Accenture holds off on salary hikes for 2023 amid IT sector challenges

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Accenture holds off on salary hikes for 2023 amid IT sector challenges
Credit: © Reuters.

Facing a challenging environment in the IT sector, Accenture (NYSE: ACN ) has announced it will not offer salary increases in 2023 to its more than 300,000 professionals in India and Sri Lanka, except where legally required or for critical skill areas. The decision was communicated by Ajay Vij, Accenture India's managing director, on Thursday.

This comes as part of the company's compensation strategy, which aims to balance competitive pay with the necessity of managing costs amid global economic conditions and the company's own growth concerns. Performance bonuses will be lower, and promotions have been scaled back. Promotions up to Associate Director (Level 5) have been reduced, while those for levels 1 through 4 have been postponed until June 2024.

Earlier, Accenture, which follows a September-August financial year, had announced layoffs of 19,000 employees and reported mixed financial results with a low FY24 guidance. This move aligns with the trend seen across other major IT companies such as HCLTech, Wipro (NYSE: WIT ), and Infosys (NS: INFY ), which have also delayed or deferred their initially planned salary hikes.

InvestingPro Tips reveal that Accenture has a high earnings quality, with free cash flow exceeding net income, and it yields a high return on invested capital. This suggests that the company's financial health is robust despite the challenging circumstances. Additionally, the company has been consistent in increasing its earnings per share and has raised its dividend for four consecutive years, signaling a strong return to its shareholders.

According to InvestingPro data, Accenture has an adjusted market cap of $197.15 billion and a P/E ratio of 28.58. Despite the recent challenges, the company has managed to maintain a revenue growth of 4.09% LTM2023.Q4. The company's gross profit LTM2023.Q4 stands at $20.731 billion with a gross profit margin of 32.34%. These figures underline the company's resilience and potential for growth in the long term.

For more insights and tips on Accenture and other companies, check out the InvestingPro platform. With over 19 additional tips and real-time metrics, InvestingPro provides valuable information for investors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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