Most Indian IT services firms are looking to freeze increments for mid-to-top management executives, as the sector tries to cushion the loss in revenues arising from coronavirus pandemic disruption, industry officials told CNBC-TV18.

The companies will review the decision only in July, officials said. In addition, many companies are considering cutting salaries of top management employees.

Also, many firms are considering reworking the salary structures to include a higher component of performance linked pay, and a lower fixed pay component.

Sources said there was a hiring freeze across the board, even as companies were trying to avoid laying off staff. It is likely that many employees on bench may be asked to switch to a contractual role.

HR managers at these firms said that campus hiring this year could fall by as much as 50-80 percent.

In FY20, the top four IT players --TCS, Infosys, Wipro, HCL Tech-- together had hired over 60000 freshers between them. TCS alone had picked up some 30000 freshers and was expected to hire close to 40,000 freshers this year.. Infosys had made offers to 18000 freshers from college campuses and Wipro had hired around 20000. HCL Tech had made hired 8600 freshers in FY20 and was planning to hire around 15,000 from campuses this year.

"On an average fresher hiring for some of the bigger Indian IT firms starts from 10000 and goes upto 30,000. This year companies have either decided to not go to campuses or cut down hiring from 50-80%;" said an HR executives at a leading IT firm.

Offer letters given to lateral hires between January and March have been put on hold for the time being.

Interestingly, despite the short term hit to revenues, some analysts tracking the sector do not seem to be as bearish on the prospects for the sector.

"We like IT due to its positive medium-term revenue outlook, near-term margin resilience and undemanding valuations," analysts at HSBC said in a note to their clients.

"Positively, the sector appears well positioned for growth in FY22e and FY23e as most of the delayed initiatives should come back by this year-end. Plus cloud migration and investments in cyber-security, etc., should accelerate further," the HSBC note says.

The broking firm feels most IT companies and clients have by and large been quite successful in the seamless migration to working from home and other business continuity plan (BCP) challenges.

Analysts at Nomura see higher risks to discretionary IT budgets such as in application development, enterprise applications and engineering services, because of clients trimming IT budgets, restricted or curtailed travel, and delays new deal closures.

Nomura expects operating margins to be broadly stable across the top four Indian IT companies during the March quarter as the weakness in rupee could offset the impact of lost billings, investments in setting up work from home and cross currency impacts.

Also read: Anxiety levels rise among employees as appraisals get delayed

First Published:Apr 13, 2020 11:18 AM IST