[Altocumulus]

Originally Posted by akshaymahajan

In the US, salaries do vary by state even if its for the same role and for the same skill level. Some people enjoy the hustle of SFO and NYC and some want to stay in say Austin. Based on living expenses, salaries vary. But that's maybe a ~20-30% difference overall.

With SFO salaries in BLR, I think one would live a very different life as they would in SFO.

So the cost of living index will always be a factor in renumeration.

Absolutely agree. As a matter of fact it was in the news recently, that Google as well will look at decreasing salary of employees who will opt for remote and shift to a low cost location.

There is a difference in Salary not just in US but also in India even between metros.

[guru_max]

Originally Posted by Samurai

Ok, so these are all zero cost employers. What about those with costs?

I don't really know the cost structure of body-shopping employers. However, don't they have costs associated with bench-strength, marketing, sales, administration, training, rent, recruiting, compliance, accounting, auditing, etc?

Many people make this argument that IT service companies pay only a small % of what they charge but this argument never holds any weight. After all, all these companies are public and it's clear that none of these companies are exceptionally profitable. In fact their margins are similar to any other company in any other sector. Of course there are arguments to be made like executive salary, other spends etc. But looking at the bigger picture, they are not doing anything majorly evil or wrong. On the other hand, off late many of the service companies have upped their game regarding remuneration in this hot market.

[ishan12]

Originally Posted by guru_max

But looking at the bigger picture, they are not doing anything majorly evil or wrong. On the other hand, off late many of the service companies have upped their game regarding remuneration in this hot market.

I would not say they are doing anything evil or wrong. But from my short 8 years of being in the industry, I would say that they are not being fair either.
IT industry has for long exploited the freshers or near freshers (less than 4-5 years work ex) employees with low salary.
If they were being fair, then one would not see up to 4x difference in salaries of people who switched vs the people who stuck to the same company. Rewarding loyalty!! what is that?

Recent example from the company I just moved out from in April. It is one of the top Indian IT companies. I joined the company in Nov 2018, so as per policy I was not eligible for 2019 appraisals (Stupid policy). Then came 2020 and Covid hit.

The companies revenue and profits grew every quarter even during Covid. Stock prices almost doubled. They went on a acquisition spree. CXXs salary grew in double digit percentages. They tried to act smart and employee appraisals were suspended citing Covid reasons. To their credit, they did give good variable in all quarters during covid.

So I waited till Oct 2020, but no salary revisions in sight, got fed up of the same salary for 2 years. Job market was hot and by March 21 when my notice period was to come to an end, I had 5 offers to choose from. Switched to another IT giant with 70% hike. Did I loose anything? Nop. Did the company loose one of the good performers in the team? Absolutely.

When did the appraisals happen? January 2021 with revised salary effective from March 2021. The company was the last one to roll out 2020 appraisals among the big Indian tech companies.
The result- They have currently the highest attrition rate in their history of existence. Because, I was not the only one who was fed up.

My team of 13 people is down to 1 person now from the old team from the time I was there. The others now are mostly mix of freshers and 2-3 years exp guys. They are barely able to sustain the project because of resource crunch. Fed-up of all this, our delivery manager just resigned last week.

Again to their credit, they did immediately have another appraisal in May 2021 after the March appraisal. But it was too late. People took the advantage of May appraisal as well and left.

[pannags]

If there was a time in the last two decades that I can stare in amazement, it is now!

The entire industry is going through a churn and attrition is only half the problem. Anyone with relevant experience is asking for - and I'm not exaggerating - hikes in the range of 100% in most cases. The strange thing I've noticed is that while most organizations don't have the provision to provide a significant salary increase to existing employees, they are willing to pay more at the time of hiring.

Just last week, we had to let go of an employee who was demanding 25 LPA as against his current compensation of 15 LPA. A replacement candidate with similar experience is now asking for 33 LPA to consider joining!

[m8002?]

Originally Posted by pannags

Just last week, we had to let go of an employee who was demanding 25 LPA as against his current compensation of 15 LPA. A replacement candidate with similar experience is now asking for 33 LPA to consider joining!

And on top of that, there is the learning curve for the new candidate. Whats even worse is that, I am receiving a lot of applications from people who just changed jobs less than an year ago with 30 to 40% hikes. And they want a 30-50% hike again. I guess we are in the days of the Internet boom when the joke was "Trespassers will be recruited" .

What can the companies do? They cannot increase the salary for everyone by 30%. So they give hikes to specific individuals either to make them stay or for someone from outside. Somehow, it feels like good performers who are loyal and stay with the company are the losers.

