India's big IT services companies have ganged up to keep the salaries of freshers low, taking advantage of the oversupply of software engineers at the entry level, says industry veteran T. V. Mohandas Pai. He told PTI,
That's the problem with the Indian IT (industry). Indian IT is not paying its freshers well. And in fact, big companies are coming together, talking to each other not to increase their salaries.
Reports indicate that as against the offers of Rs 2.25 lakh per annum that used to go out to freshers two decades ago, there has been only a marginal rise to Rs 3.5 lakh now, which suggests a massive decrease in real wages from an inflation-adjusted perspective.
Pai, who served as Chief Financial Officer at Bengaluru-headquartered IT major Infosys Ltd from 1994 to 2006, said it's a very sad fact that big companies are talking to each other about not increasing freshers' salaries. He said,
It's not a good sign for the Indian IT industry. That too big services companies. They must break away from this.
Pai, currently Chairman of Manipal Global Education Services and Aarin Capital, said the IT companies must increase freshers' salaries, and reduce "top" people's compensation.
Because if we don't increase salaries, good people (bright talent) will not come in.
According to him, now, a majority of people who join the IT services companies come from tier-2 colleges and are no doubt "smart people". He however added,
But we need people from tier-1 colleges also to come. So, it's a big, big challenge; they have to increase payment to freshers too.
Pai, who was head of infrastructure, administration, human resources, facilities and education and research at Infosys from 2006 to 2011, said the practice of top IT services companies talking to each other about not raising freshers' salaries has been going on for the past seven or eight years. He said,
They are not raising (salaries) because there is surplus capacity. People are desperate for jobs. That's why in one to three years, there is high attrition (young engineers leave within three years). The high attrition is because people are unhappy with payment.