[Samurai]

Originally Posted by tsk1979

CEO pay went up 940% since 1978. And everybody did just fine and sustained just fine. Sure, some companies may not survive, but others will.

One person's salary increase has no impact on bottom-line at all, CEO salary is not even 1% of the total wages. I am against high CEO pay because of ethical/morale reasons and not financial reasons. It is when the company has to rise the salary of everyone, it hits the bottom-line. Then it could be 20-30% rise in total cost, and profit turns into losses.

Originally Posted by tsk1979

If pay was having such a big impact on the company bottom lines, how are the companies making record profit quarter after quarter?

You are thinking like a stock market index. There will always be a set of top 100 companies that will make profit under any circumstances. There will be churn in that list, but the top 100 companies employ less than 10% of the total labour force. That is why stock market indexes don't reflect the reality of industry, it just reflects the situation of the winners at any given time.

With these kind of salaries even top IT services companies will not be able to make profits. They will find a workaround, they will replace more experienced engineers with less experienced engineers as cost cutting measures.

[jetsetgo08]

Originally Posted by sdp1975

The current situation reminds me of Y2K. An IT bubble waiting to burst ?

This is what I am afraid of.

It seems most IT folk have resigned to the fact that their careers may not last long beyond 35-40 years of age and have become street smart, hence are making most of the make hay while sun shines.

But, being in the IT field, would one be considered to be barking up the wrong tree if one is wanting a prolonged career of lets say at least till age 50? Which brings us to the original discussion of salaries not being sustainable beyond a limit if one is looking at a longer career.

[ishan12]

The way I see it, current hikes and salaries are slowly moving towards becoming at par with what the western standards are. (though still way behind). Companies in India for decades have milked their employees by significantly underpaying them and that still is true for most industries today, specially for below managerial levels.

Looking at the cost of living that have risen significantly, specially in the metros, I don't find the current salaries being offered as being very high. This is how it should have always been. The IT bubble has long been busted in 2008-09. The pay hikes on switching during period before that were significantly higher than now, along with bright onsite prospects.

Even today an average fresher engineer out of college barely manages a 4 LPA job. (IITs NITs being exception) Which is well below the salary you would need to have a decent standard of living in a metro. If he moved a couple of jobs in first 2-3 years and managed to reach at 10-12 LPA. That's exactly where he needs to be. I wont consider him overpaid at all. Lets realize that the employee is getting 60-70% hikes because he is underpaid already.
Lets not forget a decent car today costs upwards of 10L and a decent house in any metro upwards of 60L. By the time the same engineer is at age 30, 20-25 LPA is just a decent salary and nothing near to being overpaid.
What we need now is a change in perspective, because over decades we have gotten so used to of receiving and paying underpaid salaries.


However, this would also mean that the Indian IT industry would slowly loose its competitive advantage which was largely based on cheap (read underpaid) labor.

[bhppower]

The situation is really bad. Prospective candidates are demanding anything and there is arrogance in the air. As a hiring manager, I am really worried about looking at increased spends.

I believe that 3 months notice period gives enough shopping time for people who are interested in switching jobs. This needs to be relooked at by the entire IT industry.

This tweet from OLA founder also highlights that it's started to pinch now.

https://twitter.com/bhash/status/142...373555202?s=20

[am1m]

Originally Posted by bhppower

I believe that 3 months notice period gives enough shopping time for people who are interested in switching jobs. This needs to be relooked at by the entire IT industry.

With all due respect, the 2-3 month notice period idea came from the hiring management side, certainly not from the employees!

IMHO anything above 1 month is ridiculous for a notice period. It is only meant to discourage employees from switching jobs because the new company might be hesitant to wait that long. So, if unnecessarily long notice periods are now coming back to bite the companies that have implemented them, well then it's just karma!

[GS300]

Wanted to give a slightly different perspective about the way I look at the salary costs -

I run the Indian subsidiary of a non-Indian software product company in Bangalore.

Mine is not a highly funded unicorn or anything. A small(100-150 people), managing to survive-and-slowly-growing, technology company.

We started the India subsidiary about 2 years back. It was reasonably easy for me to convince the CEO and the CxOs that Bangalore is the right place for them to start the subsidiary.

I did not use 'less cost for skills' as an advantage anywhere in my pitch.

Rather, I urged them to consider question below:

If you are the CEO of a western (say, European or American) software product startup, and you are thinking of a setting up a subsidiary of about 20 to 30 people - with skills in software product development, Java, JavaScript, cloud, Bigdata etc,

Which are the cities that you can consider? think of the balance of : proven availability of engineers, overall costs, proven track-record of successful tech startups, political stability, ease of communication etc.

[AltoLXI]

Just out of college freshers are still getting paid 4- 6 lakhs and I mean the regular engineering colleges in Karnataka. Many people I know, who had more than 15+ years of experience, were let go in the past one year and some joined service companies with salary cut.

Then who are getting these salaries? 5 - 10 year experienced people with niche skills? In that case, the number of employees getting the eye popping salaries mentioned in the article may be an outlier.

[Samurai]

Originally Posted by GS300

I run the Indian subsidiary of a non-Indian software product company in Bangalore.

I did not use 'less cost for skills' as an advantage anywhere in my pitch.

Can your company sustain a 50% jump in salary cost? If not, how are you planning to mitigate this problem?

