The landscape of employment within the Indian IT sector is undergoing a profound transformation, characterized by dynamic shifts in hiring practices, compensation structures, and increment trends. The pervasive influence of artificial intelligence, for instance, has ushered in an era where certain conventional roles face obsolescence, while simultaneously fostering the emergence of novel positions demanding specialized expertise. This period is distinctly marked by a more selective, niche approach to recruitment, pronounced variations in salary increments, and an escalating emphasis on acquiring talent endowed with highly specialized skills.
Industry experts widely concur that the era of widespread recruitment and substantial, across-the-board pay raises is now a relic of the past. Companies are strategically curtailing entry-level hiring, yet paradoxically engaging in fierce competition to secure experienced professionals in highly sought-after domains. For individuals navigating a career in information technology, this signals a fundamental recalibration of the pathways to achieving higher remuneration. The traditional reliance on frequent job changes or generalized industry-wide pay increases is diminishing; instead, career progression is now intrinsically linked to a demonstrated mastery of emerging technologies.
Despite the prevailing uncertainties, the Indian IT sector maintains its position as one of the nation’s leading providers of competitive compensation packages across various industries. However, a significant internal shift in compensation trends has been observed. Experts highlight that the robust post-pandemic increment phase, which saw an extraordinary surge in salaries, was an anomaly rather than a sustainable long-term trend. During 2021-22, propelled by an accelerated global drive towards digitalization, average IT salary increments reached peaks of 12% to 15%. Conversely, in 2023-24, as major technology consumers in North America and Europe scaled back discretionary IT spending, average increments stabilized at a more conservative 8% to 9%. This period also witnessed a strategic redirection of hiring efforts towards optimizing existing talent and rationalizing costs.
Milind Shah, Managing Director at Randstad Digital India, underscores that the IT sector continues to dominate absolute compensation rankings across all experience levels throughout India. This leadership is primarily attributed to the intense demand for specialists in cutting-edge fields such as Artificial Intelligence/Machine Learning, cloud computing, and cybersecurity. Shah observes that over the last 18 months, compensation growth for traditional IT services has stabilized within an aggregate range of 6.8% to 7.5%. Concurrently, total compensation budgets have been strategically reallocated towards attracting and retaining niche technical talent. He further elucidates that salary growth in the Indian IT sector has undergone a fundamental transformation over the past four years, transitioning from an unprecedented post-pandemic hyper-inflationary period to one characterized by structural discipline and skill-differentiated compensation.
Neeti Sharma, CEO of TeamLease Digital, corroborates these observations, noting that IT salary hikes have become more moderate, with average increments currently at around 6.9%, a decrease from 7.6% last year. However, this moderation does not necessarily imply a reduction in overall salary budgets. Instead, companies are becoming increasingly discerning in their allocation of funds. Rather than applying uniform pay raises, they are offering substantial premiums for scarce, specialized skills. There is also a growing prominence of variable pay and performance-linked bonuses. A recent Randstad report on salary trends reinforces this distinction, indicating that the IT industry has adopted performance-linked incentives and skills-based pay models to attract and retain highly sought-after talent, for whom they are willing to compensate generously.
Francis Padamadan, CEO at Xpheno, attributes the highly elastic nature of increment trends in the sector over recent years to persistent challenges in order books and mounting pressure on profit margins. The substantial 45-50% decline in the overall active demand for talent and job openings within the sector has also diminished the market forces compelling enterprises to offer high increments. Changes in workforce planning and a reduction in hiring volumes, initially driven by geopolitical pressures, are now being further amplified by the accelerating trend of AI adoption across various sectors.
Within the IT sector, a discernible divide is rapidly emerging. Niche and skill-based hiring is commanding a significant premium, even as quiet layoffs persist in certain segments. The roles experiencing heightened demand and offering attractive salaries include those requiring deep technical skills. Specialists in AI/ML, cloud computing, and cybersecurity are currently commanding the highest premiums, a factor largely driving the IT sector’s lead over all other industries in overall salary rankings. Additionally, software developers, cloud architects, and product managers are identified as standout roles at the mid-level.
