IT Sector Faces Wage Disparity and Salary Hike Concerns

Salary Hikes in IT Companies are Less than Cash Back

This year has been particularly tough for IT employees with companies declining to hire freshers. Well, those working at the organisation are also not having the best time of their lives. The entire IT sector witnessed a sharp decline in hike growth in 2023, dropping to 9.1% from 10.3% in 2022. Excluding products, the IT/ITeS sector saw the lowest average salary hike at just 8.4%. In 2021, the average salary hike was 8.8%, which increased to 9.7% in 2022. Last year, the sector saw average increments between 8.5% and 9.1%. IT companies are offering single-digit salary increments to employees who lack AI-related skills. Further, there is an abundance of entry-level talent who are now equipping themselves with the latest tech and tools. Additionally, rising business costs, coupled with layoffs are making this trend continue this year too. Earlier in May, a Dehradun-based engineer, Akshay Saini, took social media by storm with his critique of the corporate appraisal system in India. Saini claimed that appraisals are a joke and further urged employees feeling underpaid to switch jobs. He is not all wrong. Infosys, which offered an average salary hike of 14.6% in FY22, came down to 9% in FY24. For TCS, the average hike ranged between 7-9% in 2023-24, compared to 10.5% in 2021-22. Tech Mahindra and HCLTech offered average hikes between 5-7%. Wipro and LTIMindtree are yet to finalise their decisions on the same. Meanwhile, Accenture has opted not to provide salary hikes for its India-based employees this time. Well, the story of startups is no different. As per the Amazon Web Services (AWS) report, Indian employees with AI skills and knowledge may see salary hikes of more than 54% and those in IT and research and development enjoying the highest pay increases. Major Indian IT companies, despite substantial generative AI training initiatives, are offering lower starting salaries of around INR 3-4 lakh. AIM noted that AI engineers with generative AI skills saw a significant 50% increase in their salaries. At companies like Accenture, a generative developer can earn about INR 8.5 lakh per annum, compared to the INR 5-6 lakh that regular software engineers make. AIM reached out to an employee who works with generative AI at TCS. He said that the company's pay scale won't change just for GenAI resources, and the hike is also largely based on the company's financial performance and business unit budget allocation. "I believe we may get some good hikes in the range of 25-30% after switching to another company," the employee added. Indian IT companies have all recently highlighted their commitment to integrate generative AI into their operations. Top firms like TCS, Infosys, and Wipro have been leveraging technology-enabled training for their employees. As the companies are offering training programs, they seem to be following Charles Darwin's survival of the fittest theory to retain employees. So, if an employee falls behind in the race, he is laid off. During the calendar year 2023, India's IT sector laid off around 20,000 techies in a manner known as a "silent layoff," according to All India IT & ITeS Employees' Union (AIITEU) data. On the other end, companies have delayed the hiring process. Indian IT companies like Wipro, TCS, and Infosys have delayed the onboarding of 10,000 freshers, and refused to provide a joining date. As per the Nasscom data, the IT sector will create only 60,000 new jobs in FY24 compared to 2,70,000 jobs that were created by the sector in the previous fiscal year. Ultimately, the choice is yours - either stay with the company, undergo training, and earn an average salary. Or get laid off, switch to another company, and wait for the same cycle down the road.

Cognizant's ₹2.5 LPA offer for freshers sparks Outcry Amid Growing IT Sector Wage Disparity

