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Follow UsAfter a year of growth in 2004 followed by a steady 2005, this year's
salaries kept up the momentum even as average salary took a hit, albeit a small
one. Average salary dipped 5.3% to touch Rs 5.4 lakh, down from Rs 5.7 lakh in
2005. 'Salary hikes' was a different story altogether with 'average salary
hikes' at 19.8%, up from last year's 18%.
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Extensive hiring of freshers and a growing proportion of professionals with
'less than two years' experience who are coming for lesser salaries has
brought the average salary down despite growth in average hikes. As the industry
gets younger, the possible dearth of experienced hands can be a cause for
concern in the future. The industry needs to maintain an optimal balance between
fresh and experienced manpower.
With IT companies expanding operations, they have been hiring freshers
aggressively. In fact, the biggest employee bracket for the industry has shifted
from the 5-10 years experience band to the <2 years. The percentage share of
employees with below two years experience now forms 31.1% of the workforce as
opposed to just 23.2% in 2005.
Correspondingly, the 5.1-10 years experience bracket has come down from
33% last year to 26.6% in
2006, taking it to third in line in terms of workforce strength. The trend is
further corroborated by the fact that the less than 25 years of age employees
(effectively, the freshers) band has strengthened from 29.4% of the total in
2005 to 37.9% in 2006. Comparatively, employees between the 26-35 years of age
band have dwindled from a 62.3% share in 2005 to 54.2% in 2006.
With the proportion of <2 years experience professionals increasing in the
pie, it is consequently affecting the characteristics of the industry. Although
the actual number of freshers and moderately experienced professionals is
shooting up, the total salary absorbed by them is much lesser than by the highly
experienced professionals. With high headcount recruiting happening at the basic
level, the average salary of the industry is decreasing compared to the previous
year.
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The sedate average salary trend is reflected across all experience groups
with an exception of the 5.1-10 years experience band, either falling or
remaining stagnant. Even the rise in the 5.1-10 years bar is almost negligible,
up from Rs 6.9 lakh in 2005 to Rs 7 lakh in 2006. The decline in average
salaries is the most visible among seniormost professionals (10 years and
above). In fact, there has been a consistent decline in headcount in the
higher-end salary range (>Rs 8 lakh), indicating more employees getting lower
salaries than last year. This is the only experience band that has witnessed a
decline in salary satisfaction, with the score moving down from 7.3 points in
the previous year to the current 7.2. Correspondingly, the satisfaction scores
of 'upto 2 years' as well as 2.1-5 years experience employees has grown from
6.7 points last year to 6.8 in 2006. The satisfaction score for the 5.1-10 years
band improved to 6.9 in 2006 from 6.8 in 2005.
However, when it comes to salary hikes, the scenario is very different, with
overall bigger hikes in tow this year. There has been a marginal increase in the
proportion of employees who got hikes in the higher range (26-35%). But, the
employee band in the lowest (below 10%) hike range has thinned down. The
cumulative effect of these changing dynamics has pushed average salary hike up
from 18% in 2005 to 19.8% this year.
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This band, which has the Interestingly, the average For employees with two and below two |
Post 2003, the average This year, the DQ-IDC Top 10 |
With the exception of the Rs However, the Top 10 A cause for concern is the declining |
The most experienced A lesser number of employees this year |
The major hikes in 2006 have been within the moderately experienced
professionals band rather than within professionals with more than 10 years
experience. So, though the average hike in salary for the industry is increasing
that is only affecting professionals with lesser years of experience. For
instance, 16.8% of employees with up to two years of experience and 14.9% with
2.1-5 years managed high hikes of 31% and above. But, only 10.3% of employees
with experience of 5.1-10 years and only 4.6% of >10 years experience managed
31% and above hikes. The possible reason for more higher-end hikes at the entry
level can be the fact that companies are paying less upfront when recruiting a
fresher and more after a six months to one year's time period.
| Methodology |
| The DQ-IDC Best Employer Survey for 2006 was carried out in seven major cities- Mumbai, Delhi, Chennai, Kolkata, Hyderabad, Pune and Bangalore. Questionnaires were sent out to around 250 companies, out of which 51 participated in the first phase. In the second phase of the survey, 32 companies were short listed from among these. A large-scale survey was conducted by IDC A further classification of target |
With lowering average salary, fewer good hikes, and the consequently dropping
satisfaction levels, the salary trends this year have failed to impress seniors.
However, considering the fact that salary has emerged as the top-most reason for
employees leaving an organization (as illustrated by the DQ—IDC Best Employers
Survey 2006), it's not just the senior hands but employees all across that
companies will need to make that extra effort to retain. And, while salary will
be one of the critical components, it will not be the only factor driving
retention through higher employee satisfaction.
Shipra Arora
shipraa@cybermedia.co.in