• 12 September 2005
  • News
  • By Shipra Arora


  • Average hike in IT salaries stays at 18%
  • Freshers/non-engineers keep average salary steady at Rs 5.7 lakh
  • Maharashtra beats Karnataka as #1 supplier of tech manpower

If last year's salary revival built hopes, IT salaries this year did not let the tempo down either. At a decent 18.4%, the average hike in salaries kept pace with last year's average hike of 17.1%.

However, significant hiring at the entry-level, together with a growing trend towards induction of science graduates, like BSc graduates, at lower salary levels, nullified the impact of average hike on the overall industry average salary. This kept the average IT salary constant at last year's Rs 5.7 lakh per annum.

Salaries:               Steady Average...
Experience Less than 2 Years 2-5 Years 5-10 Years Over 10  Years
Salary % of employees % of employees % of employees % of employees
  2004 2,005 2004 2005 2004 2005 2004 2005
Less than Rs 2 lakh 36.5 28 10 10.6 6 6.2 3.7
Rs 2 to 3 lakh 34 46 21 22.3 10.5 5.8 3.5 4.9
Rs 3.1 to 4.5 lakh 24.5 20 34 39.2 15 16.2 9.7 6
Rs 4.6 to 6 lakh 2.5 3 22 16.3 21.6 19.6 12.4 6.6
Rs 6.1 to 8 lakh 1.3 2 8 7 20.7 25.2 7.1 9.4
Rs 8.1 to 10 lakh 1.3 1 3 2.7 12 13.6 13.3 16.3
Rs 10.1 to 15 lakh 1 2 1.1 11.7 10.6 28.3 25.7
Rs 15.1 to 25 lakh 0.5 2.1 1.9 17.7 22.3
Rs 25.1 to 35 lakh 0.5 6.2 4.3
Over Rs 35 lakh 0.6 0.3 1.8 0.9
Average salary (Rs lakh) 2.6 2.8 4.2 4.1 6.7 6.9 12.4 12.2
The average annual salary remains at Rs 5.7 lakh, despite over 18% average hike-thanks to the many freshers, including non-engineers added to the pool last year
Base: 2,859 Employees Surveyed

Source: DQ-IDC Salary Survey 2005

For the senior guys in the industry this year's salary trends failed to impress. Last year the revival had spurred a growth wave leading to significant corrections in salaries, hence the quantum jump in average salaries in the 2-5 years, 5-10 years and the over 10 years experience bracket. This year the corrections in these bands were almost negligent, which is reflected in the almost stagnant, even negative, growth performance.

The average annual salary remains at Rs 5.7 lakh, despite over 18% average hike-thanks to the many freshers, including non-engineers added to the pool last year

