Expected reduction in variable pay and overheads in Indian Software Industry

Overall Rating: star ratingstar ratingstar ratingstar ratingstar rating[0/5]Total Votes [  ]  
Rate this page:
Significant changes are expected in the Indian software industry including the IT/ITeS sector in terms of pay structure and various incentives as has been reported by the industrial body Nasscom along with few other software companies. This issue has surfaced due to the devaluation of the Dollar vis-à-vis the Indian Rupee. A cut down on variable pay, overheads, and other expenses or incentives of the software employees is expected in the current year, 2008. The core pay package will face a reduction along with a lesser hike in salaries or incentives. Earlier, the salary hike for the IT professionals varied between 11-15% which will now be brought down to 9-11% to ensure better profitability in the industry. This is also expected to have substantial impact on the attrition rate in the Indian software industry.

The leading software companies initially paid a very high price to hire deft professionals as the cost issue was not a factor then. A sudden fall of the Dollar led to a complete rethinking over the issue and a decrease in the salary packages offered. It has been presumed by Nasscom that by the year 2010, the entire IT industry will witness a shortage of 500,000 skilled professionals. Ashu Calapa , executive vice-president of HR at Firstsource has made a declaration about lowering down of salary hike in the current year 2008 as compared to the past few years.

Apart from the reduction in pay package and various other financial incentives offered to the software professionals, the software industry has also taken few more measures to ensure competence and higher productivity in the sector. The working hours will be increased soon in this sector. In normal circumstances, though unofficially, there has never been any time limit of work for the software employees. As per the work commitments, the employees have had stayed back for long hours at their workstations to accomplish their tasks. Now, it has been decided by the software industry officials that a certain time bar will be fixed for the employees, before which, one cannot leave his or her workstation. In short, the flexibility of timings will no longer be in practice.

Large-scale office parties, traveling in business class air jets for official purposes and many other benefits like this will also be monitored to ensure cost-effectiveness. A current report by Nasscom states that around 1.6 million employees joined IT/ITeS industry during the Financial Year 2006-07, among which 177,000 employees joined IT and software services and around 138,000 employees joined the BPO sector. The total IT software and services sector is expected to witness a rise between 24-27% to reach a turn over of USD 50 billion during 2008-09.