Gap between mid-level, freshers' salary set to widen

The gap between freshers' wages and mid-management salaries in the information technology industry is set to widen by at least a good eight times this year as companies look to rein in the cost of training freshers. 

While mid-management level wages were five to six times the compensation given to fresh graduates as recently as five years back, the number has jumped up to eight times at the upper limit this year, according to human resource consulting firm Mercer India. Especially post the recession in 2008, entry-level salaries have remained stagnant at Rs 2.75 lakh per annum to Rs 3.5 lakh per annum. "In comparison, mid-management salaries have grown at 8%-14%, and the difference has gone from 5-6 times, to at least 5.5-8 times of entry-level wages now," says Shanthi Naresh, business leader, Information Solutions, Mercer. 

Entry-level salaries have fallen over a 10-year period, adjusted for inflation, whereas mid-management salaries have grown at anywhere between 100%-150% in the same time, according to Subeer Bakshi, director, talent and rewards, Towers Watson. According to the consultancy firm, a decade ago, mid management salaries were around Rs 7 lakh per annum to Rs 8 lakh per annum. Currently, they are at Rs 15 lakh per annum to Rs 18 lakh per annum at IT-enabled services firms, and Rs 21 lakh per annum to Rs 22 lakh per annum at MNCs. 

The biggest reason for the growing gap, from the companies' perspective, is demand and supply. Mid-managers are hard to come by, while 600,000 engineers graduate each year, far surpassing the industry's appetite for only 250,000. And the engineers who do get hired are rarely close to being industry ready, leading to high training costs at the entry level. This is prompting engineering students to take a harder look at their skills, with companies measuring salaries against expertise. 

"Higher pay for freshers is difficult, considering you have to spend at least a year in making them productive, with up to 22 weeks of full-time training, which is a huge cost," says Som Mittal, president, Nasscom. 

Besides, managing wages is a big part of keeping costs low. As Prithvi Shergill, chief human resources officer, HCL TechnologiesB says, "We are in a competitive space, and we do need to manage our cost of supply; given that this is 50%-60% of your profit and loss statement." 

IT companies agree with the estimates. Mindtree's chief people officer, Ravi Shankar, says he concurs with Mercer's industry average. "Our mid-management salaries have grown at 6%-10% every year. Against a median entry-level salary of Rs 3 lakh, mid-management is at Rs 15 lakh per annum on average. There are no plans to revise fresher salaries at this point," he adds. 

Mid- management salaries at Wipro are about 5-7 times entry-level compensation at this point, says Samir Gadgil, global head, Compensation & Benefits, Wipro. He adds that there are no plans to revise the entry-level salary range from Rs 2.75 lakh to Rs 3.5 lakh per annum. 

While Infosys declined comment, TCS, which had given average wage hikes of 8%-10% in FY14, says it will not be revising fresher salaries. And HCL, which doled out hikes of 8% on an average across levels, also says the same.

Although the poor pay does not bode well for fresh graduates in IT, the new entrants are being pushed to reconsider how they invest in their education, given that pay gets better as they go up the ladder. They are also expected to proactively increase their value proposition, instead of taking a plain vanilla engineering degree as a ticket to a high-paying job. 

"If you can take more complex roles, equip yourself with in-demand skills from the beginning, and if you are flexible in terms of locations and work where required, we will pay you more," says Shergill. 

Engineering graduates now need to boost their resumes with expertise in high-growth areas such as digital media, big data, analytics, infrastructure management, in addition to a track record in leadership, says Sunil Goel, managing director of talent search firm GlobalHunt. While Gadgil of Wipro stresses on developing soft skills, Shankar from Mindtree says, summer internships, projects, relevant research, and smart utilisation of social media to attract employer attention, help to a great extent. 

While working in IT did not look quite as gloomy to students who had enrolled in engineering three to four years ago, the poor starting salaries have been impacting the image of the industry as an employer in recent times. "Engineers are looking at other options. For instance, if you are a civil engineer, you would look at going out of the country; and a lot of young talent is dropping out of the sector in 2-3 years to do MBAs," says Bakshi of Towers Watson.

Online shopping: Surfers now buy cars, houses online

It had been inching towards this for a while. India has now arrived in the high-value online shopping arena. Diamond jewellery isn't the priciest purchase you can make online anymore — cars, real estate and houses are.

After maturing as a platform for people to buy small products like books or electronics, the country's e-tailing industry then graduated to jewellery, and is now a convenient mode even for large-ticket purchases like houses/properties and SUVs. The fact that five houses worth Rs 25 crore, 35 Nissan cars and over 250 Tata Motors vehicles were sold in four days during the recently concluded great online shopping festival conducted by Google is testimony to this. According to data shared by the internet search giant, the e-tailing market in India is expected to grow eight times from $2 billion in 2012 to $16 billion by 2016.

"Apart from saving time, shopping online offers transparency, convenience and easy access. In purchases like cars, not all brands have wide dealership and service networks, and shopping online gives customers access. With real estate, customers have direct access to the company without going through brokers. Advantages like these will drive the purchase of large items like cars, homes and all other products online," said Arvind Singhal, chairman of consultancy firm Technopak.

Also, though people don't make many big-ticket purchases online, a lot of research and product comparison is done online. "Today, most car buyers go online before making a decision. So using the internet is a logical extension of the purchase cycle. At Nissan, we are putting in place suitable payment gateways with the help of specific car portals to ensure timely delivery and service at the time of purchase," said Nitish Tipnis, director (marketing), Hover Automotive India, Nissan's national sales company.

