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IT salary highest in Bangalore

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CIOL Bureau
New Update

BANGALORE: The Silicon Valley city of India can be the most sought after city by the MNCs setting their offshore base in India, but mind you it is the most expensive for IT companies by over 17 per cent of the national average. Mumbai takes the honors for ITES companies. This is in terms of remuneration for the hired employees.

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There were some of the findings among others from the second annual "Total Rewards Management 2003" study conducted jointly by Nasscom and global human resources outsourcing and consulting firm, Hewitt Associates. In an industry characterized by high attrition, performance based increases among IT companies were reported to have grown by 23 percentage points.






Almost half of Indian IT and IT-enabled Services (ITES) companies position their compensation above the market median as a means of attracting and retaining employees. As many as 91 per cent of IT companies and 97 per cent of ITES companies benchmarked their compensation against the market.





"In an environment marked by high employee turnover and attrition, companies are introducing innovative methods of attracting and retaining talent" said Nishchae Suri, Hewitt’s India Business Consulting Leader. "This study not only assesses the prevailing market practices but also outlines strategies rolled out by companies to promote higher levels of employee engagement."

Sunil Mehta, Vice President, NASSCOM, said, "Today the Indian IT industry employs 6,50,000 people, and it is therefore essential that companies in the IT sector devise the right compensation and rewards mix in order to attract and retain talent. By undertaking the study with Hewitt, NASSCOM as an apex body, has taken a step to establish a benchmark for Indian IT and ITES companies to follow, based on benefits, people practices and rewards and recognition systems."

Some of the key highlights are,

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Compensation:



1. 91 per cent IT and 97 per cent ITES companies have a stated philosophy of benchmarking compensation against the market; 48 per cent companies position their compensation above the market median.



2. IT and ITES industry companies have a very high cash orientation compared to other traditional industries, with a Cash to Benefits ratio of 75:25.



3. Bangalore is the most expensive in terms of compensation for IT–17 per cent higher than the national average.



4. An 18 percentage point increase was reported in variable pay plans in the industry, when compared with last year.



5. Performance-based increases in the IT industry rose by 23 percentage points when compared with last year.



6. A jump in the average salary increases from 12.2 per cent in 2002 to 15.4 per cent in 2003 in the ITES companies and from 12.9 per cent to 14.5 per cent in the IT companies for the Professional/Supervisor/Technical Level (i.e. Junior Management). The ITES and IT companies are currently in a high-growth phase, and this supports the high salary increases.



7. Cash based components (base salary, cash emoluments and variable pay) have gone up from last year, whereas Benefits (loans, conveyance and housing) have gone down. More and more companies are now using a higher proportion of their total employee budget towards variable pay to drive business results.





Benefits:



Organizations in both the IT and ITES industry are consolidating benefits, with a greater focus on employee attraction and retention.





Company Cars:

An 18-20 percentage point reduction was reported in company car programs in the IT and ITES industry, as more companies moved towards cash-based programs.





Loan Programmes:

A 5 to 15 percentage point decrease was reported in the various loan schemes (housing, vehicle, and other loans) from last year.
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Stock Options:

Stock options are losing their charm in the IT and ITES industry. A 10 percentage point drop was reported in the prevalence of stock option programs between 2002 and 2003.

Non-Statutory Retirement Benefits:

There was a 5 to 10 percentage point decrease in the number of companies offering non-statutory retirement benefits, such as superannuation programs.



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People Practices:

Recruitmen

t: A, 7 to 14 percentage point reduction was reported in the allocated budget for recruitment, hiring, and orientation from 2002 to 2003.

Trainin

g: Training hours in the IT industry decreased by 13 per cent, whereas the ITES industry reported a 4.3 per cent increase in training hours over last year.

Career Path

s: ITES organizations are focusing on more long-term orientation for employees. A 14 percentage point increase was reported in the number of organizations offering employees a formalized career path.

Workforc

e: 41 per cent of the IT companies saw a significant workforce reduction (affecting 5 per cent or more employees). This figure for the ITES industry stood at 11.5 per cent.

Rewards and Recognitio

n: There has been a 4 percentage point increase in the number of organizations offering special recognition awards to their employees, with 95 per cent of the ITES companies having these awards in place. These awards are given in the form of formal communication or parties, cash and company merchandise.

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