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!

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Quite a bit of stuff..

The last three days had a lot of interesting stuff happening all around –

1. Movies like Apne, Aap ka Suroor released. And I consciously stayed away from theatres. lsat heard, people had totally given up on a capped Himesh facing stiff competition from an animated Himesh [ Caricature of a caricature.. that’s intriguing] … and the Deol family’s emotional action movie. One helluva tearjerker, I hear! And going by Dharam paji’s performance at the IIFA awards, nothing short of an oscar nomination!!

2. Indian team finally won a series against South Africa. Last night, the way they started their batting, I wasn’t too hopeful. But it was a good chase in the end. A very very scratchy Yuvraj managed to hold on till the end, thanks to several dropped catches! A cat with whiskers using all his nine lives…

3. The prancing horses finally managed a 1-2. It was good to see Raikkonen at 1. And after a while, it was not because someone else goofed up. They were right up there from the start! 🙂 Good pitstop strategies this time, reminiscent of their glorious days.

4. Was watching A B Vardhan’s (CPI) defense of Pratibha Patil’s various glorious acts. It was great to see a leading politician defend the case with the wisdom of a 5-year old. “Everyone does it.. So what’s wrong if we are also doing it” citing the numerous cases of inappropriate candidatures here and there! Interestingly enough, Pratibha Patil has finally claimed that the allegations are false and baseless. How? Well, that’s not really important, is it?

5. I was writing a post on Air Deccan. Will post it later during the day.. but even before I say something, I saw this post on Y-Lal’s blog. That’s one senior from IIMB days that a lot of people used to admire. In short, everytime I think of an Air Deccan experience, its an equivalent of caught in a peak-hour 2nd class compartment of mumbai local. Whatever you go through is your problem, because we offer cheap services!

Welll…. so much to write.. I think I will pass!

On the road, who do I blame?

Came across this interesting read sent by a friend! I am not really subscribing to the doomsday prophecy here, but the first couple of paras do strike a chord with me!

While questioning someone’s eligibility to give advice, I can also advocate the sheer objectivity with which an outsider adds perspective. While it may not be possible to avoid the nails when you are driving at a breakneck speed, the old age maxim tells you that speed thrills, but kills. The question is – do you want to blame the road? or do you want to blame the nails? OR, are you better off questioning your style of driving?

Forwarded by Dhaval Dalal –

Avoiding Nails On The Road

Many years ago, when I was barely out of college, I knew a teenager named Bhola who worked as an assistant at a roadside tyre puncture repair shop. I didn’t have much in common with him so it was interesting to have a chat with him whenever I would go to that shop to get my scooter’s tyres patched up. And since the worn-out rubber of my second-hand scooter seemed to developed holes almost spontaneously, I used to meet him quite often.
One day, as he fished around inside my scooter’s rear tyre for the nail that had just slashed the tube to ribbons, Bhola told me that the reason people got punctures was that they didn’t know how to drive. He said that all one had to do was to look at the road carefully while driving and then swerve whenever one spotted a nail. Now, I was such an inexperienced driver at the time that for a moment I actually took this statement at face value and started wondering that why, in fact, did everyone not do this.
And then realisation dawned. Actually, Bhola didn’t have a clue what he was talking about. Not only had he never driven a scooter or a car, he had probably never even ridden any vehicle except a bus. He really had no idea at all that it was humanly impossible to do what he was describing. Bhola had observed activities that he had never performed. He had then formed a theory and was now dispensing supposedly practical advice based on that theory. It was almost as if he was preparing for a career in consulting.
But if you think about it, all of us who have anything to do with equity investing, either professionally or as investors, are Bholas today. We’ve never been in the situation that we are now, and we all think that we know what to do based on some theory that we have. Consider the situation objectively. India’s economy is growing like it has never done. There is an optimism in the air the like of which none of us have ever experienced. The stock market is at an all time high and this all time high is not a trivial one. The BSE Sensex is now is almost three hundred per cent higher than the levels at which it has spent a majority of the last decade. Moreover, not only is it at such a high, it has gotten there through a journey of ups and downs that has a most solid, believable and sustainable ring to it. A huge mass of people have made an enormous amount of money through equity investing over the last four years. On the other hand, some of the dark clouds that are gathering are also the kind that we have never seen.
In balance, this seems like a good time to make one’s investments grow but I think we should all sit down and admit that we are in a profoundly Bhola-like situation. We are driving down a strange and wonderful road where we’ve never been before and it seems to make more sense to stay focused on the horizon than to try and look for nails on the road. You see, since we are anyway going too fast to be able to swerve in time to avoid the nail, it’s probably better to cover as much distance as we can before the inevitable puncture happens.

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