I am waiting for the downturn to see how these job hoppers take a reduction in force when it happens.

[am1m]

Originally Posted by pannags

The strange thing I've noticed is that while most organizations don't have the provision to provide a significant salary increase to existing employees, they are willing to pay more at the time of hiring.

Originally Posted by m8002?

Somehow, it feels like good performers who are loyal and stay with the company are the losers.

This is something I've also never been able to understand. Wouldn't it be easier to go out of your way to retain an existing employee rather than take a chance on a new hire? Especially if the new hire ends up costing you more than the original employee and that too without considering the loss in knowledge, unproductive time lost while the new hire ramps up?

I hope someone from HR can shed some light on this, there must be a rationale. My untrained conclusion seems to be that most Indian IT organizations aren't really geared up to nurturing or retaining talent, but just have recruiting specialists. Or worse, have outsourced recruiting, so it's not extra work for them, but it means extra work to retain talent. (And it's not just HR that needs to take the responsibility to retain talent, managers have a bigger share in that responsibility.)

[akshaymahajan]

Originally Posted by pannags

The strange thing I've noticed is that while most organizations don't have the provision to provide a significant salary increase to existing employees, they are willing to pay more at the time of hiring.

And this is a big problem - salary bands are huge, and in most cases have nothing to do with what an employee brings to the table. And this is just continuous and cyclic and leads to people who have been around for a while to question why they dont earn the same and look out for other oppurtunities.

[Samurai]

Originally Posted by am1m

My untrained conclusion seems to be that most Indian IT organizations aren't really geared up to nurturing or retaining talent, but just have recruiting specialists.

Corporate IT career has become transactional in nature. Once employers stopped showing loyalty to employees, the employees stopped having loyalty to employers. Now it has become a circular firing squad.

Employer: We will let go employees the moment they are not being used.
Employee: I will jump ship the moment someone else offers better pay.

Employer: We will not train and mentor employees since they have no loyalty.
Employee: Why should I have any loyalty if company doesn't train or mentor me.

Employer: We will hire people from outside who have the exact skill I need right now.
Employee: I will look for employers who will pay more for the skill I already have.

So it is based on eye for an eye philosophy. There is no pay-it-forward thinking on either side. I see the same with vendor-customer relationship too. It was not like this before.

[m8002?]

Originally Posted by am1m

(And it's not just HR that needs to take the responsibility to retain talent, managers have a bigger share in that responsibility.)

Spot on. I think its up to the immediate manager and the higher management to come up with a way to avoid this. I think companies do it to some extent. I sometimes match the pay to the new offer in exceptional candidates and make them stay. But lets be honest, we cannot do that for everyone who resigns.

HR has no say...they will just do what the management asks them to. They also dont have any delivery responsibilities..so they really don't care. Any question on attrition, they will hide behind the adage "People quit managers, not companies".

I personally have no issues countering with a new offer. But the current problem is more endemic. Everyone is looking out for jobs on a continuous basis without bothering to work/contribute at the new place. Two samples from the list of resumes I have:
1. 10 years. 5 job changes. Last 2 changes in the last two years. And he is in the market again.
2. 6 years, 3 job changes. Last change in Apr 2021 and before that in Mar 2020. Stayed at his first job for 4+ years.

Basically, these guys have not done any meaningful work in the last 2 years. They were always attending interviews, or in notice period or in induction period. Thats it.

[hserus]

Originally Posted by m8002?

1. 10 years. 5 job changes. Last 2 changes in the last two years. And he is in the market again.
2. 6 years, 3 job changes. Last change in Apr 2021 and before that in Mar 2020. Stayed at his first job for 4+ years.

I guess I am an idiot or maybe just an outlier. First job 6 months in 2000 then 2000-01 when the portal I worked for went bankrupt, 2001-09 at a HK based startup working out of HK and then India, 2009-15 for a big century + old 3 letter MNC which acquired the startup and then 2015 onwards at a company that surprisingly doesn’t work in the fruit business.

[m8002?]

Originally Posted by hserus

I guess I am an idiot or maybe just an outlier. First job 6 months in 2000 then 2000-01 when the portal I worked for went bankrupt, 2001-09 at a HK based startup working out of HK and then India, 2009-15 for a big century + old 3 letter MNC which acquired the startup and then 2015 onwards at a company that surprisingly doesn’t work in the fruit business.

Count me in for company. I worked at my first org for 19 years 1999 to 2018.

Changing jobs in short time due to bankruptcies or takeovers is fine. But they are the exception. Its not like every company these folks join goes bankrupt/bought out in 6 months

[Chetan_Rao]

Originally Posted by am1m

...it's not extra work for them...

