Freshers may not Mint Higher Pay in Indian IT
Salary may stagnate due to fall in spending by top customers, oversupply of grads
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