[kavensri]

Originally Posted by AltoLXI

Just out of college freshers are still getting paid 4- 6 lakhs and I mean the regular engineering colleges in Karnataka. Many people I know, who had more than 15+ years of experience, were let go in the past one year and some joined service companies with salary cut.

Then who are getting these salaries? 5 - 10 year experienced people with niche skills? In that case, the number of employees getting the eye popping salaries mentioned in the article may be an outlier.

From what I know, freshers from non-top Engg colleges are barely getting any jobs with good salary. And as you mentioned, people with 15+ years of experience (I would say, it is 10+ in fact) are also finding difficult to switch jobs. So, most of the companies (including mine) is mainly recruiting people with 2-10 years of experience. This is where the people are getting unbelievable salary offers.

[dragonfire]

Originally Posted by AltoLXI

Just out of college freshers are still getting paid 4- 6 lakhs and I mean the regular engineering colleges in Karnataka. Many people I know, who had more than 15+ years of experience, were let go in the past one year and some joined service companies with salary cut.

Then who are getting these salaries? 5 - 10 year experienced people with niche skills? In that case, the number of employees getting the eye popping salaries mentioned in the article may be an outlier.

I work for a premier IT company, and I can say this: people are leaving left, right and center with ~50% salary hikes. We managed to hold back a member of our team by giving him a 30% raise. A peer of mine just left accepting a 60L pay, and now he is trying to poach me. Even if I get 50L, it will be a 100% hike which will be too good to be true.

The staffing shortage real. There has been an increase in IT spending and Indian IT companies are winning large deals. There are no people to staff. What has to be seen is how it will all work out once the pandemic is over.

[bhppower]

Originally Posted by am1m

With all due respect, the 2-3 month notice period idea came from the hiring management side, certainly not from the employees!

Yes, it was mainly by service companies trying to hold back employees under name of client billing. I don't get logic in that. When someone resigns mostly that person anyways becomes less productive and can influence others (there are always exceptions).

I had an employee who resinged. When I spoke with him, he said he resigned the day he got his first offer and said "Ye to abhi suruwat hai, abhi time baaki hai" (This is just the beginning and I have full one month to make most of it to get better offers

[am1m]

Originally Posted by bhppower

Yes, it was mainly by service companies trying to hold back employees under name of client billing. I don't get logic in that.

I'm going through my notice period at one such company right now We're (or rather I should say they are, since I'm going to be gone soon!) notorious for not being flexible on the notice period and that is mainly for two reasons- it's one of the ways we make it unattractive for people to jump. That unfortunately works, I've lost a couple of job opportunities where the hiring manager has told me that I was a perfect fit but the 2 month's notice was too much for them. The second reason is because we get to bill the US office for two whole months at a rate that's a few times more than the India employee's salary.

So when companies indulge in such shady practices, who can blame employees for making the best of multiple opportunities when they come their way.

[GS300]

Originally Posted by Samurai

Can your company sustain a 50% jump in salary cost? If not, how are you planning to mitigate this problem?

Nope. The company cannot sustain 50% salary cost increase. We can probably manage the usual 10-15% increase on the overall salary costs yearly.

How do I plan to mitigate the increasing costs - especially if the salaries in the market are increasing at 50% a year?

I don't have a simple answer to that. But I can share some aspects of the strategy that I am using:

1. Since I did not promise any cost savings in salary, that allowed me to fix salaries at a quite competitive range. That helped me to build the initial team with top-of-the-line people

2. I believe that you need the best people when you are in that 'establish-and-prove' mode. Once the designs are in place, the best practices are established, delivery predictability is established etc, I might be able to run the team with next tier people as well (i.e.: When the current people leave, I might hire the next-tier people with the same salary we are paying now)

3. I have a structure where I have a few core technical architects, a couple of next level leads and a few junior engineers. The maximum attrition is expected in the junior levels. The way we are organized lets me rebuild even if I lose people at the lower level. Higher level people have many other factors to consider before leaving, and not just the salary - and their salaries are fixed at a higher-than-market level in the begining itself.

Like I said, the above points are not the only ones, and I will never claim I have a 100% airtight strategy. These are a few things I have kept in mind, and the rest is 'cross-the-bridge-when-I-come-to-it'

[KL01toKA03]

I understand the logic connecting salary and cost of living. However, I fail to understand why companies follow the herd, and stay in cities where the cost of living is high. A company moving from a large city to a smaller city (could even be a nearby state) should attract a lot of people who are not tied to the large city.

For example, I do not fully understand the gulf in salaries and opportunities between Trivandrum and cities in nearby states (Bengaluru or Chennai). There is a lot of talent in engineering coming out of engineering colleges in Kerala. Also, a significant share of people working in Bengaluru or Chennai based IT companies are from Kerala. So, if they were offered a comparable salary in Kerala, most of them would consider that. Positives for employers would be lower cost of rent, lesser traffic which saves productive hours, and even an airport in the middle of the city. However, I don't see that happening for some reason. At many points in the last 13+ years, I have fancied a move to Trivandrum, but observed that opportunities were very limited, and paid much less than what I could make in Bengaluru.

I think companies should open up to the idea of moving to smaller cities and offering salaries similar to what they would give in a bigger city.

[PrideRed]

Case of 60-100% hike applies to small percentage of folks and not everyone. Covid has bought in different perspective and people for sure are looking for change. Hike depends on what niche skill set one has, how good you are, what role you are applying for, what is your current salary and what organization you come from. An individual from service organization moving to a higher position in a product organization can be guaranteed of atleast 50% hike but generalizing may not be correct.