More to IT jobs than money, MNC tags

But a tight skills market and rising wage costs are a reality

Indian IT firms agree that staff costs will increase a bit over the next year to 18 months. But the premise that competition for recruits will be driven from multinational firms mainly on the basis of better pay offered by such firms has shaky foundations, senior executives in Indian firms said.

A combination of factors will be in play in a company's ability to retain a talented recruit and pay is not necessarily on the top of that list, they said. This is true even for mid-size IT firms, said Jayesh Chakravarthy, vice president and head of marketing at MindTree Consulting, one such firm here.

"Pay hikes in the Indian IT industry," Chakravarthy said, "are indicative of buoyancy in the market, with robust demand. This makes resources dearer, and at this point in time demand exceeds supply." But this doesn't mean tougher times for Indian firms such as MindTree, he said.

"Such a scenario (tougher times) is unlikely. Studies show that software executives value aspects such as working on cutting edge technology, work culture, work life balance, employability, as much as they value compensation. Multinationals will not attract talent merely by paying more. Even if this happens the advantage will be transitory," he said.

Last month, Azim Premji, chairman of Wipro Limited, whose main business Wipro Technologies is the third largest IT services exporter in the country, said the larger Indian firms were hitting back. Premji told reporters at the firm's first quarter earnings meet, "We are hiring back more recruits than they (the MNCs) are poaching from us."

He said there will be "campus wage inflation within moderation," at between 7 per cent and 8 per cent" and lateral moves could cost firms like Wipro between 12 per cent and 14 per cent. But "the two main MNCs who are hiring, have realised that hiring at silly rates is not viable. We are glad they are closer now to what we think is the market value of the recruits."

Premji also echoed Chakravarthy's view that there is more to an IT job than an MNC tag and better pay: At the earnings meet, he said, "Our global delivery model is the backend for them (the MNCs). For the Indian firms the offshored outsourcing business is the front end," hinting that staff would prefer to be respected for leading a business than be relegated to a business necessity.

Increasingly, American customers are looking for vendors to take charge of parts of their business processes, which is where Indian IT firms will compete for experienced recruits.

A former employee of Infosys who runs her own successful consultancy helping mid-size US and European firms find outsourcing partners in India had this to say: "With the demand for IT services looking up, the task of attracting and retaining employees is becoming tougher. Yes, it is compounded because of the influx of MNCs and their strengthening and expanding of operations."

Also, there are many smaller product companies moving to India, and typically they hire people from larger companies to head their delivery. So, companies have had to realign salaries to ensure that they do not lose good people, she said.

"Pay hikes in the Indian IT industry are indicative of bouyancy in the market, with robust demand. This makes resources dearer, and at this point in time demand exceeds supply."

Software executives value working on cutting edge technology, work culture, work life balance, (future) employability, as much as they value compensation.

"We are hiring back more recruits than they (the MNCs) are poaching from us:" Premji.

"With the demand for IT services looking up, the task of attracting and retaining employees is becoming tougher. It is compounded because of the influx of MNCs and their strengthening and expanding of operations:" IT consultancy.

Smaller product companies moving to India typically hire people from larger companies to head their delivery. So, companies have had to realign salaries to ensure that they do not lose good people.