The Salary Monster!

Saw this link which got me thinking-

1. The salaries in the Indian market have become obscene. So much so, that even though I think I am making good money, I feel that there is scope for improvement. Everytime I think I am doing well for myself, I meet at least 5 other people who can cause discontentment. By telling me how much they are earning! Whats the end figure? I don’t know! What’s a good salary? No idea!!

Faint memory – When my sister took hom Rs.7,500 as her first TCS salary in 1997, I was pretty excited. When I was completing my Economics undergraduate studies in 2000-2001, I believed a salary of 15-20K to be a good salary to have. Enough to start my career and achieve a few important financial milestone. and I am at a number several times my aspired salary. And I am still not happy…
2. The Indian offshoring industry is bringing its own demise – For me, two things have changed – one, the talent price has gone up and companies are finding their basic cost structure become gradually unfavorable. Two, there is an immense amount of billing rate pressure from clients. Combined with inflation, and the concentration of economic growth in a few cities/metros (NCR, Mumbai, Bangalore, Hyderabad, Chennai) which has led to unprecedented cost of living in these cities, supply of money is still not able to cope up with the increasing demand for things money can buy. Net result.. everyone’s running. Everyone’s unhappy.

Aside : A friend is looking for a 1BHK. Preferably wants it in the Bandra to Dadar region. Budget – 20k. Don’t laugh.
For those who are in Mumbai, thats a paltry amount to look for a 1BHK in this stretch.
For those who don’t understand Mumbai, 20k for A ONE BEDROOM HOUSE!!!! Is he looking for a palace? NOOOOO!!! a kholi will do!
What could the companies have done? Not gone berserk with the salaries paid. Kept a check on where they are headed. Thought through a basic requirement – how to differentiate between campus and off-campus hiring. People who join form campus get a salary of X. They spend 6 months with a firm, and are out in the market, because they know they can get 2X. In a hurry to poach trained (for 6 months) talent, IT ocmpanies are ready to offer 2X. However, the talent is in a bigger hurry. He jumps again within 6 months to get 3X, 3.5 X and so on. Sooner than they realize, an Indian IT company has trained someone for 6 months (paying him X) and converted him into hiking monster who is never going to be happy with his salary. And we have a whole lot of companies ready to fuel their desire.

3. If the Rupee run continues, what will happen to the Indian IT industry – Now, this is a fundamental question that a lot of economists are debating. I don’t think I need to waste my breath gasping over it. However, the long and short of it is that the fundamental driver of growth of Indian IT industry, the cost arbitrage, will get eroded far more rapidly if the dollar becomes weaker. Even if the salaries were not to go up obscenely, the strengthening of rupee can damage the margins enough to make businesses unfavorable.

But I hear the government is noticing all this! 🙂

What do I think will happen? A lot of acquisitions. Smaller fries will get wiped out. Salaries will stagnate. And there will be more unhappiness all around! 🙂 But all that.. in good time! Make hay while the sun shines. And if you can, save cash! it may become more valuable than any other thing!