High salaries, lack of middle-level leaders may trip IT offshoring industry

High salaries, lack of middle-level leaders may trip IT offshoring industry
PTI
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First Published: Mon, Aug 20 2007. 01 34 PM IST
Updated: Mon, Aug 20 2007. 01 34 PM IST
New Delhi: India’s $5-billion global offshore IT R&D industry faces increased challenge due to high salaries being paid to top executives and shortage of middle level executives, says a survey.
“The challenges faced by the industry include the facts that India has less experienced talent pool than in the United States and the United Kingdom, a lack of middle management leadership and continued cost of escalation for the top 20th percentile of the IT talent pool,” says SVB Global, the international arm of financial services company SVB Financial Group in its study “Compensation and Benefits Industry Survey, 2007”.
It adds: “The lack of senior development talent in India is one of the key reasons for the inability to develop many successful products from India.”
The survey conducted along with research and consulting firm, Zinnov on HR practices of 31 product development companies with operations in Bangalore, Pune and Hyderabad says that across all cities, the entry-level and mid-level engineers constitute the majority of talent pool while the talent pool numbers for senior managers and technical architecture relatively low.
It also says, when it comes to product development, Bangalore is the number one choice, followed by National Capital Region (NCR) and Pune.
“Bangalore has the deepest talent pool due to early entry of technology companies that set up subsidiaries mostly in the high-tech areas, such as integrated circuit design, systems software and communications software,” the survey says.
Analysing the expected average increase in salary doled out by India Inc, the survey said, “In 2007 the average salary increase is reported to be 17% for the engineering function, 15% for the technical support function and 14% for the operations support function.”
It further says that though the average salary increment given in 2006 was 16% for the engineering function, a dip of 6% in the total industry average salary was noted which can be attributed to a small talent pool.
The survey points out that India Inc is increasingly hiring ‘freshers´. “Organisations are moving toward aggressively hiring “freshers” at the zero to two-years experience bracket.
It also said that among the three cities, Hyderabad tops the salary across all levels. In addition, the survey said, “While guaranteed cash was the most visible part of the total compensation, a certain percentage of the variable pay was considered in determining the appropriate levels of compensation. Bonuses such as tenure-based retention, appreciation and signing are also gaining popularity.”
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First Published: Mon, Aug 20 2007. 01 34 PM IST
More Topics: IT | challenge | outsourcing | BPO | salaries |