over the past year, TCS shares gained over 12 per cent, although as of July 13, they were approximately 7 per cent lower than their 52-week high of Rs 3,575 reached on February 16, 2023.
HCL Technologies faced a weak Q1 FY24, with revenue at $3.2 billion, down 1.3 percent QoQ in constant currency and 110 basis points below analysts' estimates. Despite this, the company maintained its FY24E guidance for both growth and margin, citing continued ramp-downs in the Telecom and Technology verticals, primarily in Engineering Research and Development (ER&D), as contributing to the underperformance.
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