A Randstad report published earlier this year revealed that Indian IT companies are significantly escalating their investment in talent acquisition for specialist skills such as Java and Salesforce developers, cloud architects, blockchain developers, DevOps data scientists, AI/ML engineers, AI model trainers, prompt engineers, and cybersecurity engineers. Milind Shah specifically points out that positions in AI/ML engineering, MLOps, Generative AI architecture, AI governance, cloud infrastructure, and cybersecurity are commanding salary premiums ranging from 20% to 35% above traditional software engineering compensation bands.
Neeti Sharma highlights an evolving trend where the premium is shifting away from generic technological experience towards skills that are both scarce and immediately deployable. While specialized technology skills can command a 30-40% premium in some instances, the greatest advantage increasingly lies in possessing a combination of skills. Examples include the synergy of AI with domain expertise, or cloud proficiency combined with the practical ability to deploy solutions in production environments. Furthermore, there is a burgeoning demand for newer roles such as MLOps, Agentic AI developers, and Forward Deployed Engineers, with FDE postings, for instance, witnessing an almost 800% year-on-year growth.
Looking ahead, Xpheno’s Francis Padamadan anticipates a slow but steady recovery in the volume and velocity of hiring, provided there are no new adverse developments or headwinds impacting the sector. Given that the overall growth in the tech sector is projected to be in the range of 5% to 6%, salary increments of 8% to 11% should be considered healthy. However, any further pressure on growth margins could significantly depress the percentage of increments and offer hikes.
Fresher hiring, despite showing nascent signs of improvement, remains largely stagnant, and entry-level compensation packages continue to be constrained. According to Xpheno, fresher intake and salary packages at the base of the talent pyramid are being diluted due to the high availability of talent. The average annual salaries for freshers remained below the $5,000 mark for over a decade until early 2020. Since then, a few rounds of package adjustments by leading IT companies have marginally pushed fresher packages above the $5,000 threshold. Furthermore, entry-level talent is not immediately deployable in revenue-generating roles, requiring employers to invest significantly in training. These factors have historically kept compensation costs low at the entry level, and now, the increasing AI-enablement of entry-level roles has introduced another layer of complexity for fresher intake.
Experts unanimously expect niche roles to continue attracting better increments. Randstad Digital India’s Milind Shah forecasts a continuation and strengthening of two observable trends: sustained premium pay for AI/ML, cloud, and cybersecurity specialists, and a further convergence of compensation between Tier-1 and Tier-2 companies at the senior level. The IT employment market is transitioning from broad-based volume recruitment to capability-led hiring. Over the next 12 to 24 months, the hiring landscape will be defined by a “K-shaped” compensation curve. High-demand specialists in areas such as AI governance, cloud architecture, data platform engineering, and cybersecurity can anticipate double-digit salary growth (15% to 25%+). Conversely, professionals in commoditized or legacy engineering roles will likely experience single-digit increments, typically in the 5% to 8% range.
A distinct salary divide is also expected to emerge. Diwakar Chittora, Founder and CEO of Intellipaat, suggests that professionals with generic or outdated skills may experience slower salary growth, while those possessing strong development capabilities and expertise in AI, cybersecurity, analytics, and other emerging technologies could command substantially higher premiums. Interestingly, this presents a significant opportunity for freshers. AI is creating an entirely new technological landscape that everyone is learning simultaneously. A professional with a decade of experience and a student entering the industry are both relatively new to many of the latest AI capabilities. This dynamic allows ambitious freshers to close the traditional experience gap much faster. Over the next two years, the most significant differentiator will not simply be the number of years worked, but rather the speed at which individuals can learn, adapt, and apply new technologies to solve real-world problems.
The overarching message for entrants, mid-level, and senior employees in the Indian IT sector is clear: while overall salary increments may remain moderate, individuals equipped with scarce and highly relevant skills will continue to command significantly higher premiums. As Neeti Sharma aptly puts it, the demand for AI talent is outstripping the available skilled supply, and this persistent gap will continue to exert upward pressure on specialized salaries. Simultaneously, routine technology roles will face increased pressure on both hiring volumes and compensation. Her advice to professionals is straightforward: rather than solely focusing on achieving a higher percentage hike, concentrate on building skills that enhance your value. One strong, demonstrable skill in AI, cloud, cybersecurity, or data, supported by tangible business outcomes, will increasingly be worth more than several years of generic experience.
