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After a year of growth in 2004 followed by a steady 2005, this year's
salaries kept up the momentum even as average salary took a hit, albeit a small
one. Average salary dipped 5.3% to touch Rs 5.4 lakh, down from Rs 5.7 lakh in
2005. 'Salary hikes' was a different story altogether with 'average salary
hikes' at 19.8%, up from last year's 18%.
Extensive hiring of freshers and a growing proportion of professionals with
'less than two years' experience who are coming for lesser salaries has
brought the average salary down despite growth in average hikes. As the industry
gets younger, the possible dearth of experienced hands can be a cause for
concern in the future. The industry needs to maintain an optimal balance between
fresh and experienced manpower.
With IT companies expanding operations, they have been hiring freshers
aggressively. In fact, the biggest employee bracket for the industry has shifted
from the 5-10 years experience band to the <2 years. The percentage share of
employees with below two years experience now forms 31.1% of the workforce as
opposed to just 23.2% in 2005.
Correspondingly, the 5.1-10 years experience bracket has come down from
33% last year to 26.6% in
2006, taking it to third in line in terms of workforce strength. The trend is
further corroborated by the fact that the less than 25 years of age employees
(effectively, the freshers) band has strengthened from 29.4% of the total in
2005 to 37.9% in 2006. Comparatively, employees between the 26-35 years of age
band have dwindled from a 62.3% share in 2005 to 54.2% in 2006.
With the proportion of <2 years experience professionals increasing in the
pie, it is consequently affecting the characteristics of the industry. Although
the actual number of freshers and moderately experienced professionals is
shooting up, the total salary absorbed by them is much lesser than by the highly
experienced professionals. With high headcount recruiting happening at the basic
level, the average salary of the industry is decreasing compared to the previous
year.
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Industry gets
younger: aggressive hiring of freshers
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Average salary hike
marginally up-from 18% to nearly 20%.
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Freshers drive
average salary down 5% to Rs 5.4 lakh
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Maharashtra remains
top techie supplier; Karnataka's share drops below 8% of fresh
supply, down from 19% in 2004; but it still has over 25% of India's
employees
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The sedate average salary trend is reflected across all experience groups
with an exception of the 5.1-10 years experience band, either falling or
remaining stagnant. Even the rise in the 5.1-10 years bar is almost negligible,
up from Rs 6.9 lakh in 2005 to Rs 7 lakh in 2006. The decline in average
salaries is the most visible among seniormost professionals (10 years and
above). In fact, there has been a consistent decline in headcount in the
higher-end salary range (>Rs 8 lakh), indicating more employees getting lower
salaries than last year. This is the only experience band that has witnessed a
decline in salary satisfaction, with the score moving down from 7.3 points in
the previous year to the current 7.2. Correspondingly, the satisfaction scores
of 'upto 2 years' as well as 2.1-5 years experience employees has grown from
6.7 points last year to 6.8 in 2006. The satisfaction score for the 5.1-10 years
band improved to 6.9 in 2006 from 6.8 in 2005.
However, when it comes to salary hikes, the scenario is very different, with
overall bigger hikes in tow this year. There has been a marginal increase in the
proportion of employees who got hikes in the higher range (26-35%). But, the
employee band in the lowest (below 10%) hike range has thinned down. The
cumulative effect of these changing dynamics has pushed average salary hike up
from 18% in 2005 to 19.8% this year.
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This band, which has the
largest number of employees, has maintained the average salary status quo.
Over the years, the band with employees having up to two years of
experience has been experiencing a shift and greater concentration towards
the Rs 2 to 3 lakh per annum bracket, which has emerged as the most
popular salary bracket with over half the employees with less than two
years experience figuring in here. This is a far cry from only 34%
employees earning between Rs 2-3 lakh in 2004. However, fatter pay packets
still continue to elude entry level IT professionals.
Interestingly, the average
salary offered by the Top 10 paymasters to their entry level employees, is
much higher than the industry average. The Top 10 had an average salary of
Rs 3.5 lakh; the Top 5, Rs 4.5 lakh; and the Top 3 a high of Rs 5.2 lakh.
For employees with two and below two
years experience, a major chunk of the salary hikes hovered within the
range of up to 15%. However, surprisingly, this band also witnessed one of
the sharpest hike in salaries, accounting for the largest percentage of
employees in the above 40% hike bracket. |
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Post 2003, the average
salary of professionals with 2.1 to 5 years of experience has been on a
constant decline, albeit marginal. One of the most crucial segments of the
industry, this band has also seen a decline in strength over the previous
year. However, the internal dynamics for this group have remained more or
less stable with no major shifts happening within the various salary
bands.
