The IT industry continues to glitter and the last fiscal results only confirm this. According to Dataquest, the IT industry, which includes the domestic market, exports and IT software and services exports, clocked an aggregate growth of 30%, to reach a size of over $27 bn. IT software and services alone, which includes the export as well as the domestic market, reached a size of over $16.2 bn. Needless to say, when the industry has grown at a pace that has actually surpassed industry expectations, the job market in FY 2004-05 has also registered a significant growth.

A Booming Job Market
In FY 2004-05, the IT industry employee base was just a shade below the 1-mn mark. As per DQ estimates, the IT exporters segment, including captive MNC players, added about 1.6 lakh employees, growing to about 465,000. The domestic players added another 10,000 people on their rolls to take the total to 85,000. Add another 15,000 across the distribution chain of the domestic IT industry including retailers, resellers, etc. BPO segment added nearly 100,000 people to take the employee base to 3.5 lakhs. IT major Infosys Technologies alone increased its headcount by 37.6% (11,597 employees) to close the last fiscal with 32,178 people. The strength of Infosys, including subsidiaries, at the close of FY 2004-05 was 36,750. Wipro Technologies in 2004-05 recruited 9,793 people, a growth of 33% over the previous fiscal, while Wipro Infotech added 3,789 people (a 29% rise over the previous fiscal). HCL Technologies alone added over 5,000 people to its employee base, while Patni added over 3,000.

In FY 2003-04, nearly 60% of the hires were fresh recruits and this heralded the return of the bench. Companies were involved in creating a pipeline of talent for themselves among the freshers, which means hiring them early and training them indoors. The average recruitment of freshers remains unchanged from FY 2003-04 and is likely to remain buoyant in the current fiscal. However, there has been a rise in lateral hires as more and more companies are trying to move up the value chain and are looking for people with adequate domain expertise. In FY 2004-05, around 30-35% of the recruits had 0-2 years of experience; 40-45% of the recruits had 2-5 years of experience and 15-18% had between 5-10 years of experience. While fresher and middle-level recruitments are likely to increase in the current fiscal, the recruitment in the third category is likely to decline.

Another significant trend in the last fiscal has been the induction of plain science graduates into the IT industry at the entry level. Last fiscal, this chunk constituted more than 5% of the fresher pie that earlier constituted of only BTechs, BEs and MCAs. According to industry estimates, the IT job market is likely to see the boom in the current fiscal as well. The employee base in the IT and software services segment is likely to grow by 30% to end the current fiscal at 7.5 lakh and the top six IT companies would be instrumental in creating around 50% of the new jobs this fiscal.

Money Matters
At Infosys Technologies, average compensation went up by 17% in FY 2004-05. In the middle management category, the hike was in the 28-29% range, while the raise was around 25% for the senior management. However, the industry average in the same timeframe for middle level is 25% and around 12% for the senior level. Senior-level hikes are likely to remain relatively low, partly due to the higher salary base and lower overall recruitment. In addition, most employees at the senior level are beneficiaries of stock plans and variable pay plans and this affects the fixed part of the compensation to some extent.

Campus placement data from most institutes show that entry-level salaries have gone up by 8% on an average. The picture at the IITs, however, is different with the overall increase being higher, around 15%, which is largely due the heavy recruitment by MNCs. However, most large Indian IT companies are catching up and entry-level compensation this fiscal has gone up by 20-25%.

Large IT companies are also beginning to define job roles more clearly and this is having a definite impact on compensation. There is clearly an articulated difference between the "Consulting" roles and implementation, and post-implementation "Support" roles. There is a realization that the "solution developers" need different skills and competencies and there is a trend to hire MBAs or functional experts very often in this role.

Consulting roles do need good IT skills as well. The salary levels are therefore much higher, at least 20% higher for consulting roles as compared to traditional development roles. In fact, several IT companies have focused on lateral hires from the MBA campuses and preferred students with an IT background before a degree in management. There is also an increasing differential based on the segment/products. VLSI and R&D-related work especially in areas like chip design, embedded software are paid much higher-about 30% higher than general software and attract a more specialized skill sets.

Hot Skills
Java and C++ ruled the roost in the last fiscal and will continue to do so this year. Strong growth happened in the ERP segment as well, especially SAP, PeopleSoft and Oracle. Skills requirements in embedded systems are also on the rise.

The most popular technologies in the last fiscal were J2EE and .NET, with the former a tad ahead of the latter. Data warehousing and business intelligence are picking up fast and is likely to see heavy recruitments this year. In the niche technologies segment, embedded systems and RTOS leads the pack and this trend would continue this year. Professionals with skills in wireless domain are likely to see a demand in the job market in the current year. System analysts and project managers were in high demand in FY 2004-05 and the trend is likely to continue in the current fiscal.

Looking Ahead
The job market promises to be buoyant for existing professionals and the industry would see a rise in lateral hires this year, as domain expertise becomes more and more critical for companies to move up the value chain.

Attrition has been a pain point for the IT industry in the last fiscal. Says Rajib Ghosh, manager, corporate HR, Wipro, "The supply-demand imbalance for trained and quality resources is leading to a cherry picking by the new entrants. However, we are seeing some consolidation and maturity setting in over the last 12 months."

The current year is also likely to witness the focus go back to stock options. ESOPs had clearly lost its charm with the global recession and the slowdown in the Indian economy. But the stock market has bounced back strongly since the last financial year. FY 2005-06 could emerge as the year of stock options yet again.

The current year would also set a new trend with more and more IT majors encouraging employees to acquire both internal and external certifications. Infosys already has a formalized assessment policy in place. Explains, Kris Gopalakrishnan, COO, Infosys Technologies, "There is a need for IT services companies to demonstrate certain process skills and capabilities to clients and also set standards to evaluate people more objectively."

Segments like infrastructure services, mobile and wireless, R&D, high-end product support, ERP skills, consulting (security, strategy, six sigma, CMMI), solution architects would continue to drive growth and remain the thrust areas for recruitment this year.

Bhaswati Chakravorty