This year the entry-level band hit back with the highest growth among all the four groups. The reason: corrections and upgrades in salaries. The enthusiasm at the entry-level was corroborated by our DQ-IDC top 5 and top 10 star employers, whose average salary bettered the industry average in this segment. The top 5 had an average salary of Rs 3.6 lakh per annum, while the top 10's stood at Rs 3.1 lakh per annum. The growth in the overall average salary could have been much higher. However, an increased intake of freshers, especially graduates such as BScs, at relatively lower salaries, negated the positive impact of salary corrections to some extent. There was also a significant change in the dynamics, internally, in terms of shift within the salary bands in the group, as a larger proportion of the entry level employees moved to higher salaries. The most populated salary band shifted from the sub-Rs 2 lakh per annum band last year to the Rs 2 to 3 lakh per annum band this year. There has been a greater movement towards lower salary brackets within the group as is suggested by an increase in the employee concentration in the sub-Rs 2 lakh to the Rs 3-4.5 lakh per annum categories. Correspondingly, there has been a crunch in the relatively higher salary brackets of Rs 4.6 lakh annum and above, with employee proportions dropping over last year. The cumulative effect of this has driven down the overall average salary in this bracket. Consequently, there was a fall in satisfaction levels from last year's score of 7.2 to 6.7 this year. While the average salary of the DQ-IDC top 10 star employers was a little below the industry average at Rs 4 lakh per annum, the top 5 star employers managed to exceed the industry average in this category with an average salary Rs 4.9. The average salary of the industry's three biggies-TCS, Infosys and Wipro taken together also topped the industry average at Rs 4.4 lakh per annum.     
Both categories fared below industry average with average salary of Rs 6.6 lakh per annum offered by the top 5 star employers and Rs 6.1 lakh per annum by the top 10 star employers. Even the average salary of TCS, Infosys and Wipro totaled to a little below the industry average at Rs 6.8 lakh per annum. No doubt there was a decline in satisfaction levels. Within the group, the Rs 6.1-8 lakh per annum emerged as the predominant salary band with 25% employees, as compared to the Rs 4.6-6 lakh per annum band last year, indicating towards the higher salary band emerging as more common place with the experienced professionals as compared to last year. The previous year Rs 4.5-6 lakh per annum bracket had the highest employee population. Also heartening for this group was the marginal rise in employee concentration in the high salary bands above Rs 8 lakh per annum. An indication that there's a possibility of higher-end salaries coming the way of a greater number of experienced employees-a trend that has been gaining momentum in the last 2 years. After a good going in 2004, the over 10 years experience bracket was the worst hit this year. The salaries of the experienced lot in the DQ-IDC top 5 and top 10 star employers too got a hit as their average salaries stood below the industry average at Rs 11.5 lakh per annum and Rs 10.5 lakh per annum. Experience did not translate to fatter pay packets as a small chunk of the employees moved into the entry-level salary band and, simultaneously, employee concentration decreased in the high-end above Rs 25 lakh per annum band. Employee proportion also increased in the lower-end band of Rs 2-3 lakh per annum. However, the top industry brands like TCS, Infosys and Wipro did not mind paying a premium for the experience as their combined average salary at Rs 15 lakh per annum in this category much exceeded the industry average.

In what seemed like a cyclical movement (that might have been a conscious strategic decision by the companies), while the higher experience bands (2-5 years, and especially the 5-10 and over 10 years) enjoyed the benefits of correction in salary grades last year, it was the entry-level band that saw salary hikes this year. There was also significant skewing towards the Rs 2-3 lakh salary band as compared to the sub-2 lakh per annum band last year. This trend, together with the salary corrections, accounted for the rise in the entry-level average salary-an 8% growth as compared to a 12% drop in 2004.

The Top Paymasters
  Top Salary Satisfaction
  Rank Rank
Cadence 1 2
Sun Microsystems 2 14
Philips Software Centre 3 3
Induslogic 4 9
MindTree Consulting 5 12
Sasken Communication 6 17
IBM Global Services 7 19
Keane India 8 5
HCL Technology 9 16
Infosys 10 18
Wipro Technology 11 20
Mahindra British 12 11
Computer Science Corporation 13 8
NIIT Technology 14 13
TCS 15 15
Hexaware Technology 16 6
HCL Infosystems 17 1
RMSI 18 7
Rolta India 19 10
Accel ICIM Frontline 20 4

Base: 2,859 Employees Surveyed
Source: DQ-IDC Salary Survey 2005

Barring a few exceptions like Cadence, Philips Software, Mahindra BT, NIIT Technologies and TCS, the general 'salary vs satisfaction' trend more or less followed last year's trend: a disconnect between the salary and satisfaction levels with the salary. For instance, while Sun Microsystems improved its performance in terms of salary levels from #10 last year to #2 this year it did not translate into a corresponding improvement on the salary satisfaction front, which came down from #12 to #14. In case of the exceptions mentioned, the satisfaction levels were almost aligned with the salary levels being paid. However, the overall trend suggested an emergence of variables other than just salary impacting the satisfaction levels. Another possible aspect determining the satisfaction levels would be the area of work. As a result, even though the average salaries being paid by the companies on top may be among the highest in the industry, it might not have been aligned with the particular niche/specialized domain of the employees. Hence, the dissatisfaction.

