Employees disgruntled over paltry salary hikes

The IT sector is fast losing its sheen as companies dole out meagre hikes to its employees and struggle to offer them work to boost their careers.

A.M. Naik, Executive Chairman of Larsen & Toubro, has often voiced concerns in the past that the IT sector was taking away engineers from the infrastructure sector. He may not have to worry about that now as employees – existing and prospective – are finding that the $100-billion industry is not ‘cool’ anymore.

“In the last decade, most IT companies went along with the notion that everybody would line up and join them and that is not the case any longer,” said Girish Khare, Director - Marketing at Grass Roots India, an HR advisory firm.

Aditya Narayan Mishra, President Staffing and Director Marketing, Randstad India, agrees. “Though it will be attractive, other sectors like pharma, banking, or infrastructure will find more takers.”

As IT companies continue to struggle with their business model resulting in shrinking margins and an uncertain outsourcing environment in developed markets, salaries on an average in the last couple of years have come down from 2011 levels, when companies were operating in a similar economic climate.

Take the case of Infosys. “At the senior management level, the variable component was reduced up to 15 percentage points and by seven percentage points at junior levels,” said Rajesh Kumar, CEO, MyHiringClub.com.

What this means is if the company performs well in the future, the component of variable pay will not go up like it did in the past, which effectively translates into less money in the pocket of an employee.

This essentially means that difference in pay scale in some of the top IT companies is similar to that of a public sector company. “All things being same, it is definitely more lucrative to get a job at a public sector company as there are other benefits such as job security and sometimes better profile of work,” said Sriram Raman, a mid-level engineer who after working for Wipro has gone back to L&T. Others like Raman feel that these hikes are barely above the inflation levels.

Increased living expenses and employees feeling entitled to hikes are part of the problem too. “Employees are not satisfied as they are used to large hikes when the going was good,” said Kamal Karanth, Managing Director, Kelly Services India.

Hike in living expenses, which is partly reflected by Wholesale Price Index (WPI), averaged 7.4 per cent for 2012-13. India, which every year produces on an average of 5,00,000 engineers is also seeing excess supply when compared to actual demand. According to reports, in 2013, talent available was 1,072,800 and only 1,88,000 were added to the workforce.

Despite this there are certain segments in IT that remain positive. Companies that are in the business of providing analytics related software to Wall Street banks, insurance companies, retail, IT security or cloud computing certifications are seeing their salaries go up by 15 per cent or higher.

Industry watchers attribute this to a combination of skills shortage and better margins in the analytics business. “Domain expertise and specialisation in certain technologies will command premium,” said Mishra.

(With inputs from Rajesh Kurup)

(This article was published on June 23, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.