HCL sweetens deal for freshers with better pay

HCL Technologies increased the compensation package of freshers to ₹4.25 lakh per year from ₹3.5 lakh and put in place comprehensive increment plans for the entry level during the previous fiscal year (FY22), chief human resources officer VV Apparao told ET.

This was aimed at attracting more talent and combatting an acute attrition challenge, he added. India’s third largest software services provider by revenue said it will take a few more quarters before the attrition rate recedes from the current 20% levels. At the same time, the company is also expanding in smaller cities in India and abroad to increase its talent base.

“Wherever the skills are at a premium, we increase the grades. If you look at the fresher talent, today, we are paying ₹4.25 lakh per annum to graduates now,” Apparao said. He was referring to how the company had increased focus on retention and fresher growth through the system.

HCL Tech reported an operating margin of 18% for the quarter ended March 31 and 18.9% for the full fiscal year, which were at the lower end of estimates due to higher employee costs and a seasonal dip in its products and platforms (P&P) business. The entry level compensation hike in FY22 came in addition to an existing programme that allows freshers to get additional certifications to increase their compensation to ₹6 lakh a year.

“We are even talking to the educational institutions where we are selecting these kids and asking the educational institutions to make it a part of the curriculum so that they complete these and join at ₹6 lakh per annum,” Apparao said.

The company exceeded its guidance for fresher hires in FY22 (20,000-22,000) to onboard 23,000 recruits for the year. It has forecast around 34,000 fresher recruits in FY23. Its fresher intake is about 11% of its 208,877 employee base. Larger rivals like TCS and Infosys have far exceeded their initial guidance and reported 16% and 27% fresher intake, respectively, as a share of their overall employee base in FY22.

Apparao said that the company expects to roll out wage hikes in July, similar to the 7-8% band offered in FY22. This is in contrast to the slight upward bias in increments indicated by TCS.

“Last year, we already rolled out increments, defined fresher compensation grids and corrected the same for previous five batches. In addition, we had also rolled out a couple of retention kitties. These are significant amounts. Hence, I don’t see that there would be a need for anything more than what we have given as an increment last year because it was not a standalone increment. All those things have contributed to the wage bill already,” Apparao said.

While HCL Tech ended the year at an attrition level of 21.9% compared to 9.9% in the previous year, the company said it was seeing early signs of attrition slowing down during the FY22 fourth quarter. However, unlike Infosys, which saw 5% lower attrition in the fourth quarter, HCL does not see a drastic dip and expects the 20% attrition rate to last for another fiscal year.