But for the aggressive hiring of freshers, especially the growing influx of BSc graduates at relatively lower salaries, the growth here could have been much higher. Graduates accounted for 8% of the employee population this year as compared to 4.8% last year.

The Supply: Maharashtra's on Top

Respondents were asked: “What is your state of origin?”
The four Southern states of Andhra Pradesh, Tamil Nadu, Kerala and Karnataka continued to rule the roost with maximum contribution to the manpower needs of the industry, even though the overall proportion of their contribution came down from 48.7% last year to 45.3% this year. Interestingly, Bangalore had to give up its numero uno position as Maharashtra took its place as the biggest originator for IT professionals. Maharashtra has made significant strides in the last two years taking its contribution from 5.9% in 2003 to 15.8% in 2005. India's Silicon Valley even failed to make it to the 2nd position as Andhra Pradesh upped its contribution to the industry. However, Tamil Nadu, which saw a significant drop last year over 2003, did little to recover. Another interesting trend has been a lowered gap between the top-most and the subsequent states. Thereby indicating a more evenly spread contribution from the various states.

The overall sedate trend in average salaries, consequently, took its toll on salary satisfaction across all employee categories, leading to a marginal decline over last year's satisfaction levels. The satisfaction level among the entry-level employees stay put at last year's 6.7 score even as their average salary made a comeback of sorts with a growth after last year's drop.

The average hike in IT salaries this year was comparable to last year's, thereby maintaining the growth trend. Even though marginal, there has been an increase in the proportion of employees in ranges of higher percentage salary hikes. As compared to 23% of employees getting above 20% salary hikes, this time round there were 27% employees getting salary hikes on the higher end. This figure has been on a rise since 2003, when there was only 13% of the population in this category. 

Surprisingly, salary featured below factors like growth opportunity and career development, organization culture/work environment, flexibility of office hours, technology one is working on- in accounting for overall satisfaction. As a result, the country's star employers are busy figuring out an optimal satisfaction combination on both the salary front and the other emerging variables drawing the employees today.

The top three companies offering the highest salaries in the various experience categories amongst the top 20 paymasters
The Industry Gets Younger

*Include >45 years and not specified Source: DQ-IDC Salary Survey 2005 Base: 2,859 Employees Surveyed
As more freshers are recruited, the Indian IT industry gets younger. The share of the youngest bracket of the IT professionals, ie 25 years, grew this year after two consecutive years of decline. Some 70% of the employees are less than 30 years old
Engineers: "Minority Community"?

The engineering population in the IT industry is on a steady decline. From more than half the employees coming from an engineering background in 2003, it came down to less than half this year. An interesting trend is the growing prominence of the non-engineering portion of the population, especially the graduates, post-graduates and professionals with higher qualifications like MPhil, Phd as well as with qualifications in other domains like CAs, etc. Even though there was a marginal increase in the induction of employees with management degrees this year, there was still a dearth of management professionals in the industry.
*Include CA, M Phil, PhD etc    Base: 2,859 Employees Surveyed Source: DQ-IDC Salary Survey 2005
Some of the groups such as MBA, MTech etc may also include engineers


The DQ-IDC Best Employer Survey for 2005 was carried out in seven major cities -Mumbai, Delhi, Chennai, Kolkata, Hyderabad, Pune and Bangalore. Questionnaires were sent out to around 200 companies, out of which 46 participated in the first phase. In the second phase of the survey 32 companies were shortlisted from among these. A large-scale survey was conducted by IDC India among the 2,859 employees selected from the 32 shortlisted companies. The sampling was done on the basis of the distribution of employees in different cities. In each of the seven cities the sample quota was assigned based on the company's employee strength in that city. A further classification of target respondents was done on the basis of job profile and years of IT experience. This quota system enabled us to get a proper representation of different types of employees in the sample. The salary data and profiles of the IT industry have been derived from these employee interviews.

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