Double-digit hikes to continue in ’08

Real estate, energy & retail lead the binge

MUMBAI: Salaries are going to be marginally better this year in India — despite the country clocking the highest growth in paychecks globally in 2007.

That’s the message coming from the 12th annual salary increase survey conducted by Hewitt Associates, the Illinois, US-headquartered human resources consultant.

In 2007, salaries in India rose the fastest anywhere in the world, by 15.1%. China #reported a more moderate rise of 8.6%. Salaries in India had risen 14.4% in 2006 and 14.1% in 2005.

In 2008, Hewitt sees sal-aries rising again by 15.2%, led by big growth in the real estate and infrastructure sectors.  Turn to p9

The survey was conducted over a period of six months amongst Asia Pacific countries, including Australia, Malaysia, Japan, and Taiwan, amongst others. In India, nearly 600 companies were surveyed across 19 industries and 22 sub-industries.

“One factor catalysing the increase in salaries is the struggle for attraction and retention of talent,” said Sandeep Chaudhary, leader of Hewitt’s Rewards Consulting Practice in India. “With new players entering different sectors and companies expanding their bases, pay hikes are seen as a key tool for attracting quality talent and retaining the same,” adds Chaudhary.

The real estate sector, which is growing at a rate of approximately 25-30% annually, saw the maximum pay hikes — at an average 25.2% in 2007. Energy (19.0%), retail (17.6%) and telecom at 17.2% followed.

“Realty is currently reeling under a shortage of talent. We are finding it difficult to hire technicians, architects, civil engineers, as also people with backgrounds in finance and marketing,” says Kunal Banerji, president, marketing, Ansal Properties and Infrastructure (API). #

He said Ansal had kept pace with the market by hiking salaries by about 20% last year.

According to Rajnikant Agrawal, chairman of the India chapter of CoreNet Global, an association of corporate real estate and related professionals, the rise in the number of property consultants has also contributed towards a persistent increase in the requirement for chartered accountants and management graduates. “Salaries are seen as a prime measure of retention.”

Starting salaries in the real estate sector range from anywhere between Rs.5.5-7 lakh per annum. However, DLF, one of the biggest real estate players in the market, has not effected any pay hikes recently. “There haven’t been any hikes at DLF till now. However our appraisals are awaited and hopefully we will swim with the market trend,” says a DLF group spokesperson.

The survey also brings to light another significant trend of staff members at the junior manager/supervisor level and those at the middle management level getting highest pay increases of 15.9% and 15.7% respectively in 2007.

Chaudhary says that a shortage of managerial and technical talent in the country is the reason behind the significant rise in mid-managers’ salaries.

The key issue of attrition is seen highest in the insurance sector, touching 35.2% in 2007, and is closely followed by the IT-enabled services sector (28.9%) and hospitality (27.1%).

Chaudhary says that companies are increasingly using variable pay as a strategic lever to curb attrition, with 95% of the respondents saying they have variable pay plans in 2007.

He adds that 76.1% of the surveyed companies have quoted compensation as the reason for people quitting. “Some 50.8% of our respondents cited role stagnation as another key reason.”

“High attrition is a chief reason why the variable pay in insurance sector is nearly 100% of fixed pay,” says Sanjay Teli, managing director of Mumbai-based HR firm ESP Consultants.