IT, ITES firms hike pay in 2003: survey

Mumbai has costliest ITES compensation and Bangalore in IT services

Forty-eight per cent of infotech and IT-enabled companies have positioned compensations above the market median, according to a survey by the National Association of Software and Service Companies (Nasscom) and Hewitt Associates.
 

A whopping 91 per cent of the IT companies and 97 per cent of the IT-enabled services (ITES) firms have benchmarked their compensations against the market, with Mumbai becoming the costliest city in India in terms of compensation for ITES companies, while Bangalore being the most expensive city in terms of IT services , the study said.
 

In an environment marked by high employee attrition and turnover, almost half of Indian IT and ITES firms position their compensations above the market median as a means of attracting and retaining employees, the second annual Nasscom-Hewitt survey on Total Rewards Management 2003 said.

 

  "A jump in average salary increased from 12.1 per cent in 2002 to 15.4 per cent in 2003 for ITES companies and from 12.9 per cent to 14.5 per cent in the it companies for the professionals, supervisor, technical level," the survey said adding both the sectors are currently on a high-growth phase.
  IT and ITES companies have a high cash-to-benefit ratio of 75:25 with cash based components such as base salary, cash emoluments and variable pay having gone up from last year whereas benefits like loan, conveyance and housing have gone down, the survey said.
  While there was an 18 percentage point rise in variable pay plans this year when compared to last year, performance-based rise in the IT industry rose 23 percentage points compared with last year. However, there was a 7-14 percentage point reduction in the allocated budget for recruitment, hiring and orientation. Other major highlights of the survey on the people practice segments are that 41 per cent of the IT companies saw a significant workforce reduction while for ITES companies IT stood at 11.5 per cent.

  ITES organisations are focusing on a more long term orientation for employees and the industry reported a 4.3 per cent increase in the training hours over the last year. However, for the IT industry, the training hours decreased by 13 per cent. Stock options are losing their charm in the infotech industry. A 10 percentage point drop was reported in the prevalence of stock option programme between 2002 and 2003.
  Sunil Mehta, vice president, Nasscom, said, "Today the Indian it industry employs 6.5 lakh people and therefore it is essential that companies in the it sector devise right compensation and rewards mix to attract and retain talent".