Trendmill
IT professionals take home fatter cheques
Salaries grew by 16-18 per cent in 2005: survey

THE above average performers in the Indian IT and IT-enabled Services (ITeS) have seen their salaries grow by an average of 16-18 per cent year-on-year in 2005, according to a survey by Nasscom and human resource consultancy Hewitt Associates.

"Though, over the years, this industry has witnessed double-digit salary increases (for top performers who constitute 30-40 per cent of a organisation), the actual compensation data across levels has not moved in the same proportion," Sandeep Chaudhary, Head of Consulting Analytics at Hewitt India said in a report from New Delhi on Tuesday.

The average year-on-year movement in compensation across levels has been 7 per cent on Total Cost to Company (TCC), the NASSCOM-Hewitt Total Rewards Study said.

Continuing with the trend of last year, National Capital Region and Bangalore are among the highest on the location index with each reporting a 3-6 per cent increment over the national average followed by Hyderabad.

"Most organisations do not have a very high differentiation in compensations across locations, those that do differentiate pay based on locations, primarily align it to attraction and retention challenges in the location and cost of living differences," the survey said.

According to the report, the year 2005 saw the expansion of IT-ITES companies in newer locations, especially Tier II cities and the nature of work grew to deliver high-end services in the value chain.

"Movement to Tier II and Tier III cities has expanded the talent base, but on the other hand, the shift from low-end business processes to higher value knowledge-based processes has amplified the challenge of hiring specialised manpower.

"Outsourcing companies are now falling prey to increasing wage costs for specialized skills and the need to constantly align reward practices to the market continues," Nishchae Suri, Asia Pacific business consulting leader with Hewitt Associates said.

Chaudhary said despite the introduction of Fringe Benefit Tax, the companies continued to maintain the 2004 ratio of cash to benefits.

Tax-friendly compensation

"ITeS organisations in 2005 revealed a similar cash orientation as last year with the average cash-to-benefits ratio across levels being 76: 24. Organisations in this sector are increasingly designing compensation structures which are tax friendly and allow employees to exercise their choice of benefits through a single flexible allowance," the survey added.

"Continuing with the trend of last year, the average Fixed Pay-to-Variable Pay ratio this year has been reported as 88:12 across levels. There is an increasing popularity of performance-based pay in this sector with organisations reporting a higher variable pay-to-fixed-pay ratio at senior management levels," according to the survey.

Sixtysix per cent of the organisations surveyed reported a formal policy of differentiating compensation based on process complexity.

Forty-eight the survey partners said that they paid premiums for specialized skills at the hiring stage and the quantum payout was often left upon the recruitment manager’s discretion.

Nearly the same number reported that they designed fixed pay ranges and placed employees with hot skills in a higher quartile within the same range. Other methods adopted by the industry to retain such employees were hot skill allowances, sign-on bonuses and frequent salary revisions. — PTI