This year, the DQ-IDC Top 10
paymasters made a good comeback in terms of their salary offerings to
professionals in this group. The Top 10 combine significantly improved
upon their last year's offering with average salary touched Rs 5.1 lakh
per annum this year, as compared to Rs 4 lakh per annum in the 2005
survey. The momentum continued with even greater force for the Top 5 and
Top 3 paymasters. While the top 5's average salary touched Rs 6 lakh per
annum, that for the Top 3 fared even better as they offered Rs 6.4 lakh
per annum to those in the bracket under review. The range with 11-15%
salary hike emerged as the most popular for employees within this band.
The employee concentration in the higher salary hike bands was more evenly
spread. |
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With the exception of the Rs
10.1 to 15 lakh salary band, there has been a marginal decline in employee
concentration in the higher salary bands for this experience group.
Correspondingly, there has also been a decline in strength in the lower
salary bands. As a consequence, the employee population has happened
mostly in the medium salary bands. The cumulative effect of these dynamics
has been just a decimal point improvement in the average salary for
employees in the 5.1 to 10 years experience band.
However, the Top 10
paymasters did well to recognize and make efforts to retain experienced
hands as their average salary offerings overshot the industry average in
this segment. The Top 10 managed to exceed the industry average with a Rs
9.1 lakh per annum average salary. The Top 5 did even better at Rs 10 lakh
per annum followed by the Top 3 at Rs 9.6 lakh per annum.
A cause for concern is the declining
proportion of employees in this experience bracket. From a total of 33.2%
employees in this experience range in 2005, the proportion has come down
to 26.7% this year. |
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The most experienced
employees continued to be the worst hit this year as well. After a good
going in 2004, this band's fortunes have been on a decline. However, in
line with their trends in the other lower experience categories, the Top
10 paymasters have continued to perform well in this slot as well. While
the Top 10 combine paid an average salary of Rs 14.3 lakh per annum, that
offered by the Top 5 and Top 3 stood at Rs 16.1 lakh and Rs 16.9 lakh per
annum respectively.
A lesser number of employees this year
enjoyed fatter pay packets as compared to 2005. In fact, the combined
strength of employees in the higher salary ranges of Rs 8 lakh per annum
came down significantly from 69.5% of the above 10 years experience
employees in 2005 to 56.7% in 2006. Experience also could not translate
into higher salary hikes this year, as a greater proportion of employees
had to satisfy themselves with up to 20% hikes. In fact, the 10 years and
above experience band had the smallest proportion of employees in the 21%
and above hike range, as compared to the other three categories. |
The major hikes in 2006 have been within the moderately experienced
professionals band rather than within professionals with more than 10 years
experience. So, though the average hike in salary for the industry is increasing
that is only affecting professionals with lesser years of experience. For
instance, 16.8% of employees with up to two years of experience and 14.9% with
2.1-5 years managed high hikes of 31% and above. But, only 10.3% of employees
with experience of 5.1-10 years and only 4.6% of >10 years experience managed
31% and above hikes. The possible reason for more higher-end hikes at the entry
level can be the fact that companies are paying less upfront when recruiting a
fresher and more after a six months to one year's time period.
| Methodology |
| The DQ-IDC
Best Employer Survey for 2006 was carried out in seven major cities-
Mumbai, Delhi, Chennai, Kolkata, Hyderabad, Pune and Bangalore.
Questionnaires were sent out to around 250 companies, out of which 51
participated in the first phase. In the second phase of the survey, 32
companies were short listed from among these.
A large-scale survey was conducted by IDC
India among the 3,006 employees selected from the 32 short listed
companies. The sampling was done on the basis of the distribution of
employees in different cities. In each of the seven cities, the sample
quota was assigned based on the company's employee strength in that
city.
A further classification of target
respondents was done on the basis of job profile and years of IT
experience. This quota system enabled us to get a proper representation of
different types of employees in the sample. The salary data and profiles
of the IT industry have been derived from
employee interviews. |
With lowering average salary, fewer good hikes, and the consequently dropping
satisfaction levels, the salary trends this year have failed to impress seniors.
However, considering the fact that salary has emerged as the top-most reason for
employees leaving an organization (as illustrated by the DQ–IDC Best Employers
Survey 2006), it's not just the senior hands but employees all across that
companies will need to make that extra effort to retain. And, while salary will
be one of the critical components, it will not be the only factor driving
retention through higher employee satisfaction.
Shipra Arora
shipraa@cybermedia.co.in
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