IT’s Loaded Pashas

During the past few years, Indians viewed IT as more than just another
industry. As a profession, it is supposed to have al-

tered the rules of the methods of making money. At the risk of sounding
simplistic, one could say that the success stories of IT professionals across
the country proved that one didn’t have to belong to a successful business
family to make it big–and that knowledge pays. As word of these ‘IT
professionals’ salaries’ got around, even experienced professionals from
other sectors like manufacturing, finance and banking expressed a keen desire to
"get into IT".

As HR managers in IT companies would vouchsafe, moving to a better job and
negotiating the salary was often not just about moving along the career path. It
was also about being able to move to a bigger house, paying off family loans and
more…The slowdown killed many such dreams and with the same naiveness, IT
aspirants started equating the flaws of the dotcom bust with IT itself. Well,
last year was bad no doubt and as per Naukri.com estimates, salaries across the
IT industry in India fell by 10% to 25%. Even in companies where salaries have
not dipped, there was a freeze on salary hikes. When it came to downsizing, the
most expensive resources were asked to go first and were in fact, replaced by
new recruits at lower salaries.

IITs RULE: A degree from any of the IITs fetches many times the starting salary that a diploma or degree from lesser institutions can command. RECs are not too far behind in the pecking order

Among those who survived the downsizing drives in companies, employees were
asked to take salary cuts (upto 30%). Increments in the range of 5-10% is the
industry average as opposed to average of 25-40% two years back. There is more
respect for rules across organizations and cash reimbursements are curtailed to
a great extent. Even at the entry level, computer engineers from premium
institutes who had starting salaries of Rs 2.5-3.5 lakh have had to settle for
Rs 1.8 to Rs 2 lakh. There would be exceptions with certain companies offering
Rs 3 lakh or so, but the stark reality is that 30% of the same batch is not
placed at all.

Despite these negative factors, IT remains one of the most lucrative
professions, with the average IT professional in the country (across years of
experiences and companies) earns Rs 7 lakh per annum.

Reality check

But before we conclude that salaries across the IT industry are this good,
here’s a missive. The figures quoted above are based on a Dataquest- IDC India
survey featuring 48 of the country’s top companies. It does not include data
from the SME (small and medium size enterprises) or ‘B’ and ‘C’ class
cities, which employ a huge chunk (in terms of volumes) of the country’s IT,
professionals. In order to capture this data and to ensure that we had an ear to
the ground, we computed the career paths of professionals from diverse
backgrounds. What emerged was that a lot of them began their careers at salaries
as low as Rs 36K to Rs 60K per annum, mostly in small companies. They have grown
through the ranks, honing their skills and often changing jobs to cross over to
the Rs 2.5-Rs 4.5 lakh bracket (see table). Not surprisingly, the significant
jump in salary happened during the pre-2000 IT boom period when companies
maintained a bench while bidding for projects. As projects got cancelled,
companies found themselves bleeding money. Now, post 2000, companies complete
the pre-screening, short-listing and even selection of candidates, but actually
take employees on board only after the project materializes.

SOME SERIOUS BUCKS: Never mind the slowdown–salaries at IT companies still remain high, though the really serious money comes after ten years in the profession

Clearly, professionals have lost much of the arrogance that often crept in
along with the tremendous bargaining power they wielded. Juggling offer letters
and using one to get what one wants against another, was a common phenomenon
during boom time. The practice is not as rampant today, simply because there are
fewer offers being passed around.

The hardware-software chasm

Average salaries depend not only on years of experience, but skills set
also. For instance, technologies like ERP (Oracle Applications 11i, PeopleSoft,
SAP) which are in demand today, command much higher salaries compared to
professionals with the same years of work experience in JAVA, Microsoft
Technologies etc. A professional with 5-10 years of experience in ERP related
technologies, would get a salary in the range of Rs 5-8 lakh. A professional
with the same level of experience is areas which are not considered so ‘hot’
today, would be in the Rs 3 lakh- 7-lakh range. The IT industry always has its
waves of ‘hot’ technologies, which are largely dependent on the availability
of projects in that particular area. While professionals who fall into the ‘hot
skills’ bracket at that particular instance will always command higher
salaries, the disparity between the salaries of hardware and software
professionals is sizable too. If a hardware professional with 5 years of
experience gets Rs 4.5 to 5 lakh per annum, a software professional in the same
bracket would get Rs 5 to 7.5 lakh. A marketing professional’s salary would be
on par with the software person or even higher in some cases. Marketing
professionals usually have a higher variable component, which is dependent on
the revenue they manage to rake in for the company. Similarly, the starting
salary for a hardware professional would be around Rs 1.2 lakh p. a (though
smaller companies and B and C cities could even have salaries as low as Rs
48,000 p. a.). By the same yardstick, software professionals would get around Rs
1.5 lakh p.a. and an MBA from a reputed institution about Rs 2.5 lakh.

Starting trouble

When it comes to comparing salaries on the basis of educational
qualifications, computer science/electronic engineers from the IITs come out
tops, commanding a starting salary of Rs 3 lakh or above. The next in demand are
computer science/electronic engineers from other reputed colleges. These would
command salaries in the range of Rs 2.75-3 lakh. Other computer science
graduates from institutes offering courses like MCA (Masters in Computer
Applications), BCS (Bachelor in Computer Science), and MCM (Masters in Computer
Science) would be in the range of Rs 2 lakh to 2.5 lakh. And the multitude of
arts, commerce and graduates who joined expensive IT courses with stars in their
eyes, would have to settle for anything in the Rs 60,000 to the Rs 1-lakh range.

Perks

The perks still exist but companies are through with the pampering having
said good bye to the frills they offered employees in an attempt to have them
stay on. Perks often form 25% and in some cases upto 30% of salaries. Most
companies are veering around to the CTC (cost to company) concept and the perks
are being limited at junior and middle levels. In fact, for professionals in the
2-7 year bracket, PF and ESI would be the only two additional benefits offered.

For those in the 7 years of experience and above bracket, perks like company
owned homes, cars, mobile phone and telephone at residence, laptops, home office
furnishing reimbursement (hard furnishing), club membership, credit cards,
overseas vacations with family etc. There has certainly been a cut in the extent
to which these are offered–lesser domestic air travel, subsidized meals and
office transport is not completely free any more.

Stepping around the slowdown

Apart from the distinct downsizing in perks, salary structures have
undergone a change too. The trend has been to go with more variable component,
for instance, 60 % fixed and 40 % depending on company performance.
Organizations have become wiser about the danger of inflating the base salaries
(includes Basic, HRA, etc) to unreal levels. A higher base makes it impossible
to reduce salaries, when the going gets tough, without attracting attention from
Labor and IT authorities. What is being done is the concept of EVA (Economic
Value Add) which is basically a variable pay coming out of a more liberal profit
sharing mechanism. Sometimes EVA or its equivalent may be upto three times the
basic salary and is linked to individual performance, team/project/product
performance, company performance.

Another concept is staggered performance bonus. After a year of good
performance, a sizable bonus is announced and is paid out in three to five
instalments over the years. The balance due for the particular year is called
the "Kitty" and this increases every subsequent year. In whatever form
a company pays this out, it is money, and a nice hot boodle at that! And despite
the fact that the pampered pashas have had to become pennywise, they still
remain some of the best paid professionals in the country.

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