As salaries for techies go up, what it means for IT hubs like Bangalore, Pune, Hyderabad
Indian economy is showing strong resilience from jolt of second wave of covid as all dots are coming together with normal monsoons, strong tailwind in IT services with an expected ₹500-550 billon incremental salary outgo per annum and digitization wave sweeping across with fintech, consumer tech and EV led transformation, a report by Prabhudas Lilladher suggested.
With respect to the expectations of the surge in increments for techies, the brokerage firm in a note said that IT salaries are firing up discretionary spends. “IT sector has been instrumental in creating a large middle class amongst millennials. Demand for IT professionals is rising following robust deal wins as enterprises move to digital and invest more in cloud, cybersecurity and SaaS," it said.
With the surge in demand for talent, the lateral hiring costs of Indian IT companies is also increasing, the report pointed out, which will lead to an increase in the employee costs for these IT firms.
Though, higher jobs and income levels in the information technology (IT) sector will benefit real-estate (residential and commercial), apparel and accessories, passenger vehicles, durables, QSR (Quick service restaurant) and restaurants, travel and entertainment etc, according to the brokerage.
Although the impact will be wide spread but it will be more visible in IT hubs like Bangalore, Hyderabad, Chennai, NCR and Pune which account for more than 80% of IT employment, said Prabhudas Lilladher.
In the previous quarter (Q1FY22), net hiring by the India's top 5 IT firms Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies and Tech Mahindra was 53k as against 87k in FY21. The IT majors are likely to hire more than 1.1 lakh fresher’s combined this year.
The brokerage believes that the IT sector is in for strong growth in coming years, although near term pause post sharp moves of past few quarters looks likely.