Compensation of IT companies

Thursday, October 13, 2011

When will India have its own Jobs (Steve) ?

Steve Jobs is dead. I wanted to make history by saying just that in this column and dramatically leaving the rest of the allotted space blank. I couldn't at first think of anything more to say. For, in the words of a poet: “Death. Nothing is simpler. One is dead!”

After setting out at the age of 21 to redraw the map of the cyber world with his out-of-the-box thinking, in his 56 years on the planet, this drop-out produced out-of-the-hat rabbits such as Macintosh, iTunes, iPod, iPhone and iPad. It will all be Jobs dominating the media and Web sites with innumerable tributes to his unparalleled genius which stood the computer industry on its head. The obituaries will liberally draw on his 2005 Stanford Commencement Address in which he recounts three stories that shaped his life and thinking, pointing out how his chucking structured educational courses, and later, being “publicly” fired from the company he himself founded, gave him the courage to follow his “inner voice” and his heart's dictates. He then movingly talks of the immensely creative force that awareness of approaching death can be.

At the moment, though, my thoughts are not on the passing of this innovator par excellence who gave the world the intriguing mantra: Stay hungry, stay foolish. The question uppermost in my mind is: When will India have its own Jobs? Or Gates? Or Larry Page and Sergey Brin?


Despite all that India boasts of its ancient cultural heritage — its epics, Upanishads, Arya Bhatta, Varahamihira, Sushrutha, the decimal system, the zero — it has not been able to match the Western mind in respect of the latter-day inventions and discoveries. India's record is abysmal in regard to the number of Nobel Laureates, scientific papers and patents.

I have long wondered why a Columbus should be discovering America, a Scott exploring the South pole, a Livingstone uncovering the Dark Continent of Africa, or a Cook claiming Australia and not a Ramaswami or a Rakesh Bhatt? Why should the falling of an apple lead a Newton to his Laws or the rattling of the lid of a kettle of boiling water lead a James Watt to the steam engine? Why did Indians with all their thousands of years of investigation into the mysteries of Brahman, the soul and the like fail to go into the scientific significance of day-to-day happenings as Wright Brothers, Salk, Fleming, Edison, Marconi or Baird did?

Even in regard to the so-called success stories in software, it is all an extrapolation of what was already common knowledge handed from the West, and not the result of any original thinking. Indeed, in some circles, Indians in the software field are regarded as no more than tech-coolies!


There are, no doubt, success stories of Indians in other countries but only in run-of-the-mill professions (teaching, financial services, medicine). Most of them are mere salary-earners. The only Indian names coming up again and again for their extra-ordinary contributions in science are C.V.Raman, S. Chandrasekhar, H.L. Khorana and V. Ramakrishnan, of whom all but one were expatriates. What is it in the soil of the US that enables it to grow geniuses of the likes of Gates and Jobs and Page and Brin, and that too at such a young age, while India is yet to produce achievers of comparable calibre?

Here is a quick check list of reasons: The hierarchical set-up reflective of a feudal mindset, breeding conformity with established conventions and incapacity to break new ground or take risks; want of sustained focus on, and allocation of the needed funds for, both pure and applied research; absence of a sense of perfection, thoroughness and excellence; lack of self-pride.

However, here is a tidbit that should gladden our hearts: The Consumer Electronics Association of the US recently asked in a survey where the next Bill Gates will come from; 40 per cent of Americans predicted that he would be from either India or China. Amen (despite being bracketed with China)!

NRIs moving from the US to India: How much salary to expect

The fact that NRIs from the US are moving back to India is no shocking development. NRIs have, in the last few years, been relocating to India in large numbers, in search of better personal and professional lives. And if you are an NRI considering that move, there is one important thing that you must understand very well: the salary you will get in India.

Kris Lakshmikanth, Founder CEO of The Head Hunters India Pvt Ltd. says, "When it comes to compensation, we find that NRIs have inflated expectations. They mainly go by hearsay; their friend or friend's friend who returned to India has told them a tall story about Indian salaries. They want to go by that yard stick."

USD will not convert to INR

The first thing to remember is that you will not make the rupee equivalent of your US salary in India. The cost of living in India is significantly lower than that in the US. This also means a lower labour cost in India. These factors will determine your India salary. Seema Nair, Co-Leader India HR Operations of Cisco India explains, "The salary in India (for Cisco employees moving from US to India) is related to local labour market wage rates with a potential premium for critical skill sets."

Achyut Menon, head of Options Executive Search Pvt Ltd also adds, "In the nineties, people who were posted to India got expat salaries. But those days are over. In the last 10 years, India has become an attractive market for global companies who are not just looking to set up offshore centers here, but also to capitalize on the growing, educated and highly aspirational middle class consumer segment. Added to that is the availability of skilled labour within India itself. Companies no longer need to pay expat salaries."

Benchmark: What then should be the broad benchmark?

Both Lakshmikanth and Menon say that while there cannot be a standard formula, the Big Mac Index is a good guideline to calculate salaries. The Big Mac index published by The Economist, is based on the theory of purchasing-power parity (PPP), according to which exchange rates should adjust to equalise the price of a basket of goods and services around the world. The basket in this case being a McDonald's Big Mac.

Now according to the last available index dated July 2011, a Big Mac costing USD 4.07 in the US costs USD 1.89 in dollar terms in India (Rs 85 converted at an exchange rate of Rs 45). It means that the Big Mac costs 54% less in India; the cost of living is 54% lower in India. Read another way, this means that the rupee is undervalued by 54% to the dollar and that on the basis of PPP, one dollar would actually be worth Rs 21 instead of Rs 45.

So if you are drawing a salary of USD 100,000 in the US, you can expect to draw Rs 21 lakh in India, give or take. At an exchange rate of Rs 45, that would translate to an Indian salary of USD 46,666 or 46% of the US salary.

"Senior management can expect anywhere between 40% and 70% of their last drawn US salary when they move to India," Menon explains, adding, "At the 70% end would be people who have moved to India to set up a development/ engineering center or to head the global company's India start-up."

Best career move

Having set that broad benchmark, the salary would also vary between industries and functions. You would need to choose your profile and company carefully to maximise your salary.

"Manufacturing would pay less than technology. Within technology, we find that delivery of software is something which Indian companies have become masters in. They don't need to employ people from overseas. In fact, such people from the US are paid less than the person who stayed back in India because those returning from the US have handled fewer people teams as compared to peers in India," Lakshmikanth points out.

Similarly, domestic Indian companies do not usually recruit NRIs for strategic positions if the NRIs are not familiar with the dynamics of the Indian market and work place.

As an NRI moving back to India, Menon says it would be best to join a company in the US which has plans to start-up/ expand in India. "A lot of US companies across sectors like engineering, legal, analytics, financial services, pharmaceuticals are setting up operations in India.

These companies are happy to send an Indian to India who also has experience of their other markets. The employee benefits because he can grow with the company's operations in India. In the beginning, the company will set up a 30-40 staff office and expand going forward. As a member of the start-up, the employee grows as the company grows, making it a win-win for both" he explains.

Parting shot

"At the end of the day, come back to India for the same reasons you went abroad: for personal and professional growth and happiness. Come with a long term view in mind and you won't regret it," Menon advices.

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