A 50-year-old project manager at a tech firm in the US manages a fleet of engineers and earns a lot more than his Indian counterpart who ends up doing the same job with his engineers out here. Some call it discrimination; some dub it as the incompetency level of the Indian and some dispute all of this. But Industry experts say that the salary in every country is decided by how much the organisation is earning because of the engineer, not what an engineer doing a similar function is earning overseas.
“It’s like comparing oranges with apples,” says PM Soni, a project manager at Sasken Systems. “The business in India has a different impact because of the clients it has. But in the US, the client base is different, therefore the salary will also be different. Just because my counterpart gets more salary doesn’t mean I should get more. You must also look at the cost of living which is an added burden on both the employee and the employer. In India itself, the salaries aren’t the same in every city. For example, Bangalore guys get more salaries compared to their counterparts in other Indian cities because there is more competition as there are many more companies here.”
Talking of roles, they do vary from case to case and company to company. But if there are exclusive MNCs like Infosys and Wipro, they pay on par with their western counterparts. And the roles and the responsibilities tend to be the same, too. Also, salary discrepancy depends on the size of the company. Mid-sized IT companies pay higher than big companies in the other sectors. But when compared to their counterparts in other countries, it’s low.
The latest Hewitt Associates’ 12th annual ‘Salary Increase Survey’ points out that IT and ITES rank amongst the lowest in terms of salary growths in 2007 despite the fact that these sectors saw the highest growths for three consecutive years (2002, 2003 and 2004). What is even more telling is its forecast. Hewitt says there will be a gradual decrease in salary increases and a stabilisation of increases to 9-12 per cent by 2012. However, compared to other streams like pharma, real estate and retail, mid career professionals in IT are still being paid well.
And yet, there is a discrepancy. “In IT, I would prefer to see a jump of 20-30% rather than 15-20%,” says Arun Kumar, Associate VP of a multinational biotech firm based in Mumbai. “This is pretty crucial because IT saw some pretty high growth in 2003-04, but the increase in salary is drastically reduced.” However, competent engineers in India have nothing to fear. “There is a serious fear in American minds that Indians are better than them,” says Kumar. “On a count of 10, 3-4 get salaries on par with international standards whereas the remaining people get an average to below average salary.”
Not that the rest are comparatively bad. It’s just that companies don’t like to share profits. On top of that, there is increasing competition to deal with. One senior HR professional in an IT firm, who didn’t want to be named, said competing with countries like China and Taiwan on price, has brought down the profit margins of Indian firms. The result is that they go down on pricing and end up doing low quality work.
The alarm bells started ringing only recently when Tata Consultancy Services (TCS) asked its employees who had just served two years with them, to leave the company. Some number crunching will reveal the reason behind this. If the company were to keep these employees, they would be forced to give an 18-20% hike every year. But when they can get a guy with lesser experience for a salary that is 30-35% less, then why wouldn’t they? Industry sources reveal that there are many companies like TCS who are adopting this strategy to keep their costs low. One other reason prompting them to resort to such measures is the dollar depreciation that’s affecting their profitability by 2-3%. If you take a fast growing city like Bangalore, there is the cost of living index to worry about that only raises the cost of overheads. So what’s the working mantra being adopted by companies today? “Strategise to the need of the hour; do a proper statistical analysis based on the requirement of the company and then take a proper call on whether to increase the salary or not,” says Kumar.
The future outlook seems bleak. “Most probably, the salaries will remain what they are,” says Kumar. “We haven’t beaten the competition yet and this is a never ending game. And then you have exchange fluctuation and the fact that tax exemption on IT companies could be lifted by 2010. Which means, they might have to start paying taxes. When that happens, where is the surplus money?”
And here is where the mid career pros come in. “They cannot survive unless they produce something of value,” says Soni. “If it’s extraordinary, they can get a hike whereas others might have to do with the general salary hike. But this also means, that some might have to suffer a cut in their pay packet if they don’t perform well.”
