Recession 2024: IT sector affected by fear of recession, many companies make huge cuts in salary hike and promotions
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Recession 2024: On one hand the whole world is busy celebrating the New Year. At the same time, the effects of recession are beginning to be seen in companies. Investments by private equity (PE) and venture capital (VC) funds fell to a 43-month low of $1.6 billion in November. Meanwhile, news is coming that major IT players in Bengaluru in India have implemented huge cuts in annual increments and promotions for employees. Bengaluru-based tech giant Infosys has given less than 10 percent salary hike to its employees this year. The scenario is more or less the same with global players headquartered in the US and Europe, which have a major presence in Bengaluru. It was believed that this phase had started a year ago and would end in six months, but it has continued to force IT companies to take drastic measures in terms of salary hikes. An IT professional working for a US-headquartered company said that IT companies earlier used to give 20 per cent annual hikes, and for those who were promoted, the hike would be 50 per cent. This year, promotions have been stopped, and those who have been promoted have been given a 10 per cent raise, instead of a 20 per cent hike.
IT sector was broken between 2007 and 2009
Such a situation in the company is reminiscent of the terrible period between 2007 and 2009, during which the IT sector was badly affected. As revealed by a senior HR manager of a reputed technology company, IT professionals are worried about the impact of automation and Artificial Intelligence (AI) on jobs. However, experienced employees say that companies which could survive the worst phase of recession earlier will come out of it this time too and this is a natural phase of the IT industry. According to sources, in its communication with the employees, Infosys thanked the employees for their unparalleled support and efforts to overcome the current challenges and ensure success in all aspects.
PE, VC investment drops to $1.6 billion in November, 43-month low
Investments by private equity (PE) and venture capital (VC) funds fell to a 43-month low of $1.6 billion in November. Information was given in a report on Tuesday. According to a report by industry lobby group ‘Indian Venture and Alternative Capital Association’ (IVCA) and consulting firm EY, PE and VC investments declined by 69 per cent in November compared to a year ago, while it declined by 60 per cent in October. There was a decline of. The report says that in terms of volume, 58 deals were done in November, 2023 compared to 106 deals in the same period a year ago and 73 deals in October, 2023. EY partner Vivek Soni has predicted, based on available data, that PE/VC investment this year will be 10-12 percent less than the $56 billion in 2022. He said this decline was mainly due to a sharp decline in startup investment and a decline in the number of large deals due to the widening gap between investor valuations and seller expectations.
In November, there were six big deals worth more than $100 million, the total value of which was $993 million. This is only a quarter of the amount recorded in the same period a year ago. According to the report, Actis’ $205 million bid to acquire Acme’s 321 MW solar assets was the biggest investment this month. The report says that PE/VC funds raised $401 million last month for future investments. This was less than the $1.9 billion raised in November, 2022 and $2.4 billion in October, 2023.
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