India’s US$250 billion IT services industry is entering a new maturity phase. Salary increments are expected to remain a modest 4–8.5% through the fiscal year 2025. This latest phase fundamentally differs from the post-pandemic era's double-digit growth. However, these moderate increments reflect the transition of an industry beyond its simplistic compensation models towards more sustainable growth patterns.
Multiple interconnected factors are cooling the salary growth of the industry:
AI management skills attract better compensation structures and hiring opportunities than traditional coding development processes.
Indian firms are keen to demonstrate their value over labour arbitrage to adjust to the international clients' IT budgets.
Industry is shifting from seniority-based to skill-based pay models.
Organizations are including flexible work arrangements and upskilling opportunities to supplement direct compensation.
The once-predictable career path for tech professionals now requires adaptability and specialized expertise. This is a new fundamental shift in the employer-employee value proposition.
The Growing Compensation Divide
2025 has a writing on the wall: the era of a generalist IT career with steady compensation is fading. Now, the compensation is dependent on the skill more than on general experience.
| Experience Level | Skill Category | Expected Hike Range | Key Value Drivers |
| Entry-level | General | 2-4% | AI collaboration and adaptability |
| Mid-Level | General | 5-8% | Domain knowledge and efficiency |
| Mid-Level | Specialized | 10-12% | Implementation expertise |
| Senior-Level | Leadership | 8-10% | Strategic Vision |
| Senior-Level | Technical Niche | 12-15% | AI leadership |
The market is rewarding those who have specialized skills in AI/ML, cybersecurity, cloud engineering, and full-stack development. These skills are now key to navigating the intersection of technology, business transformation, and innovation.
Tech professionals need to look beyond immediate compensation expectations and rethink future career development. The wisest strategy is to look for long-term success.
For those currently in IT or considering their future in IT careers, the implications are clear:
Sticking to a technology and riding on it for years is over. The new frontier in technology is skill acquisition.
Salary negotiations based on learning opportunities, flexible arrangements, and exposure to cutting-edge projects offer better value in the future than just a base salary.
Tier II cities offer better work-life balance than expensive traditional tech hubs.
Developing expertise in a specialization counteracts moderation in salary trends.
The progression of traditional salary premiums through management roles is fading. Technical specialists in emerging domains can now demand salaries comparable to or exceeding those of managers.
The shift coincides with the rise of Global Capability Centers (GCCs) in India. These centres often provide higher compensation for niche skills, exposure to global projects, and advanced training opportunities.
Meanwhile, the gig economy is creating alternative paths for tech specialists. Contract-based roles for specialized consultants are increasingly becoming common, commanding premium rates while maintaining flexibility. This shift in salary hikes signals a measured advancement that rewards a specialized value creation—bypassing the traditional compensation structure entirely—the new demand-in-demand expertise outpacing the industry-wide salary trend through project-based work.
Will the double-digit hikes return? When the market is right, it will. However, tech professionals must learn to adapt to the evolving market demand and scarce skill set. Specialization in a niche technology will attract premium compensation, irrespective of the moderation trend in the market.
This shift signals a pivotal moment for India’s position in the global tech ecosystem. Routine coding is increasingly facing AI-assisted development. The industry must evolve its identity from a low-cost destination to a centre of specialized expertise.
The earlier scalability model that powered the industry’s initial growth produced general practitioners rather than specialists. Educational institutions and corporate training programs need to calibrate their models and provide a new scalability model focusing on depth rather than breadth.
Companies that successfully transition to value creation through specialized capabilities will thrive. Industry leaders should understand this fundamental business model and look beyond outdated compensation strategies to be successful.
Ultimately, the moderation in salary growth should be viewed as a catalyst for transformation. Prompting both individuals and organizations to develop deeper capabilities in an increasingly sophisticated global market that rewards distinctive values.