Currently, the industry has a huge mass of people at various competency levels. Since the requirements are high, the companies are keeping them at different competency levels. But experts feel that a time will come, within the next two years, when businesses will be down. This would prompt organisations to keep employees only at higher competency levels. Those with a lower competency might have to move out. The upshot of course is that competent people will get paid better and yet the hike will not be as good as what was being given during boom time.
Dependency factor
India’s dependency on other countries forces it to be an underdog. “Many of the services are getting outsourced to countries like India to handle cost pressure and make the operations cheaper, so the American and British companies can focus on other areas,” explains Mohd. Arif, who was a director at the Bangalore-based Microland before he moved to be one of the board partners at a software company based in Mumbai. “Our worth is much higher than say the Americans, but then, there is no choice but to accept the salary differences.”
But pray, why is our worth much higher? “In India, where IT boomed in the past decade, multiple job opportunities got created and people grabbed it with both hands,” explains Arif. “This also meant updating themselves with cross-domain technologies to keep pace with the changing world. However, the people in other countries like the US have not updated them selves with the changing world, and this is where we are worth more.”
But being updated isn’t enough in a highly competitive world. India is yet to reach international levels in terms of quality. “The productivity levels are much higher in the US, discounting the age factor (most software engineers in the US are 50+) and the fact that they cannot adapt to technology,” says R Manoj, a senior software engineer at a global tech firm. “Our engineers may work for 80 hours but their work is worth only 40 hours. Now that’s not productivity. Whereas in the US, if they work for 80 hours, their worth is also about the same.”
Which is why many mid-career professionals are slowly realising the need for excellence in whatever they do. “My aim is to make my engineers work for 40 hours and make them produce work worth 40 hours,” says Soni. “Our laziness is one important factor. People have been spoiled by the hype in the industry.”
The problem is that India isn’t producing anything. It’s only doing backend work for what is being manufactured abroad. And this is what is limiting mid career pros. “India isn’t producing, because there is no requirement,” says Soni. “But when this industry will face a threat in the future, then probably people might think of producing goods. China is doing it, but we are still not on the same track as they are.”
The work culture is another reason behind our worth not being good enough. HR experts say most engineers are not found in their seats at 9am like it is in the US. Rather, they arrive at 11am. The result? Lower productivity. “The 18 hours that we put in is still less productive than the 8 hours of an American, and this affects the quality of the product,” says Soni. And there is a rationale behind that. According to many industry-wide surveys, the reason why most skill-based industries have a 9-6pm shift is because a person works his best during these times, and peaks between 9am and 12pm. But if you start work only at 11am and compensate for it by working overtime till 8pm, you still lose out a major part of your productivity cycle. In fact, some years ago, Infosys head honcho NR Narayana Murthy had sent out a mail to all his employees not to work overtime. Why? Because he found that people who worked overtime weren’t as good qualitatively than those who worked during office hours. “I have known cases where people spent a lot more time on fixing problems created by people who worked overtime,” says Soni.
Auto correction
Observers feel that the only way this anomaly can be corrected is through a slowdown of sorts. “Only when the IT business is impacted will the industry auto correct itself and become more quality-conscious,” says Soni. “That’s when it will be about survival of the fittest. Right now, anyone with a fake CV can not only survive but also lead a hassle-free life.”
And some believe that the government should step in. “It should ensure there are certain guidelines that enable employees to get equitable salary,” says Kumar. “The government should also provide the necessary tax exemptions to the industry so the IT companies can use the money saved to bring in the concept of social responsibility.”
Industry experts believe that only quality consciousness and constant learning can make mid career pros survive the salary crisis. “One mistake made in the past is that people forgot to keep abreast of knowledge,” explains Soni. “They were only looking for money and most were okay to do any kind of job for money. Learning was the last priority for them. But going ahead, unless people keep abreast of knowledge, it’s going to be risky and impact their growth in a big way.”
