Bangalore: Good times seem to be on their way back for India’s salaried professionals. With corporate profit margins rising and the economy recovering faster from the downturn than most other countries, companies across sectors are willing to award salary hikes of up to 20%.
Brokerage firm Motilal Oswal Financial Services Ltd, for instance, plans to give an average raise of 20% to its 1,250 employees in April. Sudhir Dhar, head of human resources (HR), said most brokerages would offer 15-20% increments as the business was doing well on the back of robust stock markets. “The hikes will make up for rising inflation and the (absence of increments over) the last one-and-a-half years,” he said, adding that bonuses for 2010 would also be higher than in 2009.
HR managers at many companies are busy talking to peers and conducting salary surveys to determine the percentage of increase to be handed out. Companies typically announce pay hikes in the January-April period.
Photograph by Rajkumar/Mint; Graphic by Sandeep Bhatnagar/Mint
Firms are witnessing higher profit margins with the markets on the rebound, said Venkat Shastry, client partner at Korn/Ferry International, an executive search firm. “They want to reward the people that have stayed on through the bad times,” Shastry said, adding that the average pay hike across sectors will be 7-9%.
But it is not just on account of improving corporate fortunes that firms are awarding raises. Most companies are also driven by the fact that their employees are a restless lot who may well switch jobs if the salary hikes don’t happen soon enough.
Several Indian firms froze hiring and salaries following the collapse of Wall Street investment bank Lehman Brothers Holdings Inc. in September 2008. Some even slashed pay in order to save cash as business prospects diminished and the economy slowed. More recently, double-digit food inflation has added to the workers’ woes and made them open to better paying opportunities.
“They feel their companies are not taking care of them,” said Pius Maria Prasad, director of HR at Chinese equipment maker Huawei Technologies India Pvt. Ltd.
Huawei plans to add 200 people to its headcount of 1,800 in 2010, and Prasad said many candidates he met wanted a change of job because they hadn’t seen a pay revision for many months.
Prasad foresees hikes of 12-15% in the technology sector in 2010. Huawei itself gave pay hikes of 8-10% in 2009—against raises of 16-20% in the boom years of 2002 to 2007, when the Indian economy grew at 9%.
India’s second largest software firm Infosys Technologies Ltd gave an average interim hike of 8.5% in October 2008.
But today, employee expectations are rocketing, said Gangapriya Chakraverti, Indian business leader, information product solutions, at the Indian arm of HR consultancy Mercer Llc. “Employees feel they should be getting hikes for two years.”
According to Mercer, pay hikes will range between 9% and 12%, with the average being 10.9%. “Employers feel they cannot continue with the year-on-year, high double-digit increases of previous years,” added Chakraverti.
Many HR managers are yet to firm up the increments they will offer this year. Rajeev Dubey, president, HR (after-market and corporate services) and a member of the group management board of Mahindra and Mahindra Ltd (M&M), which typically gives out raises in August. But he is sure “the hikes in 2010 will be higher than last year”.
M&M, India’s largest maker of tractors and utility vehicles, gave 5-8% salary hikes to its 75,000 officers in 2009, down from 12-14% in previous years.
S. Bhattacharya, president of HR at Axis Bank Ltd, which employees 22,000 people, said he, too, was unsure of the numbers, but optimistic that increments would be better than last year. “I don’t think hikes will go as high as 10-16% (as seen in the years before the downturn), but they will be more than 4-6% (given out at the bank in 2009).”
But there are sectors that foresee no hikes. L.S. Vaidyanathan, executive director at Bangalore-based Nitesh Estates Ltd, said real estate firms won’t offer any hikes for at least another nine months as a visible recovery in the sector took longer than, say, in automobiles. Also, “real estate (sector employees) already have high level of salaries,” he said.
Nitesh Estates cut salaries of its 125 employees in 2009.Vaidyanathan said he was yet to decide when to revoke the cuts. But firms such as Motilal Oswal and technology provider EMC Corp. revoked salary cuts in June and January, respectively.