Compensation of IT companies

Tuesday, September 26, 2006

Overpaid? We should get more: IT workers

Techies respond to Murthy’s statement that IT industry has raised salary expectations

Mumbai: “We deserve more!” This was the common refrain amongst most IT professionals when this paper asked them about Narayana Murthy’s comments that the IT industry itself has fuelled expectations of techies (Mumbai Mirror – September 20 issue).

While software companies refused to go on record about the same, most did admit that this profession certainly offers opportunities which no other industry does in the country.

On the other hand, software engineers, while still hesitant about being quoted, were quite clear that they deserve even more!

A senior software engineer with a multinational company said, “We are the main resource. We make the final products. Why shouldn’t we get more, especially when the employer earns in dollars with reasonably good margins?”

Another software engineer, working with a leading Indian software company, revealed that their employer charges about $40 per hour from clients abroad. “Now even a Rs 40,000-a-month salary translates into just $5-6 per hour for us. So we aren’t over-paid at all,” he explained on condition of anonymity.

They get to call the shots too!

Forget “fuelling salary expectations”, the industry has now even started allowing software engineers to decide their own terms and conditions.

In fact, if sources are to be believed, a growing trend is that software engineers, who have three years of experience, get their desired increments or on-site postings abroad by just threatening to leave the job!

Paucity of people – a problem
A Nasscom study had stated that the industry, despite adding over 1,20,000 professionals during 2005-2006, would need 8,50,000 IT professionals by 2010. This also drives up salaries.

In fact, about three years back, an engineer fresh out of college would earn about Rs 60,000 a year in a small, domestic software company. In just three years, he could have landed a job in a good multinational company drawing Rs 6 lakh a year.

Compare that to today’s entry-level packages which hovers at Rs 2-3 lakh! Human resource consultants do accept that, in other hot sectors, like management and financial services, the entry level packages are equally good.

“But the problem is that, over time, experience gets rewarded more in IT,” said an HR official at a leading software firm.

According to this person, it is this growth in the salary of a career software engineer that makes IT the best sector, in the long run. “The exponential rise in an IT employee’s income is due to the foreign postings they get and additional stipends for these on-site work,” explained the HR official.

Look at what they log

• An IT professional posted abroad would earn at least $4,000 per month for a six-month project – that’s Rs 11-12 lakh over and above the regular salary which lies untouched in the bank for the duration of the trip

• ESOPs! Employee Stock Options are big. Of course, they come with various riders but that doesn’t reduce this perk’s shine

• Bonuses are there too. With most IT firms at the forefront of big-earning companies, bonus amounts stay well ahead of other sectors in terms of amount

IT fuelled salary expectations...

Grand doyen of India’s highly successful IT sector says that the industry itself made workers expect more

N Narayana Murthy, who stepped down as Executive Chairman of Infosys last month, is quite clear that India’s much vaunted Information Technology sector has fuelled expectations, may be more than it should have.

Commenting on a recent survey which found that the level of satisfaction among Indian techies is on the wane, Murthy told Mumbai Mirror, “Expectations of IT employees are increasing with the sector’s growth. So, it’s like a treadmill. You keep walking on it, and your doctor keeps increasing the speed. A software engineer earning Rs 5 lakh a year now feels that he is earning lesser. Compare that to a doctor who may feel the same but only if he is stuck at Rs 2 lakh a year.”

Govt needs to get its act together

With competition increasing in the industry, Murthy feels that there is also an urgent need of speeding up reforms.

“On the government’s part, there are so many things to be done. There are many regulations. For example, norms

calling for a software firm to acquire an environmental clearance licence is stupid. When the sector is growing at the rate of about 35 per cent a year, the pace of new construction also has to match. Government takes at least a year-and-a-half to clear one construction project,” he said.

Manpower is the key

Though the country has achieved a lot in the IT sector, it will have to sustain it. “For sustaining growth, infrastructure will have to be improved.

We have the opportunity, it has come after a long time,” Murthy said.

He further added that India can sustain this growth if manpower is improved. “We need better education facilities, more English schools, and a better curriculum with IT education,” he pointed out.

Easy way? ‘ that’s bulls***!’

While, addressing a gathering of the Asian Institute of Management Alumni Association in the city, Murthy said, “If we want to grow, we will have to increase our exports, create more jobs, increase disposable incomes, bring more capital through FDI. If any politician, or anyone else says that there is another way of doing this, that’s bulls***!”

Purpose of this blog

This blog tries to present a view on salaries / compensation of IT companies in India. Readers are welcome to post the comments and add ideas in the same. Occasionally I will publish articles of interest. I will also post IT employer rankings in India. Employment practices of IT employers. Work life balance. Onsite opportunities and beyond. read on...