Shares of major Indian technology companies faced significant selling pressure during Friday's trading session, December 26, triggered by a strategic move from industry giant Infosys. The company's decision to substantially increase entry-level salaries for new graduates sent shockwaves through the sector, raising concerns about rising operational costs.
Market Reacts to Rising Cost Pressures
The sell-off was broad-based, with nine out of the ten stocks in the Nifty IT index trading in negative territory. Leading the losses was Coforge, which plunged 4%. Other major players like Mphasis, Tech Mahindra, LTIMindtree, Tata Consultancy Services (TCS), and HCL Technologies also saw declines ranging between 1% and 1.5%. Even Infosys, the catalyst for the downturn, saw its stock price dip by 0.5% to ₹1,657 per share as of 1:45 PM.
This widespread weakness dragged the benchmark Nifty IT index down by 1% to 38,600 points, putting it on track to close the week with a marginal loss of 0.2%.
Infosys's AI-First Strategy Drives Salary Surge
The root cause of the market's anxiety is a reported major revision in compensation for freshers by Infosys. According to information cited by Moneycontrol, the tech behemoth has raised salaries for 2025 graduates to as high as ₹21 lakh per annum. The company is also preparing to launch an off-campus hiring drive targeting engineering and computer science graduates from the 2025 batch.
This aggressive move is part of Infosys's "AI-first" approach, as confirmed by the company's Group CHRO, Shaji Mathew. He emphasized that integrating artificial intelligence across all services makes it imperative to both upskill current employees and attract new talent with deep expertise. The hiring spree will include both on-campus and off-campus drives, with a particular focus on the Specialist Programmer role.
End of an Era: Breaking the Stagnant Salary Cycle
This development marks a potential turning point for India's IT industry. For decades, top Indian IT firms maintained largely stagnant entry-level salaries for fresh graduates, even as compensation for top executives skyrocketed. The advent of AI and the fierce competition for specialized skills are now forcing a dramatic shift in this long-standing practice.
A Moneycontrol analysis highlights the stark contrast: Between FY12 and FY22, the median salary of IT CEOs jumped by an astounding 835%, from ₹3.37 crore to ₹31.5 crore. In the same period, the median fresher's salary grew by a mere 45%, from ₹2.45 lakh to ₹3.55 lakh. Infosys's new compensation package, therefore, represents a significant correction aimed at securing the niche talent required for the next phase of growth driven by AI and advanced technologies.
The market's negative reaction underscores investor worries about shrinking profit margins for IT firms as the war for talent intensifies. While securing future-ready skills is crucial, the associated higher wage bills are now being viewed as a near-term financial headwind, leading to the observed sell-off in tech stocks.
