Fresh­ers may not Mint Higher Pay in In­dian IT

Salary may stag­nate due to fall in spend­ing by top cus­tomers, over­sup­ply of grads

The Economic Times - - Companies - Anir­ban.Sen@ times­

Ben­galuru: Newly-grad­u­ated en­gi­neer­ing stu­dents, who are find­ing it in­creas­ingly tougher to land a job in In­dia’s $160-bil­lion IT in­dus­try with each pass­ing year due to lower lev­els of hir­ing, may have to deal with an­other dis­ap­point­ment this year — their start­ing salaries are un­likely to see a spike any­time in the near fu­ture and will largely re­main stag­nant. Ac­cord­ing to hu­man re­sources heads of top com­pa­nies such as TCS, In­fosys and Wipro, as well as sev­eral re­cruiters and ex­perts track­ing In­dia’s IT in­dus­try, In­dia’s largest out­sourc­ing firms are un­likely to re­vise fresher-level wages, at a time when spend­ing from top cus­tomers is de­clin­ing.

“Hir­ing is clearly chang­ing. The 2,000-odd peo­ple we’ve added this year in­cludes peo­ple we’ve added from ac­qui­si­tions. We’re also call­ing out fac­tors like num­ber of peo­ple who are get­ting re­leased from au­to­ma­tion, lower util­i­sa­tion, etc. — all that put to­gether, there will be pres­sure on en­try-level salaries and hir­ing,” said Sau­rabh Govil, chief hu­man re­sources of­fi­cer at Wipro, adding that fresher level salaries will stay stag­nant at the .₹ 3-3.5 lakh level in the near term.

“Ten years ago, the sup­ply-de­mand sit­u­a­tion was neck to neck — the num­ber of en­gi­neers grad­u­at­ing was roughly sim­i­lar to the num­ber of jobs in the IT in­dus­try. That has changed dras­ti­cally — as of now, sup­ply is 5 times as much as de­mand,” said Achyuta Ghosh, head of re­search at Nasscom. De­spite mar­ginal salary hikes of­fered by US-based Cog­nizant — fol­lowed by TCS — last year, ex­perts point out that the range of salaries still largely re­mains the same. More wor­ry­ingly, no other large IT or mid-sized IT firm fol­lowed suit. In­fosys and Wipro said they planned to keep salary lev­els con­stant in the near term.

“Ex­pect in­va­sion of trade unions in In­dian IT. This may sound far-fetched but we think of this as a pos­si­bil­ity,” said an­a­lysts Akhilesh Tilo­tia and Jayku­mar Doshi of Ko­tak In­sti­tu­tional Equities in a re­port.

“If there is a glut of fresh­ers com­pared to the de­mand, they (1) may be hired at a pay lower than what would have been the case ear­lier, (2) may not re­ceive pay-hikes ini­tially, (3) their pro­mo­tion pack­ages may not be as gen­er­ous and (4) they may take much longer time to be pro­moted,” they said.

“We be­lieve that as a large batch of not-so-well-paid fresh­ers learn and grow in the sys­tem, they are more likely to im­pact the growth in pay of the se­niors as the ra­tio of the pay-scales be­gins to look dis­tended. It is quite pos­si­ble that low-growth in­dus­tries may see a cor­rec­tion in the salaries of the se­niors – and this can have quite a mean­ing­ful im­pact on the con­sump­tion dy­nam­ics,” Tilo­tia and Doshi added.

And with the dis­rup­tion caused by au­to­ma­tion to the tra­di­tional “pyramid model” of the IT in­dus­try, things could get even tougher for en­try-level en­gi­neers over the next 5-10 years. “De­spite be­ing an em­ployee-in­ten­sive in­dus­try, so far a com­pany’s pro­cesses and or­gan­i­sa­tion struc­ture have had a more im­por­tant bear­ing on the qual­ity of de­liv­ery than the qual­ity of tal­ent re­cruited by the com­pany; this could change in the fu­ture,” said an­a­lysts Sagar Ras­togi and Ut­sav Me­hta of Am­bit Cap­i­tal.

Things could get even tougher for en­try-level en­gi­neers over the next 5-10 years, feel ex­perts

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