While switching jobs, candidates’ demands have dropped from 60-100% raises to 20-30% raises.
Candidates looking for new jobs have reduced their pay hike expectations as the job market cools and the economy slows, according to consultants, HR heads, and recruiters.
Candidates’ demands for 60-100% raises while switching jobs have now dropped to 20-30% as a result of fewer options, hiring freezes, and fears that their current roles will be reduced.
“At the peak of the Great Attrition, salary hikes went up to 100-200% in some cases when changing jobs, but, on average, would hover in the 50-70% zone. These numbers would have come down, at least for most job families, to the 20-30% zone that used to traditionally be the case,” said Anandorup Ghose, partner, Deloitte India.
“This change is still new, i.e. it’s about 3-4 months that the market conditions have shifted visibly. The first signs came in the fourth quarter of last year; then it started in the first quarter of this financial year but has caught pace only in the second quarter,” Ghose said.
Salary increases are expected to fall further, as many companies, particularly in IT services, products, and tech startups, expect recruitments to fall more than 50% from last year in the December quarter.
“In the manufacturing sector, a few quarters ago, a job change would have led to a salary hike of 50-70%, but now it is around 30%, and in the coming quarters, it will stabilize to 20%,” said Praveen Purohit, deputy chief HR officer at Vedanta Group.
Although the downturn is still too new for companies to make changes to employee contracts, a drop in salary expectations can be seen across industries.
Until a quarter ago, the technology sector had been subjected to multiple rounds of negotiations and a barrage of counter-offers.
Wage costs as a share of revenue at Tata Consultancy Services Ltd and HCL Technologies Ltd fell to 56.1% and 54.6%, respectively, according to September quarter earnings data, while wage costs at Infosys Ltd remained unchanged at 53.2%.
The figures showed a decrease in costly salary negotiations to stem attrition, indicating a weakening job market.
Hikes among senior employees have tempered in the startup sector, which saw 17,0000-20,000 layoffs this year.
“The downturn has impacted venture capital- and private equity-funded startups and tech companies, where people are now moving at 20-25% hike,” said Navnit Singh, chairman and regional managing director of executive search firm Korn Ferry
According to TeamLease Services, the hiring frenzy continues at the junior level, with candidates switching jobs for a couple of thousand rupees extra in take-home salary.
“The middle to senior segment will shift for 15-20% now, given the reduced job mandates, but at the junior levels, companies are getting talent who want to see an immediate impact on their take-home,” said Rituparna Chakraborty, co-founder and executive director of TeamLease Services.