The Hindu Business Line : Sign-on bonuses are back, but firms are more choosy

UNLIKE the early 1990s, this time round, the sign is clear on the IT turf: No trespassers will be recruited. IT companies in the country, which are on a massive recruitment spree, are exercising caution and prudence, both in hiring and compensating employees.

Though sign-on bonuses and retention bonuses are increasingly appearing on salary slips, companies are offering these goodies prudently and selectively, according to Mr Aditya Narayan Mishra, Centre Head, Ma Foi Management Consultants, Bangalore.

The size of the sign-on bonus packet is anywhere between Rs 50,000 and Rs 2 lakh depending on the new-recruit's experience and position. "This is being given only for lateral hires, particularly when they have to relocate. This is to take care of their start-up expenses like finding a house, school for the children, admission fees, etc."

The retention bonus, on the other hand, is a kind of pre-committed salary hike, regardless of the employee's performance. This could range between 10-15 per cent of the employee's CTC (cost-to-company).

Mr Gautam Sinha, CEO, TVA Infotech Pvt Ltd, a Bangalore-based IT recruitment firm, says these two bonuses are still done on an individual basis and are not yet being offered across the board. "They have not yet become blanket policies," he says. On whom it is given to and how much, depends on how desperate the company is to get an employee (read as skills). Most companies though, only offer it in the first year. But when software engineers negotiate for another job, they quote retention bonus and sign-on bonus as part of the compensation package, contends Mr Mishra of Ma Foi.

Mr Sinha says that though the IT recruitment market is hotting up, salaries in the industry are not irrationally high. "For employees there is a multiplicity of choices and sometimes candidates do two interviews and not even take up one job."

But he also finds that companies are also becoming more stringent in the recruitment process. They have reduced the processing time to close a position and demand that recruitment firms should enlist candidates from across the country to get a better candidate profile, he says.