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Top IT services firms are increasingly adopting a tiered hiring strategy in which they are attracting entry-level talents at higher salaries, amid a major technological shift, say HR analysts.
About five years ago, Tata Consultancy Services (TCS), Accenture, Infosys, Wipro, Cognizant, and Capgemini, among others, were the companies who had formulated this strategy.
“IT services companies were losing talented freshers to MNCs and differentiating the engineers based on assessments has given them the ability to financially bucket these grads into different pay packets. This allowed them to hire highly skilled and in some cases freshers from premier colleges at higher pay brackets,” said Kamal Karanth, founder and CEO, Xpheno, a specialist staffing enterprise.
A fresher joining the IT services sector gets anywhere from Rs 3.25 lakh to Rs 3.5 lakh per annum. Freshers who get selected through this tiered framework can get salaries that range from Rs 6.25 lakh to Rs 12 lakh per annum.
With the campus hiring in the slow lane, hiring under this tiered framework has also taken a hit, but campus placement heads and HR specialists that Business Standard spoke to opined that with artificial intelligence and new-age technologies in focus, this strategy will now become the core focus area.
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Emails sent to players such as TCS and Wipro remained unanswered.
The trend started as digitisation started to become the buzzword and clients started asking for skills that were higher than what IT firms were generally hiring for.
“A decade ago, most of the engineering hiring done by the IT services was largely plain vanilla type of hiring. Again from a skill point the projects that IT services handled were also application development management type that entailed Java, Testing, SAP or Oracle. This started to change when the buzz of digitization started. Clients would also say that they do not want the same plain vanilla engineering talent skill sets. Over the years, software development also started to undergo changes,” explains S Pasupathi, COO, HirePro.
This is when the companies started to relook at their strategy. So either they went to Tier-I colleges, but then they would not get the day one placement slot or within the same campus there would be a different stringent cut-off based on a different test to identify these students.
Another reason why this was launched was the competition coming from global capacity centres (GCCs), startups, and MNCs who also began to visit campuses.
“These firms would pay a higher level of salary for a fresher, which was Rs 7 lakh. So the top talent started to move there,” said a head of HR operations in a mid-tier IT services firm.
Neeti Sharma, CEO Teamlease Digital believes that as a strategy, differential salary at fresher level, even in a slow hiring market has not lost its relevance.
“Each of these categories under the differential salary comes with different salary levels, educational level as well as aptitude,” she explains.
“We have seen that people hired through these funnels, the stickiness of these employees increases. We have seen that the attrition in this hiring goes down by 8-10 per cent,” she added.
In the case of talent, this works for the freshers as well, since those who get hired through this route get a clear growth potential for them as well as a clear career road map.
Though this was launched in 2019-2020, those hired through this tiered structure formed 20-30 per cent of the total fresher hiring that was being done by the companies.
Dr. V Samuel Rajkumar, director (career development), VIT Vellore, says that of the total students hired over the last two to three years, almost 20 per cent were hired through this tiered framework at the campus.
In 2024 Accenture handed 181 offers for freshers from VIT for the role of Advanced Engineering with a package of Rs 11.89 lakh. In 2023 it was 201 offers, and 289 offers in 2022.
Pasupathi believes that going ahead, as the market opens the focus will be on hiring through this tiered framework. The ratio of such hiring already touched a ratio of 30:70, which is likely to change over the years.