Street food vendors earn more than an engineer: Cognizant's off-campus placement drive, offering a ₹2.5 LPA salary to fresh graduates, has sparked online criticism, highlighting stagnant entry-level wages since 2002. This comes at a time when the disparity between CEO and employee pay is growing in the IT industry, with CEO compensations soaring. The widening gap between leadership and entry-level salaries is raising concerns about fairness in compensation, especially in a job market facing layoffs and AI-driven changes. Social media reactions reflect the growing discontent among the public.Cognizant's recent off-campus placement drive has ignited widespread criticism online due to its entry-level salary offer of ₹2.5 lakh per annum (LPA) for fresh graduates. Despite being one of India's major IT companies with a global presence, Cognizant has maintained this salary package since 2002, a move that has drawn sharp reactions from social media users, especially in light of the current economic climate. A Stagnant Package Amid Economic Uncertainty In a job market marked by hiring freezes, layoffs, and the growing integration of AI in tech operations, the unchanged salary package offered by Cognizant has raised eyebrows. Fresh graduates, facing limited employment opportunities, have expressed frustration and humor on various social media platforms. Many have pointed out the disparity between the cost of living and the offered salary, questioning how freshers are expected to manage in metro cities with such low compensation. The response on social media has been overwhelmingly critical. Users have drawn comparisons between the ₹2.5 LPA salary and earnings in other, less specialized jobs. Here's how social media users reacted to the news: "No wonder GenAlpha wants to make reels and aspires to be a successful YouTuber," quipped one user. Another wrote, "People earn more than this by giving tuition." One user remarked on the disparity by pointing out, "Just a maid who works for 30 minutes in a house makes more by working in 8-10 houses...gets more salary than an engineer." Adding to the conversation, another user stated, "Street food vendors earn more." Memes and comments illustrating the salary disparity have flooded social media platforms. A user named EngiNerd shared, " -- EngiNerd. (@mainbhiengineer) August 13, 2024 pic.twitter.com/zOPn5gBZOw" In a similar vein, Che Krishna tweeted, " -- 👑Che_ಕೃಷ್ಣ🇮🇳💛❤️ (@ChekrishnaCk) August 13, 2024." Another reaction came from Srinivas R, " -- Srinivas R (@srini_r_twit) August 13, 2024 pic.twitter.com/ved9tMjYKc." Parag Mandpe also contributed, " -- Parag Mandpe (@ParagMandpe) August 13, 2024 pic.twitter.com/PLDsYmlz8J." Arka Bhattacharjee shared his thoughts, " -- Arka Bhattacharjee (@niveyshak) August 13, 2024 pic.twitter.com/P9iX6BI6A2." Amit Misra added to the trend, " -- Amit Misra (@amit6060) August 13, 2024." Advaid echoed similar sentiments, "Meanwhile pic.twitter.com/krwSlW9FXZ -- Advaid അദ്വൈത് (@Advaidism) August 13, 2024." Highlighting the broader societal shift, a user named Ray shared a personal anecdote, "I asked my 14-year-old cousin brother to stop using mobile and making reels all the time, instead focus on studies. He replied: People with just 1 viral video are earning in crores and buying expensive cars. So I am also uploading videos on IG and YT. You studied and got job in..." An individual wrote, "2.52 LPA is very generous. What will the graduates do with so much money." Another X user, Manu, said, "This package was offered to 2002 batches. No House, no free commutation, no Free Food. All this to be managed in just 18 to 19K rupees after PF deduction in metro cities." "That's barely enough to cover a year's rent in a village and a few packets of Maggi. Cognizant must be running an experiment to see if people can live on chai and hope," X user Himanshu Rajawant added. Someone else shared, "2.5 LPA? No wonder GenAlpha wants to make reels and aspire to be a successful YouTuber." X user Vishnu Pradeep posted, "Tech companies hiring is a good sign while taking the recent layoffs into context. But 2.52 LPA is seriously concerning. 10 years ago, the average package was around 3 LPA. Instead of the emoluments growing, we have lower payouts now. Not sure if it's due to higher competition (excess supply of candidates), lower projected profitability or something else." The criticism of Cognizant's salary offer comes at a time when the wage gap between CEOs and entry-level employees in the IT sector is growing increasingly pronounced. In companies like Infosys, Wipro, and HCL, the disparity has widened over the past five years as reported by TOI. For example, Infosys CEO Salil Parekh's compensation is nearly 700 times that of the median employee's salary, a figure that has increased significantly since 2019. Similarly, former Wipro CEO Thierry Delaporte's pay was 1,702 times more than the median remuneration of Rs 9.8 lakh in the 2023-24 financial year. In Accenture, the disparity is also stark, with CEO Julie Sweet earning 633 times more than the median employee salary of $49,842 in the 2023 fiscal year. The increase in CEO compensation, particularly through stock grants, has contributed to this growing gap. A report by Equilar noted that in 2023, stock awards accounted for approximately 70% of total CEO compensation, with the median value of these awards increasing by 10.7% to $9.4 million. According to Infosys founder NR Narayana Murthy, a fair CEO remuneration should be about 25 to 40 times that of the lowest level employee. Yet, in Infosys today, CEO Salil Parekh's compensation stands at nearly 700 times that of the median employee remuneration and much more compared to the lowest-level employee. This figure has increased sharply since 2019. Wipro has also seen a significant rise in the remuneration of its CEO over its employees. Former Wipro CEO Thierry Delaporte's compensation reached $20 million, which was 1,702 times more than the median employee remuneration of Rs 9.8 lakh for the 2023-24 financial year. HCL saw its ratio of CEO C Vijayakumar's compensation to median employee remuneration widen to 707:1 in the 2023-24 year, up from 253:1 the previous year. In a TOI report, industry experts pointed out that the widening pay gap is partly due to global benchmarking of senior-level talent, which has led to rapid increases in CEO pay while entry-level salaries remain stagnant. Shriram Subramanian, founder and MD of InGovern Research Services, explained, "Since the number of entry-level employees has increased significantly, the compensation at entry levels has not increased. This is the main reason why the pay ratio will keep increasing. Shareholders are more interested in CEO compensation being largely variable and linked to performance metrics." Subramanian also noted the contrast between India and the US, where the disclosure of pay ratios has been used for corrective bargaining by labor unions. "In the US, labor unions and other organizations use this data for corrective bargaining. In India, these numbers have not found significance or usefulness anywhere." (With inputs from TOI)