Information technology (IT) managers in India, earning an average of $25,000 (Rs9.93 lakh) annually, are among the lowest paid in the world; their counterparts in Switzerland take home a pay cheque of $140,960. These are among the findings of a new survey by human resource consulting firm Mercer, part of Marsh & McLennan Companies Inc. Mercer’s 2007 IT Pay Around the World survey finds that employers in western Europe are the best paymasters in the IT sector.
The survey, which does not include salaries of expat employees, compared the total annual cash compensation and total remuneration information for IT staff in 6,545 companies in 35 different countries. It ranks Denmark second, followed by Belgium and the UK. The US and Canada are ranked sixth and eighth, respectively. Based on gross annual total cash, an IT manager in Denmark fetches a salary of $123,080, while Belgium pays an average of $121,170. In the US, the average IT manager earns $107,500 a year, compared with Canada, where the salary is around $93,340.
“The salary arbitrage is because of several reasons,” says Sharad Vishvanath, rewards practice leader, Hewitt Associates, a global outsourcing and consulting firm. “The difference in pay stems from the way the labour markets have developed, lower cost of living and wage levels, lower cost to get qualified and larger manpower supply compared to developed economies,” he adds.
The impact of outsourcing and offshoring on IT roles in North America and western Europe helps explain the pattern of global pay, according to David Van De Voort, IT workforce specialist in Mercer’s Chicago office. “Lower-level roles are being moved to regions where talent is cheaper. The jobs that remain in western Europe and the US may be fewer in number, but are more demanding and complex roles, like vendor relationship manager, internal consultant and IT business partner,” said Voort in the survey release.
IT managers in India, however, fare better than their peers in Vietnam, Bulgaria and the Philippines, who receive the lowest pay, respectively, at $15,470, $22,240 and $22,280 a year. “The reasons for better compensation can be attributed to quality of talent and India’s growing presence at the high end of the IT value chain, where cost advantages may not be the only driver for future growth,” says Gangapriya Chakraverti, business leader, information product solutions, Mercer, India.
The survey also reveals that compensation in developed countries focus more on variable factors to attract staff such as bonus schemes; in lower-paying countries, the emphasis remains on cash compensation. However, a significant number of companies, especially in India, Brazil, Russia, Ireland, Singapore and Taiwan, seem to provide fair amounts of variable pay as part of the total cash package, says Chakraverti. “In 15 of the markets out of the 36 surveyed, managers get at least 10% of their total cash package as variable pay,” he adds.
Interestingly, the correlation between experience or skill level and pay differ in different countries. Large pay gaps exist between junior and senior executives in Indonesia, India, Brazil, Chile and Vietnam. Vietnam pays the least to junior staff at $5,570 followed by the Philippines and India at $8,130 and $9,630, respectively. “The salary gaps exist because of tight supply and huge demand of highly skilled employees,” says Srinivas Kandula, global head, human resources, iGATE Global Solutions Ltd, a software services provider. “Thus, companies have to pay a premium to attract and keep employees with special skills and experience,” says Kandula. “Also, we are more hierarchical than the West, thus rewarding experienced employees with higher salaries.”