Salary Scenario Expected to Perk-up in FY11

If you were to ask me my dream company to work for, it has to be Google for sure, said a wannabe IT professional. Certainly not a new thought as majority of the IT professionals rate Google as the most desired company to work fora fact corroborated even in the Dataquest-IDC Best Employers Survey 2010 (DQ-IDC IT BES 2010) wherein Google occupied the top slot in the ideal company to work for parameter.
Named after googol, a mathematical term for a one followed by hundred zeros, Googleas most of us are awareincidently, is an R&D company. However, not many outside the IT world would be aware that Google employs seasoned hard-core techies in alignment with its missionto organize the global information and make it universally accessible as well as useful.
As Googles business is different from the usual IT companies like TCS, Wipro, and Infosys, so is the background of its employeesmany of these seasoned techies are hard-core R&D professionalsa community hard to source, keeping in mind the limited availability of these professionals.
Unlike previous years, the Dataquest-IDC Salary survey 2010 is different this year as the survey has seen an unprecedented number of new entrantseight in total and surprisingly most of the new entrants are captive R&D centers of MNCs including SAS Institute, Citrix, Sybase, Philips, Novell, Pitney Bowes, and Datacraft.
As new entrants, these captive R&D centers are engaged in developing a cutting edge technology unlike most of the IT companies, which are engaged in mainly application maintenance work although even they engage in R&D work, albeit marginally engaging cyber coolies. |
A few players have entered the survey perhaps for the first time. However, these R&D centers with an intention to capture the imagination of the present and prospective employees, participated in large numbers. These R&D companies, as a result of intense competition, offer lucrative financial incentives for securing experienced engineers, only to lose them to their rivals a couple of years later.
Another trend that emerges from this years survey is that a majority of the participating companies are either captive R&D centers or are specialized in a specific domain, for instance, Kale Consultants (offers niche IT solutions for airlines industry) or Polaris Software (offering banking solutions). Therefore, one can safely conclude that the arrival of niche and specialized companies and R&D centers have edged out the traditional IT players like TCS, HCL Infosystems, L&T Infotech, from the Top 20 best paymasters. No prizes for guessing that being specialized players, these companies invariably have to shell out fatter pay packages for retaining their hard-to-get experienced employees. This is unlike other IT companies which employ fresh out-of-college graduates, hiring them at lesser packages even though they too employ individuals with higher packages.

Salaries Get Fatter
The last two years have seen mixed fortunes for the Indian IT industry. From the heady, uncontrolled growth of 2008, the industry was down in the dungeon beginning in late 2008 with the poor run continuing in 2009. Most of the IT companies put their projects on hold and continued to wait with bated breath as the US and European economies struggled to keep out of recession, albeit unsuccessfully. However in H2 2009, the fortunes took a turn for the better as the industry bounced back. Nasscom in June had predicted that wages in the IT sector, which employs more than 2 mn people, could rise by 10-20% in FY11, with some even forecasting that India will even outperform the other Asia-Pacific countries. Incidentally, wages at the Indian software companies had been rising by 10-15% annually before the slowdown hit the Indian shores.
In fact, according to 2009 EE Times Global Salary & Opinion survey, the engineers salaries in India and even in China have risen faster than even some of their counterparts in Europe, Japan, and North America. Almost half of the respondents in China and about 40% in India found their salaries slightly or much higher than what they were five years ago, while only 34% of the respondents in Europe and 25% in North America reported a hike in the similar duration.
The increase in the salary hike can be attributed to the growing demand for engineering talent in China and India in the last decade or so, as hardware and software companies have accelerated the transfer of manufacturing and design operations from onshore locations to lower-cost parts of the globe.
In the DQ-IDC salary survey too, there has been an increase in the average industry salary from 15.3% (in 2009) to 17.6% (in 2010). In fact, only 2.3% of the workforce received no hike and around 30% of the workforce received a salary hike between 11-15%. In fact, around 23% of the workforce received a salary raise between 6-10%, a definite improvement from the last year wherein 30% of the employee force received a salary hike between 1-10%. Interestingly, a small percentage (3.9%) of the workforce even managed to get a salary raise of more than 40%, a commendable feat indeed, and that too in a year when the industry managed to limp back to normalcy. Insiders say that the trend of getting higher salary hikes may well be more pronounced this year as the industry goes full steam.
Coming to the alleged salary discrepancies between male and female employees, thankfully the trend of offering widely differing packages to the female employees has been on the decline as the percentage of salary hike to women employees is now more or less at par with their male counterparts. Not just that, the salary hike between 16-30% sees women employees outscoring their male colleagues (in the 16-20% salary hike bracket, 16% of the fairer sex saw a raise vis–vis 14%; similarly in the 26-30% bracket, only 5.9% of the male workforce managed to get a hike while 6.7% women force got a salary increase in the range). However, one also needs to keep into consideration that the percentage of women workforce employed by the IT companies is still dismal as it hovers around the 25% mark (as per DQ-IDC Best Employers Survey 2010).
Employees particularly of the R&D centers this year can further raise a toast as companies are expected to double their salary hikes thanks to the market making a comeback.