He added, "Unlike other countries, the growth of e-tailing in India is very different and e-commerce players bring out innovative schemes and options like cash-on-delivery and free exchange/return. These also help the industry mature and customers gradually develop faith in the system and payment mechanism." Tata Housing Development Company, for instance, gives customers a virtual tour of the property while booking flats online.

Earlier, companies had devised new concepts and looked at the e-tailing platforms as another means to reach out to customers. But the response for lapping up products online was a surprise. "This is an indication of the e-commerce ecosystem maturing. If ten days back I was asked if real estate would be sold online, I wouldn't have said it surely would. The sale of such big-ticket products and services like job search or matrimonial services was a surprise," said Nitin Bawankule, industry director (e-commerce), Google India.

Cognizant bets big on analytics

A car could today have an onboard telematics device that sends feeds to your insurer on your braking and acceleration habits, distance you travel, and the roads you frequently travel on. That would enable the insurer to build a pay-as-you-drive insurance policy - a higher premium for more and irresponsible driving. That, in turn, could potentially have a huge impact not just on the profitability of insurance companies, but also on people's driving habits.

The data collected from the onboard telematics device creates, what Cognizant calls, a personal Code Halo. Today, every click, swipe, 'like', buy, comment and search produces information that creates a unique virtual identity of any individual, company or device. Code Halo is the virtual digital information that surrounds any person, device and organization. And Cognizant has begun a major initiative to develop innovative commercial business solutions based on these Code Halos.

"A growing number of companies are beginning to make value out of Code Halos. They are seeking data and information from person, device and organization and creating a new business model that's redefining how commerce is done," said Paul Roehrig, assistant VP and co-director for the Future of Work initiative at Cognizant.

While many companies are working on big data analytics, Cognizant's idea is to build interfaces between, say, the data from a flight engine, the pilot's chatter, and the chatter of passengers at airports, and create a larger solution that enables airlines, airports and others to glean vital insights. Cognizant's new Future of Work division is a team of analysts who previously worked in industry research firms like Forrester and Gartner and who work with others in the organization to build larger business solutions.

Roehrig said there is a big shift in the business of technology with the digital economy expected to surpass the physical economy in value very soon. Cognizant surveyed 300 companies that achieved a total economic benefit of roughly $766 billion over the past year based on their use of business analytics. Among those that participated in its research, investment in business analytics yielded an average 8.4% increase in revenues and an average 8.1% improvement in cost reduction in the previous fiscal year.

Code Halo's foundation is SMAC (social, mobile, analytics, cloud), and the internet-of-things, or the internet-enabling of everyday devices and instruments, a trend that's beginning to take off. Social, mobile and internet-of-things produces vast quantities of personalized data, while cloud is the medium through which these become generally available.

Code Halo is a layer sitting above these volumes of data and weaves a business model around them. "Many companies — perhaps most — are missing the opportunity for significant economic benefit. If the companies we surveyed were to begin deploying best practices in analytics, we estimate they could create $853 billion of value within the next 12 months," Roehrig said.

SMAC will account for over $500 million of Cognizant's expected $8.8 billion revenue this year. It's one of the few companies that have started reporting their SMAC revenue separately, given the size of the business and its rapid growth. The Code Halo initiative is expected to accelerate this growth.

Free Facebook, common globally, comes to US mobile phones

For years, Facebook has been cutting deals with telecom carriers in developing countries like India and the Philippines to offer free Facebook access to cellphone customers using simple phones with no data plans.

Now, for the first time, Americans will be able to get free Facebook, too, even if they don't have a mobile data plan.

In January, GoSmart Mobile, a little-known low-cost prepaid service from T-Mobile US, will begin bundling free access to Facebook's social network and instant-messaging service with all of its mobile plans, including a basic $25-a-month unlimited voice plan. The service is primarily aimed at smartphones that run Apple's iOS or Google's Android software, but it will also work on the cheaper, more basic devices known as feature phones.

For GoSmart, which is sold primarily through independent shops in urban areas, free Facebook is a way to differentiate itself from other prepaid cellular brands - including the more upscale offerings that T-Mobile sells under its own brand and through its MetroPCS unit.

"This is something that no one else is offering in the United States," Gavin Dillon, T-Mobile's vice president of partner brands, said in an interview Tuesday. "It's really about providing more value for GoSmart's cost-conscious customers."

As in other markets, the free taste of Facebook, including access to videos and other multimedia content embedded in the service, could also persuade some GoSmart customers to upgrade to plans that include data.

For Facebook, which has 1.2 billion users worldwide, the benefits are less clear.

On any given day, more than 40 per cent of the US population is on Facebook, according to data that the company released in August. More than 100 million Americans access the service on mobile devices a day.

GoSmart's customers number in the hundreds of thousands, so any increase in Facebook usage will be minimal.

But as the social network embarks on its ambitious Internet.org project to bring everyone in the world online, mostly through mobile phones, the T-Mobile deal sends a message that Facebook wants to be ubiquitous, including in its home market.

The company has gone to great lengths to redesign its back-end infrastructure to reduce the amount of data and network capacity required to deliver its service globally. For GoSmart, Facebook further tweaked its service to help ensure that usage would not count against the limits for GoSmart customers who pay for some data on their plans.

"Facebook's mission is to give people the power to share and make the world more open and connected, and we're delighted that GoSmart subscribers, many who don't have data access, will be able to use Facebook for free," Chris Daniels, vice president of partnerships at Facebook, said in a statement.