The Economic Times
As he winds up a chat session with friends at the local pub on the weekend, 24-year-old software professional Vijay Shankar emerges poorer by Rs 2,000 just this week. Youngsters like him have seen their careers and pay packets skyrocket in recent years and have amply fed the consumer-driven economic boom.
This year, however, they may just be going slow. Concerns over fall in demand in the world’s largest technology market, the US, have forced Indian outsourcing companies to save every cent possible, even if it means cutting variable pay to employees and hiring less robustly than before. Therefore, the consumer class represented by the two million outsourcing workers in the country say they are whittling down their expectations and spending plans accordingly.
Vijay Shankar (name changed) has seen his employer, TCS, reducing the variable component of his salary for a quarter, and smaller companies following suit. This has left him feeling his Rs 2,000 entertainment purse is perhaps too lavish. “I do not expect to continue spending such high amounts for long. The company just cut our variable pay by 1.5 percent and I expect that the salary structures are in for a change in the coming six to eight months. Even new job offers are not offering as much salary increases as there were two to three years ago,” he says.
The mood is reflective of what employees in the IT industry, the largest employer in the organised sector with about two million employees at last count, are feeling today. The note is one of caution, and depending on whether the situation improves or worsens, it could have implications on overall spending patterns.
“I was hoping for a raise this year. But there is no hope of that now. My salary may only be enough to take care of the kids’ day care expenses,” says an employee with one of the large Indian IT services firms. For now, indications are employees have not yet started scaling back on planned investments or cutting down on their spends. But very soon, if their companies become more careful with increments and promotions, they might.
“I’m going to wait and watch,” said one employee, whose company has become strict about expenses and is ‘cutting corners wherever possible.’ “Yes, at present my job is safe but there would be tremendous emphasis on performance and ratings,” he added.
Over the past few years, riding on high global demand for technology skills and companies fighting to retain trained talent, IT professionals have been buying bigger houses, investing in the stock market and in mutual funds, buying branded clothes, and eating out more frequently. Some of this may change in 2008 depending whether fat raises continue, how much easier it is to switch jobs and what kind of ‘salary jumps’ they can expect when they shift.
Madhu Bhojwani, COO of employment services firm EmmayHR, says although job opportunities will continue to be robust, ‘some amount of realism will set in candidate expectations’ and increments will not be as good as previous years.
Smaller expenses on nice-to-have things will be the first to be affected. Larger investment decisions that are more long-term in nature and have already been taken are not being scaled back. What is prompting caution among many employees are early signs that calls from consultants and head hunters seeking to recruit them elsewhere have come down marginally.
While most employees ET spoke to indicated there were still enough job opportunities outside the company, many agreed that the frequency of these calls had reduced. “Yes, my job is safe. But career opportunities outside are not as strong as it used to be,” said one employee with a Bangalore-based multinational services firm.
“Job hopping will reduce if the slowdown persists. And hikes may be lower,” said a 24-year-old fresher, mulling a change for higher monthly pay. “The 30-50 percent hikes seen earlier may not be there, so people may stay on in their current jobs,” he added.
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