Infosys Pay Hikes

With most Indian IT companies announcing wage hikes, it seems quite clear that the moribund economy has impacted pay hikes at most companies. It turns out that the various HR consultancies were off target by around 2% in their general predictions. Infosys has announced a 8% avergage hike this year coming on the back of a 6% – 8% hike in Oct’12. Wipro has said it’s paying up it’s employees by 6% – 8% this year; reports about TCS put it’s hike in the wide 5% – 10% band. Mid tier Mindtree may come in at 6% (same as last year?). Cognizant seems to have deffered hikes to July so that all employees across rank and file get wage hikes at the same time. I also read somewhere that IBM is not doling out any hikes this year! So the scenario is quite bleak and suddenly IT does not seem to be the hot sector that it was made out to be. Unless of course if you happen to be an IT worker seconded overseas. The recent weakness of the INR has effectively increased the value of such folks’ USD holdings by approximately a tenth!

Given this theme, a good part of my last weekend was spent in reading up assorted news stories about wage hikes reported in Indian media. On a lark, I also tried to collect historical mentions of wage hikes at Infosys (long considered by many to be the darling of the Indian IT scene) and since I try to correlate anything with everything, I tried to see how the decisions by the top brass at Infosys regarding this extermely crucial element of their cost have stacked up against their company’s share price over the past few years. As mentioned earlier, the data for the chart below has been collected from old media reports (all of them online) and as hard as I tried, I could not get the average hikes at Infosys for FY’04 and FY’05. If you know, please let me know. So, with wage hike data from FY’06 onwards, the chart below superimposes the salary hikes at Infosys over it’s share price. The share price has obviously been adjusted for the two very generous bonus issues on the stock, but it has not been adjusted for the various dividend payouts on the stock. I don’t know if you can see it, but to my “force fit a pattern where none exists” eye, I can discern a weak correlation between average hikes and the share price! And I can also see a distict lag effect between the time when the insiders (i.e. employees) feel the pinch vs. when the market drops the price!