Quoting for reference, but will make a point slightly out of context of your comment.

The phenomenon of prioritizing quarterly results above anything else has had a curious side-effect within organizations at micro levels. Lots of individual leaders only care about numbers they're directly responsible for and have their performance/compensation tied to, often to the detriment of the larger organization.

E.g. Reduce headcount this quarter to meet a certain margin target? Great, done. Here's your bonus. Wait, this will mean we'll have to potentially spend more to hire and ramp up replacements later? That number doesn't land in my bucket, don't care.

From the outside, it seems crazy to not make an effort to give a great resource an X% retention bonus instead of spending 2X to hire a replacement, but in large organizations, the X% bump and 2X replacement hiring money often come from different budgets, and the person responsible for the former doesn't necessarily care for the latter.

It seems crazy, because we see organizations as a whole, which often is NOT the case at the individual decision level.

[sreerknair]

Originally Posted by am1m

I hope someone from HR can shed some light on this, there must be a rationale. My untrained conclusion seems to be that most Indian IT organizations aren't really geared up to nurturing or retaining talent, but just have recruiting specialists.

Yes, you are right that there is a rational to NOT counter offer when an employee resigns for monetary benefits. Main reason is - the trust between Employee and Employer is broken the moment one decides to leave. If the Employer provides a counter offer, then it simply re-emphasize the Employee's belief that he/she was under-paid in the organization. In such case, either the Employee will not accept the counter offer or will accept the counter offer and then leave in a year or so (that way he/she can command much higher salary in the next hop).

Another reason is - a counter offer will cause a flood of resignations in the organization. If you come to know that the current organization offered a 50% hike to your colleague when he/she resigned, then what will you do as a rational being? You will also resign and demand HR to increase your pay.

If someone resigns for purposes other than monetary benefits, say hostile managers, un-exciting work, lack of flexibility etc., then in such instances a counter offer servers no purposes.

And trust me, Indian IT organizations have mastered the art of retaining talent. Some of these firms are very successful in retaining brilliant employees even after paying them less than 50% of what they will get outside.

The moment an organization (whose business model is mainly based on "cost arbitrage" & volume) shows that they are willing to negotiate on salary, then almost all their employees will make use of it. If we ignore the non- monetary benefits then just from salary perspective - it is the fear of resigning, and joining a new organization is what keeps most of us in our organizations.

[JithinR]

Originally Posted by Chetan_Rao

.... it seems crazy to not make an effort to give a great resource an X% retention bonus instead of spending 2X to hire a replacement, but in large organizations, the X% bump and 2X replacement hiring money often come from different budgets, and the person responsible for the former doesn't necessarily care for the latter.

Didn't really get this part (I suck at finance stuff though). What happens once the project billing starts?

At that time don't managers have to account for an increased monthly expense due to higher salary costs. That would affect his projects budget right?

Edit: Looking at people discussing their hikes, I am starting to worry that my manager will think that I will never jump (and so I could be stiffed in hikes) since I seem to be too incompetent/demotivated to make the switch (all the while I am sitting here thinking that I shouldn't switch again since my last jump was in 2019 and it would look bad in my resume). After all, even my manager would jump if given the right price.

[Chetan_Rao]

Originally Posted by JithinR

...

At that time don't managers have to account for an increased monthly expense due to higher salary costs. That would affect his projects budget right?

It's not that straightforward.

Cost to company, cost to project and cost (billed) to customer often don't have directly proportional impact.

Project Managers obviously want to use the lowest 'cost to project' resources (every little bit saved helps with margins), but there are multiple factors involved in controlling project costs and resource cost is just one of them. One aspect that's part of most contracts is 'efficiency gains', meaning a certain volume of work should be able to be delivered with incrementally lesser resources (people, time & money).

Budgeting can get complex, so salary increment budgets may be separate from retention bonus budgets and both separate from hiring cost budgets in a large organization, and different leaders accountable for each number (and often unwilling to share surplus with others).

So as a manager, if I lose a resource to attrition and have to hire an expensive replacement, I can still come out cost impact neutral (or even ahead) based on where else I can make up the difference, including costs saved during hiring and ramp up, which can be as much as a year once notice periods, hiring lead times and ready-to-deploy requirements are accounted for.

Long-term impact? Well, as I said, nobody cares beyond the next quarter. Even if a cost is moved from one column to another (say employee cost replaced with short-term stand-in contractor cost), it's still a win for the person who owns the column the reduction comes from!