After 19,000 Layoffs, Accenture Announces No Pay Hike For Employees In India This Year

After laying off around 19,000 employees already this year, it seems that the tough times don't seem to be ending for the employees of IT sector giant Accenture, at least as per the company's latest announcement.

What Has Accenture Announced?

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Accenture will not be paying out hikes to its employees in India and Sri Lanka in 2023 except where it is legally mandated or where it has committed to it in critical skill areas, country managing director Ajay Vij said in an email to employees.

Accenture has over 3 lakh employees in India, and globally, the count is 7.33 lakh.

Why Has Accenture Decided To Not Give Salary Hikes?

This decision by Accenture comes at a time when the IT sector, which comprises other giants such as TCS, Infosys, and HCL, among others, is facing numerous headwinds, and Accenture doesn¡¯t expect an improvement in the discretionary spend environment or the macro.

Accenture's country managing director, Vij said the company experienced a macro environment that was more challenging than anticipated at the beginning of the FY23 fiscal year, and growth was lower than planned. The Dublin-headquartered IT giant, which follows a September-August financial year, reported mixed numbers last quarter, and its guidance for FY24 was the second-lowest among the beginning-of-year guidance in the past 16 years.

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Accenture will not be paying out hikes to its employees in India and Sri Lanka in 2023 except where it is legally mandated or where it has committed to it in critical skill areas, country managing director Ajay Vij said in an email to employees.

In his email, Vij said, ¡°Our rewards philosophy is to provide market-relevant pay based on skills and location that is affordable for Accenture. Keeping our payroll aligned with the market is essential to the health of our business, including competitive pricing of our services¡±.

¡°Given the context of our performance, we will not be providing any stay-at-level (base pay) increases this year except where legally mandated or committed in a few critical skill areas,¡± he added. The email also stated that it will payout individual performance bonuses based on the individual¡¯s contributions wherever they are applicable, but said they will be 'significantly lower than last year.¡¯

¡°¡­our global annual bonus funding is based on our company performance. Given our performance, you should expect our global annual bonuses to be significantly lower than last year,¡± he said.

Also Read: Money Lessons We Can Learn From Mass Layoffs

When Will Accenture Give Promotions?

Besides the pause in salary hikes, Accenture is also severely reducing its promotions. Up to the level of Associate Director (Level 5), the company said it will reward promotions in December as scheduled, but it will be lower than last year. Accenture has 13 levels, with 13 being the lowest and 1 being the highest.

For levels 1 through 4, promotions have been postponed until June 2024.

¡°We are postponing our promotions to and within MD, and appointments to SMD, until June 2024 in order to allow ourselves to return to growth so that promotions are affordable,¡± Vij¡¯s email said.

¡°Our rewards philosophy is to provide market relevant pay based on the skills and locations where we operate. We also consider a variety of factors, including the macroeconomic environment in making our decisions around pay and benefits,¡± a spokesperson for Accenture said in response to Moneycontrol's queries.

How Have Accenture Shares Reacted To The Decision?

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Accenture shares closed more than 2.5% down yesterday amid the no-salary hike announcement. The IT sector giant has a market cap of $202.19 billion at present.

What About Other IT Giants' Salary Hikes?

Irish-American IT giant Accenture's decisions are indicative of the larger headwinds that the sector is facing, and its India counterparts have also undertaken tough decisions by delaying their salary hike rollouts this year.

As of now, HCL tech has decided to roll out wage hikes from October onwards, Wipro will do so from December 2023. Also, Infosys has announced that it will roll out salary hikes on November 1 instead of the usual months of April to July.

India's largest IT sector giant, TCS, had, on the other hand, already rolled out salary hikes in June and July this year.

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