Salaries in IT sector drop 10%

Salaries of techies across software industry, baring those with specialised skills, has shrunk over 10% in the last two quarters as revenue growth and deal acquisition of IT companies slow down.

Rajesh A R, vice president -temporary staffing - of TeamLease Services Pvt Ltd says salaries of IT workers with generic skills, which had been holding up till now, are finally moving southwards.

“My observation is that people with generic skills and 0-1 year of experience are being paid 10% less of than what a similar skill set was being paid some time back. This downward revision in salary by tech companies is due to supply of manpower outstripping demand,” says Rajesh.

He says growth in remunerations of those with over three years of experience has been flat for some time now. And, the only IT professional, whose compensation is growing, is the one with highly specialised skills.

“Even in this group, increments are in the range of 1-5%,” says the HR expert, who is working on a report tracking the salary trends in 2008.  He said the report will be published next week.

Players in the IT industry confirmed the trend, saying that the growth in compensation was in tune with expectation of IT workers.

V Balakrishnan, chief financial officer (CFO) of Infosys, said that his company’s increments or offer rates to fresher were based on current market expectation.

“Earlier, the expectation for increment was 13-15%. This has come down to single digit. We are giving what the market expects,” said Balakrishnan.

He, however, said that Infosys had not yet resorted to pay cuts. The second largest tech company will be taking on all the 25,000 people to whom it has made campus offers. For next year, it has made 20,000 campus offers.

Rahul Kanodia, managing director of Datamatic Ltd, feels that the rate of growth in the pay hikes has been slipping very fast recently, taking it down to lower single digit compared to 15-20% a year back.  “This April, when we revise salaries, pay hikes could be as low as lower single digit,” said Kanodia.

Puneet Jetli, senior vice president - global head of MindTree Consulting Pvt Ltd, says that salary trend is following the revenue growth graph.

“Different companies will have different strategies but all of them will try to keep their compensation package in line with revenue growth guidance. In that sense, we there scope for downward revision of current salaries,” he said.  On Wednesday, Nasscom, the IT industry representative body, brought down its guidance for income growth from software export to 16-17% from the earlier 21-23%.

Jetli also expects campus offers from IT dwindle dramatically.

“If a company doesn’t need people, why should they hire them? So instead of cutting slashing, they may prefer not to take on new people,” he said.