In the fiscal year 2023-24, major Indian IT firms like Infosys, TCS, Wipro, HCLTech and Tech Mahindra have significantly curtailed salary hikes, offering increases between 5 per cent to 9 per cent amid economic pressures. However, this trend is a stark contrast to the soaring compensation packages enjoyed by C-suite executives, who have seen their salaries swell dramatically over the years.
For instance, Infosys, traditionally known for its generous increments, reported a dip in average salary hikes to 9 per cent from 14.6 per cent in FY22, while TCS granted average increases of only 7-9 per cent, down from 10.5 per cent the previous year.
The disparity has sparked debate, particularly following Cognizant’s recent job posting that offered entry-level salaries of Rs 2.5 lakh per annum, pointing to the chasm between fresh graduates and top executives whose earnings have skyrocketed, raising questions about equity and sustainability in the IT sector's compensation structure.
Speaking with BW Businessworld, Krishna Vij, Business Head at TeamLease Digital shared several key factors contributing to the salary gap between fresh graduates and C-suite executives. She said, “C-suite compensation is shaped by extensive experience, the ability to drive company performance, and innovation,” stressing that executives often benefit from stock options and performance bonuses that significantly enhance their earnings.
Vij added that the pandemic-induced over-hiring has led to a saturated job market for entry-level positions, resulting in stagnant or reduced salaries as companies exercise caution in their hiring practices. She stressed the importance of education quality and skill readiness, noting that graduates from prestigious institutions or those with in-demand technical skills command higher starting salaries. To bridge the growing pay gap, Vij suggested that IT companies adopt transparent pay structures and invest in skill development programmes, which could help justify higher salaries for freshmen.
Aditya Narayan Mishra, CEO at CIEL HR Services, provided a comprehensive analysis of the ongoing salary disparities. He remarked, “The major cost is the manpower cost,” indicating that companies must control salaries to manage expenses effectively. The high demand for skilled senior executives in the dynamic IT sector leads to big salary disparities, as firms are willing to pay top dollar for talent that can drive strategic decisions.
Mishra noted that entry-level positions often suffer from a lack of readily employable candidates, necessitating long training periods, which contributes to lower starting salaries. He identified four segments within the IT industry—IT services, Global Competency Centres (GCCs), IT product companies, and non-IT companies—each with varying skill requirements and salary structures. He advocated for a cultural shift towards continuous learning and stronger connections between industry and academia to enhance the quality of education for graduates.
Ad Astra MD Nirupama VG emphasised the distinct roles of freshmen and C-suite executives, stating, “The role and the responsibilities are very different, especially in a changing world.” She added that C-suite employees must take accountability, while freshmen primarily execute projects.
She also pointed out the necessity of upskilling and reskilling to remain relevant in a rapidly evolving technological landscape, noting that "technology is taking over many jobs, almost close to 30 to 40 per cent of the jobs.” Nirupama also highlighted that entry-level employees typically do not receive profit-sharing from organisations, contrasting with C-suite executives who are accountable for delivering results.
True Ripple’s Veronica Thavonat noted that the salary disparity issue is not unique to India but is prevalent globally across various industries. She explained, “The difference exists due to the benefits and the cost of hiring C-levels, the competition to get the best talent, and the excess of candidates at the fresher level.”
Thavonat emphasised that while there is a surplus of candidates for entry-level positions, C-level roles face a shortage of qualified applicants. She advocated for a dual approach to address this gap, involving corporate responsibility and government regulation, particularly in promoting salary transparency and equity. Additionally, she stressed the importance of developing both technical and behavioural skills among freshmen to enhance their employability.
The reduction in salary hikes among major Indian IT firms reflects a broader trend of economic caution and strategic cost management. While top performers and those with niche skills continue to receive substantial increases, the majority of employees face a stark contrast in their compensation.
