Upbeat placement season

If you thought the slowdown in corporate performance over the past few quarters would temper India Inc's urge to splurge at the top B-school campuses, think again. The eagerness of companies to acquire top-drawer talent has shown no signs of diminishing. For example, the Indian Institute of Management at Indore, the first among the IIMs to complete the placement process, has seen an average salary rise of over 20 per cent over last year. As many as 95 companies registered for the process and made 367 offers. These are all record-breaking numbers, despite the fact that the number of students at IIM-Indore has gone up to 173, from 115 last year.

The same story is being played out at the other IIMs as well. In IIM-Ahmedabad, for instance, the average salary for lateral placements (students with prior industry experience) has increased to over Rs 18 lakh, compared to Rs 16 lakh in the previous year. Early placement trends at the Indian School of Business in Hyderabad also show astounding numbers. Though placements will be completed only on March 31, the premier institute has already seen 230 companies visiting the campus. The total tally last year was 200. The news from the B-schools that are a notch below the IIMs also shows that the great Indian salary boom story is continuing. Consider the Xavier Institute of Management at Bhubaneswar, where the highest salary offered this year has gone up to Rs 16.5 lakh-up sharply from Rs 12.75 lakh a year ago.

In a way, the salary increases were to be expected, going by the projections made by the leading human relations consultancies. For the fifth consecutive year, Indian companies are expected to report double-digit salary increases. According to Watson Wyatt, the salary increases in 2008 are likely to be 15 to 25 per cent more than a year ago. China is expected to be a distant second, with projected raises of about 8.5 per cent, followed by the Philippines with 8.3 per cent. A Hewitt survey showed that the traditional gap between salary hikes offered by locally-owned and multinational companies has closed, with Indian private sector companies projected to raise salaries by 15.5 per cent in 2008, compared with 14.9 per cent offered by multinationals.

The kind of companies visiting B-school campuses shows a shift when it comes to ranking the leading employment-generating companies. While top-notch consultancies and banking and financial services firms continue to dominate the placement scene with mouth-watering salaries, quite a few emerging sector companies have also come calling at these campuses. So there are large numbers of private equities, logistics, retail, real estate, hospitality and media companies competing, often successfully, with the established names for attracting students. At IIM-Indore alone, 30 such firms participated in the placement process. This was to be expected, as a Ma Foi report released this week said that the hospitality sector is expected to generate the maximum employment in 2008, closely followed by health and education training & consultancy companies. Sectors where the demand for freshers is above 30 per cent include hospitality, energy generation/supply and IT companies. Interestingly, energy companies are expected to experience the highest average salary increase this year. What the survey also makes clear is that, despite stray instances of a cut in variable pay and pink slips for a few, the IT and ITES companies as a whole show no let-up in recruitment. Already, the top companies have declared that they will stick to their recruitment commitment for the year.

While all this is good news suggesting that Indian firms are still focused on growth, the crucial question is whether Indian companies can sustain such a steep wage spiral. Certainly, the cost-competitiveness of Indian companies could take a knock. But that seems to be something that India Inc is not worried about just yet.