HCL Tech Investing in Employees: Finances Fuel Salary Increases

HCL Tech has offered its employees a 7% wage increase beginning October 2024. Top achievers at the corporation would receive raises of up to 12-15%, according to Chief People Officer Ramachandran Sundararajan. While layoffs can typically negatively impact, offering wage increases, particularly to top performers, can help preserve morale, attract and retain talent, and increase employee satisfaction. It might also demonstrate the company's devotion to its surviving employees. By raising compensation, the corporation hopes to enhance employee morale and make its personnel feel valued and motivated.

The wage hike comes after HCL Tech announced an 11% year-on-year growth in net profit to Rs 4,235 crore for the second quarter ended 30 September 2024. Operational revenue increased by 8.2% to Rs 28,862 crore when compared to the same time last year. HCL Tech has achieved outstanding financial performance, as evidenced by its Q2 FY24 statistics, which show an 11% year-on-year growth in net profit. This increase is attributed to HCL Tech's ability to face market challenges while remaining profitable. The company's sound earnings growth reflects its genuine methodology and operational efficiency, allowing it to invest in its employees. With such a strong financial foundation, HCL Tech appears to have the means to pay wage increases, which can help maintain the best employees.

Salary increases will not impact profitability

Sundararajan noted that the salary increases are projected to have little effect on the company's operational profits in the December quarter. HCL Tech is actively attempting to mitigate the impact using efficiency methods. The number of employees eligible for the raise will be determined by the company's review cycle and the percentage of lateral hires who become eligible after one year of service. As of Q2, HCL Tech's headcount was 218,621, down 780 from the previous quarter. It comes at a time when some large Indian IT companies have deferred wage increases until the third quarter of FY25 to manage costs and maintain profitability in the face of slowing demand.

HCL Tech's Q2 performance outperformed market expectations, with an EBIT margin of 18.6%, a 149 basis point increase sequentially. Recognizing exceptional performance develops a culture of continuous improvement, which is essential for long-term success. The company continues to prioritise growth while investing in its employees.