Although a year ago, analysts predicted that the IT sector in India has better resilience capacity to sustain a high growth momentum than other industries; the situation has changed over the last 6 to 8 months. Experts feel that the global economic meltdown has taken a heavier toll on India’s IT sector and this has been clearly reflected in the hikes that have been given to the employees in recent times.
The gloomy scenario
According to estimates, most IT firms have reported a single-digit increase in their average salary, for the first time since 2002. Last year, IT firms recorded a 13.5% rise in the average salary, which spiralled to 7% this year and is expected to dip further during the remaining part of 2009.
“Bigger players in the industry such as Tata Consultancy Services (TCS), Wipro and Infosys are already treading cautiously when it comes to salaries. However, for the smaller players, the situation is worse as they are increasingly striving for survival in the downturn-hit economy and are unable to give their employees a decent hike,” said D Padmanabhan, MD of Appnomic Systems, a Chennai-based mid-sized IT solutions firm.
Mr Padmanabhan feels that low profit margins, coupled with the loss of clients due to the global economic meltdown are compelling IT SMEs to review their salary structure.
“Mid-sized IT services firms that are into engineering software and services and R&D have recorded an abysmally low hike. However, the scenario is no better for firms that are into IT hardware and BPO,” says V Ranganathan, MD of BNA Consulting, a mid-sized IT consulting firm based in Chennai. He says that many of these firms have also witnessed massive job-cuts, especially during the first quarter of 2009-10.
Ray of hope
Although in many economies almost all employees are equally affected by the reduction in the salary structure, Mr Padmanabhan observes that the reduction in salary hikes and compensations in Indian IT Companies have been confined mostly to the senior and middle-level managers.
At the same time, though most firms are freezing salary hikes, experts feel that the only ray of hope for IT employees at present is that not many firms are considering layoffs as a viable option for cost reduction, as they were doing until 3 to 4 months ago.
David Parks is a well known author and has written articles on Investment Guide, B2B Portal, Trade Leads, suppliers, Manufactures and many other subjects.
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