IT sector: CEO pay surges 160%, freshers see 4% growth
The pay of Chief Executives at India's top five IT firms has surged by a whopping 160% in the last five years, data analyzed by Moneycontrol revealed. This surge stands in stark contrast to the 4% hike witnessed by entry-level employees in the same period. The companies analyzed were TCS, Infosys, HCL Technologies, Wipro, and Tech Mahindra.
Disparity in pay scales
The median annual remuneration of the top five Indian IT CEOs jumped 160% to nearly ₹84 crore in FY24. Meanwhile, the median salary package for freshers witnessed a paltry 4% increase, from ₹3.6 lakh to ₹4 lakh in five years. The disparity comes at a time when corporate profits haven't kept pace with wage growth in the last decade.
IT sector: A significant contributor to India's economy
The Indian IT services sector is a major private sector job creator and an important driver of consumption and investment. However, the sector witnessed a collective annual headcount reduction for the first time in at least two decades, losing nearly 64,000 jobs in FY24. This came as companies turned their attention toward improving utilization rates and expanding margins in the face of macroeconomic challenges.
CEO-fresher pay ratio highlights income disparity
The pay ratio further emphasizes the income gap between CEOs and freshers. For Wipro, the number is 1,702; for Tech Mahindra, it's 1,383; HCL Technologies's ratio stands at 707; Infosys's number is 677; and TCS reports the lowest at 192.
Industry experts weigh in on wage disparity
Gaurav Parab, a Principal Research Analyst at consulting firm NelsonHall, blamed the wage gap on the pyramid model that depends on a large pool of freshers. He said, "Entry-level talent requires significant investments in training, which drives low compensation costs." Parab further added that CEO salaries are in line with global CXO benchmarks as companies try to stay competitive in a global market.
Industry strategies to manage wage discontent
Echoing Parab's sentiments, Kamal Karanth, the Co-founder of Xpheno, said that the industry's cost advantage relies on controlling salaries of freshers due to high attrition rates and extensive training. To quell discontent, firms have offered accelerated career streams and onsite opportunities. However, these measures have hardly bridged the wage gap between CEOs and freshers here.
IT sector salary hikes impacted by global uncertainties
The IT sector witnessed salary hikes in 2021 and 2022 due to a spike in demand for tech talent, Kapil Joshi, the CEO of Quess IT Staffing, said. However, he claimed that global economic uncertainties in 2023 have resulted in a slowdown in these hikes.
