People at Work & Play

An article in the Economic Times speaks of the narrowing gap betwenn US and Indian salaries in the software sector.

This follows the rupee appreciation against the US dollar and the robustness of the local currency.

While the gap is likely to drop by up to 21 per cent in 2008 from the levels seen in 2006, it is still high enough to keep India’s competitive edge as a low-cost market, says a white paper by leading executive search firm Manpower.

According to data compiled by Manpower, the sector’s staff level salaries were as much as 86 per cent higher in the US compared to India in 2006. However, this gap declined to 82 per cent in 2007 and is expected to decline further to 78 per cent in 2008.

The steepest decline of 21 per cent is likely to be seen in the middle manager level, where the US salaries used to be 69 per cent higher in 2006, but would be only 48 per cent higher than India in 2008. This difference stood at 57 per cent in 2007.

Salary is the biggest cost component, accounting for 45 per cent of IT companies and 40 per cent of BPO costs. Concerns have also been raised periodically that the adverse impact of rupee appreciation could force IT companies, for whom exports account for a major part of revenues and profits, to cut down on the wage hikes and other employee costs in order to offset the impact on their margins.

However, “as long as the cost arbitrage exists and major companies remain profitable, the chances of a slowdown in recruitment may not be in the offing,” the paper noted.

“While most of the companies have managed to weather the storm rather well, they have started to gear up for further appreciation in the rupee and taking other remedial measures to increase productivity and improve efficiency in their operations instead of resorting to cost cutting around people,” Manpower said.

According to data compiled by Manpower, the average annual executive salaries in the US stood at $205,047 in 2006 and increased to $213,336 in 2007. In comparison, the Indian average annual salary is expected to rise from $65,356 to $103,167 in 2008.

The estimates for 2008 are based on the assumption that salary levels remain unchanged in the US, while there would be an average 15 per cent increment in the Indian salary, Manpower said. It took into account 2006 dollar rate at Rs 45, while for 2007 and 2008 it has considered rupee level at 40 and 38 respectively.

For middle-manager level, the US average annual salary actually dropped from $104,681 in 2006 to $103,379 in 2007, while in India it rose from $32,733 in 2006 to $44,250 in 2007 and would further improve to $53,566 in 2008.

The Indian staff-level salary is expected to rise to $20,337 in 2008, from $13,156 in 2006 and $16,800 in 2007. In the US, the staff-level salary dropped from $92,201 in 2006 to $91,965 in 2007.

Mercer, the well known HR advisory firm released its survey results recently of IT Pay Around the World. The survey compared the total annual cash compensation and total remuneration information for IT staff in 6,545 companies in 35 different countries.

6 of the world’s 10 highest-paying countries for information technology (IT) managers are in Western Europe. Switzerland pays the highest salaries followed by Denmark, Belgium and the UK. The United States and Canada are ranked 6 and 8, respectively. Indian IT managers were fourth from the bottom, earning an average of $25,000.

In the most-junior career band surveyed, defined as IT Professional – Experienced, employees in Switzerland earn the highest salaries at an average $101,510, ahead of Belgium (2), Germany (3) and Denmark (4). The UK ranks fifth with an average of $64,340 followed by the US (6). In the lower-paying countries, Vietnam again pays the least at $5,570, followed by the Philippines and India at $8,130 and $9,630, respectively.

The survey also highlighted that the relationship between experience/skill level and pay is different in different countries. For example, large pay gaps exist between junior and senior career streams in Indonesia, India, Brazil, Chile and Vietnam, which have the highest pay progression ratios between the lowest and highest career streams. In the US and many western European nations, pay increases more proportionately with experience.

Here’s how I see this survey. Although the survey may point to Indian IT professionals being paid less, it is a fact that the profitability of many mid-size Indian IT companies is under pressure. They have to pay higher compensation to attract and retain talent while the appreciation of the rupee is eroding their profit margins.

An article in Forbes lists the Best and Worst Paying Jobs in the United States.

The medical profession continues to dominate the top end of their list of the 25 best- and worst-paying jobs in America.

According to government data, the mean annual salary for America’s 29,890 anesthesiologists is $184,340; for its 2.5 million fast-food preparers and servers, $15,230. The mean annual pay for all jobs is $39,190.

These are mean salaries and give no indication of how distant the outliers at either end of the salary scale for any occupation might be. There are plenty of lawyers that earn a lot more than the average $113,660, and surely there are dishwashers who earn a lot less than $16,190.

In all, the lowest-paying 25 occupations employ 15.6 million people in America; the best-paying jobs employ 3 million.

Came across this nice piece about Compensation. Top 6 Reasons To Care About Salary Increase Projections by Ann Bares.

In my experience, as the old saying goes: ” Beauty lies in the eyes of the beholder”. Compensation increases evoke a wide set of reactions. To the guy who has got a great increase, the organisation is “merit driven” and shows “professional evaluation of contributions”.

To the guy with the lowest increase, managements suck.

Last week’s issue of Business World came out with heaps of data following the annual Business World and Gallup survey on Salaries. See this in the context of the Indian IT-ITES industry likely to touch revenues of $ 47.8 billion in March this year. This is expected to rise to $ 60 billion by 2010.

Exhaustive details are provided on salaries at various levels across different sectors. The highest entry level salary was not unexpectedly in the IT sector at Rs. 28,840. The hottest sector seems to be the Financial Sector with it being the highest for Junior Management (Rs. 67,000), Middle Management (Rs. 1,50,000) and Senior Management (Rs. 4,20,000) !.

An interesting comparison showed that salaries for Indian CEOs were much, much less than that of their Global (actually US) counterparts. The annual pay for the top 10 Indian CEOs put together was less than the $ 56.66 million paid to Richard Fairbank of Capital One Financial who ranked 10 in the Global list. Top of the Global ( read US ) list was Terry Semel of Yahoo. His annual pay: $ 230.55 million.

Excuse me while I fish out my calcy. Wow, that translates to ( at Rs 44 to the $) Rs. 10120 Million !