Infotech Salaries FY 2008

The predictions made by economists, HR experts and IT professionals earlier this year is now coming true. Salary increments in IT companies are lower this year than it has been in previous years, in some cases, significantly so.

IT and ITeS companies are giving an average increment of only 8% to 10% this year, substantially lower than the 18-20%, it gave last year. In some cases last year, it even went up to 40-50% said an employee of the company. That’s the increment trend across the tech sector. Employees have received lower increments this year according to an employee of Infosys Technologies. Laterals got only some 8% hike. A company security policy e-mail has also asked us not to share such details with anyone outside.

Head of education & training in Infosys, said that inclusive of variable pay, the company’s increments this year were in the rage of 11% to 13%, against 13-15% last year. Senior HR executives at some large tech firms confided that their companies are not in a position to increase salaries, beyond single digits at least or a couple of years, till the global markets stabilize. Companies are hit from increase in hiring cost and billing pressures are choking even large players. This has forced them to drastically revise their increment formula according to managing director, Sentient Consulting, a corporate consulting firm.

The biggest pressure is seen to be coming from the US, which looks to be quickly slipping into a recession. Almost 60% of the revenues of many Indian IT companies come from the US. Tech firms are increasingly moving away from an equalitarian regime in compensation.

Companies are trying to keep employees across the board (except the bottom 10%) happy, to keep attrition at bay. But in today’s scenario, cost pressures are compelling them to change that approach, said the HR director of a tier 1 tech firm.

Indian companies have so far been affecting unsustainable salary increments. It has clearly hit a correction mode this year, says a CEO of hiring firm Human Capital. Wipro’s average salary increments are expected to be in the range of 8% to 10% against 12-14% last year, pay hikes expected to happen in August will be some percentage lower than the previous year’s says head of compensation benefits in Wipro.

Product firms that give out hue hikes are also on a cost cutting binge. Recession is hitting them hard and increments are done to 10-15% from 20-25% in previous years, observes a VP, New Era India Consulting. And if lower increments make employees unhappy, there’s little they can do about it. In previous years, they would have jumped into another job at a significantly higher salary. Now, with IT companies no longer hiring as they were, nor offering any such hikes, they have to be content with what they get.

Numbers have come down in the low-end non value added services domain based on US off shoring. As a result, the industry is seeing moderated attrition levels ranging between 20% and 25%.
While hiring momentum has taken a hit, companies are also lowering the salary hikes. The hikes this year are about 12-13% compared to about 17-18% last year. The decline is partly due to an effort by the IT companies to save their margins in the wake of rising rupee and increasing taxes. Analysts say that there will be a salary correction this year. The companies are expected to hire at lower salaries and without sign-on bonuses.

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