Graying Population
Look around and you may find that the majority of the Indian workforce is in the twenty-five to thirty years age group as India prides itself on being one of the youngest nations in the world. Even in 2009 itself, the percentage of the workforce in the age bracket of less than twenty-five years was a good 25%, however in FY10, it has gone down to 17%a clear indication that there was a cap on hiring of fresh recruits straight out of campuses. Companies struggled to keep the costs, including that of training in check, preferring instead to retain their trained and experienced employees. The DQ-IDC salary survey too highlights this trend as 39% of the workforce fell under the thirty to forty age bracket. So, the average age of the employees increased by 1% last year to 30% reflecting the trend in the IT industry now adding more value to experience.

Graduates vs Engineers
Not so long ago, the Indian IT industry used to be a favored haunt of engineering graduates when it came to bagging lucrative job offers. Incidentally, the trend started to taper down in the last few years. This year too, the trend of hiring non-engineering graduates continue as around 60% of the total industry workforce comes from this category with only 40% of the workforce coming from the engineering background. The engineers are gradually losing their grip over the tech jobs as the graduates, post-graduates, and management graduates along with the diploma holders in technology, are being employed by the companies increasingly. With product features across the companies becoming similar to each other, it is the sales and marketing activities that the companies are banking on, to move ahead of competitors and therefore, MBA graduates are being preferred. However, this does not indicate that the engineering graduates will give up easily as they seem to have clawed back in contention, perhaps the entry of many R&D companies in the survey this year is the primary reason (as they employ seasoned engineers in large numbers).

Looking Up
Belying the prophecies of going into the twilight zone, the Indian IT industry has shown resilience in times of slowdown. With companies struggling to stay afloat in the slowdown, it was a daunting task to tread that fine line of balance between their earnings and salaries paid to their employees. This resulted in withholding of salary increase and increments till the times improved.
The last one-and-a-half year has been a rather bad year in terms of salaries as the pay packages were severely hit across all verticals, with employees having to carry-on with no hikes and in some cases marginal hikes. However, excluding a few sectors like pharmaceuticals and CPG which managed to dole out decent salaries, the other verticals were badly hit in a recession affected economy.
As India Inc has shrugged off the bad memories of the recessionary phase and hiring gathers momentum, the companies too have rewarded employees for being loyal. Therefore, there has been an increase of 2% in salary (at 17.6%). Most of the companies are back to their salary hike ways. For instance, the recovery of the defamed Satyam Computer Services under its new owner Mahindra Satyam has proved to be a blessing for the more than 20,000 employees across all levels, as the variable pay was restored. The variable component is 10% at the entry level, 20% at the middle level, and 30% at the senior management level. IT bellwether Wipro too has lifted its freeze on hikes and promotions.
Industry insiders although exude a positive outlook for 2010, as the Indian economy is on its way to registering good growth figures. This year has all the trappings of being a year when salary hikes became the rule and not the norm, FY11 may well turn out to be a good salary year.

Stuti Das

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