In the last fiscal year TCS hired 32,462 people and retained 22,750 of those hires. Infosys hired 30,946 employees and retained 19,526 among them. Both these companies lost 1 of every 3 employees hired ! In an effort to curb the attrition, both companies have announced 12% to 15% hike for India-based workers.
Read more on ACM Career news.
The wage increases, then, are a reflection of the fact that it is getting harder for all companies doing business in India to hire and keep the number of employees they need to meet demand.
Double digit salary hikes would mean a huge increase in standard of living in the West; hence the reaction to such news there is “WOW!”.
India has an alarmingly high inflation rate. Prices are on the high, virtually everything costs more this year than it did last year. I have found that this is kinda hard to explain in MNC companies which have offices in India. When they first set shop and hire people, the thinking is “Hey, lets attract the best talent; lets pay more than everyone else”. So the first bunch of employees get a nice package. After that, across the globe they give hikes like 3% annually. Now, 3% is a decent hike in many countries – unfortunately not in India. Often, the US managers fail to understand why the 3% doesn’t make any sense in India situation. In India, anything less than 5% means that the standard of living of the employee *actually takes a dip*.
Secondly, as Kevin Barnes notes in his blog,
So, an Indian engineer with a few years experience is making enough money to live comfortably and well, but she’s not rolling in money as you might naively assume.
(I recommend reading his argument in full at http://codecraft.info/index.php/archives/63/)
So yeah, salaries did rise double digits. But no, it does not have the WOW effect that the journalist implies.
Thanks,
Binil
BTW, this is from last October:
According to a study, the prices of eight essential commodities such as wheat, pulses, tea, coffee, sugar, spices and non-vegetarian products has increased at an average of 19 percent in the last one year.
Now tell me, did the Infosys employee who is getting 15% hike – did his standard of living increase or decrease?
I don’t know how much is the usual percentage of hike in Infy/TCS, but 15% might be higher than normal for them.
At any rate, something is better than nothing.
Yes, employee attrition been a major problem for most of the IT companies. The problem gets doubled considering that it is even more difficult to get newer experienced employees. The cost of hiring an 5+ years experience individual has gone up at an average of 15% to 20%. So taking this into consideration, giving higher pay package for retention is the best policy.
The real question is what will happen 3-4 years down the line. The employee wages will get to a point when it will be no longer feasable for offshoring companies to stay competitive. People in IT who are experienced meanwhile are making hay, while the sun is shining on them
http://economictimes.indiatimes.com/Quit_Infy_but_cant_join_rival_for_6_mths/articleshow/2102946.cms
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