Fatter pays, only for some

IT pros can expect pay hikes, but only if they have requisite skills

IT pros can expect fat pay hikes next year, but only if they have skills that are in demand.

First, the good news. Salaries in the information technology (IT) industry are slated to go up next year by between 30 and 50 per cent, versus the 10-20 per cent last year. The bad news?

Only a few IT employees will get increments of this order "� the hoi polloi will have to lump salary increases of between 10 and 20 per cent.

So if you are an engineer with skills in the embedded and telecom area, or have package implementation expertise on SAP, PeopleSoft or Oracle software or have data warehousing or business intelligence skills, go out and whoopee.

You can plan on buying the latest hot wheels available or even budget to buy a new apartment. As for the others whose skills are restricted to C, C++ or Java, thank your stars that you will still get a raise.

IT industry employees are, in fact, entering a new era of salary increments where their compensation will depend on the kind of demand that their skills and experience command.

Says Bijay Sahoo, vice president at the Bangalore-based Wipro Technologies, which has seen employee attrition levels go up markedly in the last two years: "Our internal studies show that attrition is the highest in areas related to package implementation, systems engineering, technology infrastructure and data warehousing and business intelligence. Attrition is not high in run-of-the-mill application maintenance and development-related areas."

Agrees Nirupama V G, executive vice president at the Bangalore-based TeamLease Services Pvt Ltd, a human resources outsourcing company: "There is a huge demand for these skills and they are in short supply. For example, today an engineer with embedded skills can pick and choose the company he wants to work for. The market is starved for such people."  According to some estimates, about 6,000 professionals with embedded engineering skills are in jobs. Close to 1,000 more professionals every year are in demand, but only between 500 and 600 are available. This apart, the software industry in India has over the years gone up the value chain.  Indeed, new recruits with such skills to offer are already being paid more than their garden variety counterparts. So while an ordinary telecom or electronics engineer fresh out of college will be offered up to Rs 2.4 lakh a year, a fresher with embedded skills could earn up to Rs 4 lakhs a year or more if he has graduated from, say, the Indian Institute of Technology.  Companies like the UK-based Tesco which offer business services (another name for BPO) and IT services at their newly launched operations in Bangalore, have realised that they have to pay fatter salaries.  Admits Meena Ganesh, CEO, Tesco Hindustan Service Centre: "We are stretched to locate quality resources. If in the market a certain skill has a higher premium, we will match it." To hold on to new employees, Tesco does not have a probation period for them. Each employee is permanent from day one.  In the early years, the Indian software industry grew by offering software application development services which needed C++ or Java programming knowledge.  But in the last couple of years, the bigger boys have been offering solutions "� ERP/CRM/SCM implementations, technology infrastructure solutions, e-architecting and engineering solutions in the embedded and telecom areas "� that were for long the preserve of the multinationals.  The National Association of Software and Service Companies reckons that these areas offer higher growth prospects. It estimates, for example, that package implementation services will grow at a compound annual growth rate of 38 per cent till 2008; the number for the technology infrastructure segment "� 80 per cent till 2008.  Contrast this with the application development and maintenance (ADM) area whose growth, it is estimated, will be only 26 per cent till 2008. The multinationals here are aware of these statistics "� and are poaching employees with just these skills from top and second-rung Indian IT companies.  Sahoo backs the point "� companies like Wipro are losing employees with cutting edge skills to the multinationals, he says. "We need to pay those with these rarified skills more and not resort to across the board hikes. Otherwise, the economics of running the organisation will go haywire."  The irony is that the ADM business still accounts on an average for 70-75 per cent of a company's total revenues while the hot growth areas account for 25-30 per cent of revenues. "In the future, the money is going to come from these areas and it is better to invest in the future," points out Sahoo.  Bhasker Das, vice-president, human resources, at the Nasdaq-listed Cognizant Technology Solutions, points out that salary raises in the IT industry have always been selective.  "A few years ago, very few IT services companies in India offered the breadth of services that they are offering today. So naturally salary raises seemed across the board. But with Indian companies increasing their bouquet of offerings, it is but natural that some service segments are hotter than others. Hence the salary increments will reflect that," Das notes.  Yet Gartner India vice president Partha Iyengar argues that salaries had inevitably to be linked to the demand for skilled people. "High end engineering skills have always enjoyed a premium abroad and now it is happening in India partly because so many multinationals have set up shop in India and partly because Indian companies are going up the value chain and offering more high end IT services.  This is nothing but the maturing of the IT industry and this continues to happen in the US," he concludes.