Why Salaries Are Increasing for Indian Tech Engineers

June 27, 2024 (4 weeks ago)


Imagine that you are an engineer. You have either just finished graduation or have worked with a software company for 1-2 years. Indian Tech Engineers

You are looking for a new job. So you appear for interviews for a few companies and a few of them even give you offers! Companies are giving you BMW bikes, a Mercedes car, and even gadgets like iPad Pro. Some are taking you all the way to Dubai to watch the T20 cricket world cup Now, come to think of it…

This is not wishful thinking but this is exactly what is happening in India’s tech industry right now Bharat Pe was giving BMW bikes as a joining bonus to some of its tech employees.

HCL announces that it it may give its top performers a Mercedes car This is all happening because there is a lot of competition for hiring in the Indian tech industry. Kunal Sen, a partner at a leading global executive search firm, told Rest of World, an online publication, that this situation is “unlike anything he’s ever seen before” Today, on many fronts, there is hyperactive hiring at all levels And all the companies are on a lookout for top talent. Interestingly, candidates understand the situation and so, a lot of them are looking for jobs TopHire, a recruitment marketplace, said “A year ago,

If we had about 1,000 candidates looking out actively for jobs on their platform every one or two weeks now that number would easily be 2,500 or even 3,000.” Candidates are simply taking advantage of this situation They use the offer of one company to negotiate with the second company and then, they take the offer of the second company to a third, for a better offer

This is why a lot of companies are being forced to give large increments to their employees in order to retain them in their own company. According to a survey, the average pay raise in other sectors in India is 9.4% the average pay raise in tech sector stands near 17%! In this video, we will discuss about 4 factors that is causing a high demand for tech talent in India .

How can you derive benefit from it and what are the challenges it is creating “…the highest package is of 2 crores 15 lakhs that has been offered by an international firm.” “There have been offers as high as 2 crore rupees per annum for IIT graduates.” “Sir your package has been increased from 15 lakhs to 1 crore and the company is giving you a brand new Audi as well!”

Skill Gap In The IT Industry

First, is that India might be producing a lot of tech professionals but many of them aren’t employable. It is very difficult for the companies to give them jobs .

According to the India Skills report 2021, only 48% of IT graduates were deemed employable. In contrast, 38% of computer science graduates were employable. The major reason for this is skill gaps. The tech industry is evolving rapidly but the skills of our graduates are not growing as swiftly For example, according to NASSCOM, the total demand for digital talent in 2021 specializing in technologies such as big data and AI is estimated to be around 800,000. But the supply of such people, according to NASSCOM, is merely 6,40,000 And there is one more thing to understand about this demand-supply gap .

This mismatch is not only because there aren’t enough tech workers in India It’s because there aren’ t enough high-quality tech workers.

Now because of this skills gap, candidates with the requisite skills are not easily replaceable This is why companies want to retain them at any cost and therefore during any salary negotiations, candidates hold the upper hand.

Vishal Gupta, the CEO of a technology solutions company, = says, “For the same role, there is a 30 percent to 50 percent salary increase over the last two years” Since the skills demanded in the tech industry are constantly changing, there are several sub fields of tech where this skill gap is further increasing Like- cloud computing, cyber security,AI and DevOps.

But unfortunately, our traditional colleges are unable to evolve as fast as our industries Becuase hiring professors and changing the syllabus takes time

Digitalization In The Indian Economy

The second factor is – digitization in the Indian economy. As echoed in the words of the chairman of Wipro, Technology will play a very important role in economic recovery due to COVID According to a recent McKinsey Global Survey of executives, their companies have accelerated the share of digital or digitally enabled products in their portfolios by more than 10 years. In the Asia Pacific Region, the products/services that have been digitalised in a company have increased in value from 33% to 54%. Moreover, the demand for tech talent has increased not only at tech firms Even non-tech firms are looking for tech workers because they too want to adopt digital products So you maybe manufacturing biscuits, but even you need a lot more tech employees to accelerate your digitization .

According to Siva Prasad Nanduri, an executive at an IT company, In fact, technology hiring by non-tech firms is up 17%-18% since COVID times And if we talk about tech firms, hiring has increased by 55% within an year There are two factors left to talk about. After that, we will talk about the challenges, that, in my opinion, are very important for this video. So keep watching!

Booming Start-up Ecosystem

The third factor is that the start up ecosystem in India is booming. Indian start-ups raised around $40 billion in 2021, which has risen three folds compared to 2020. Equipped with VC money, these start ups can afford to pay more money for talent Several start ups are offering packages of almost 1 crore per annum to full stack developers as young as 25-26 years old .

When compared to the industry average, packages amount to 15-30 LPA Sanket, co-founder of a tech company called InVideo says- Broadly, everyone is very confident about the Indian market. Which is why VC money is flowing in India. But to speed up from X to 5X, you need engineers.

Demand Form Foreign Companies

Several companies are getting funded together, and they are competing with one another to hire talent. This is when the supply of talent is still limited. The fourth and final factor is that the demand for Indian talent has increased not only in Indian companies but also in foreign companies that don’t even have their offices in India Companies from abroad are setting up large campuses in India to serve their clients around the world or serve their head offices They come to India largely for 3 reasons; Low Cost of labour, English speaking Professionals and high tech skills.

Kamal Karanth, founder of an HR firm in Bengaluru, says that these companies come to India to buy talent. He adds that they are willing to pay as much as a 30 percent salary premium to attract talent and that heats up the market. For example; o9 Solutions India, a supply chain management software maker headquartered in Dallas has more than doubled its employee count in its Bengaluru office since July 2021.

These companies do not serve the Indian markets; they serve other markets Even in those markets, the speed of digitization has picked pace and so they are setting up offices in India in order to attract our talent Also, since remote working has become common due to the pandemic and so many companies don’t even have the need to set up an office The talent acquisition director at a Bengaluru-based start up provided certain examples Coinbase, a cryptocompany is hiring remotely and they are offering a premium salary .

An engineer with five years of experience can get Rs 70 LPA packages and that is still cheaper than tech salaries in the US.


All that I said is sounding very positive both for the Indian economy as well as for Indian talent But it comes with its own challenges and it is very essential for us to understand and this, in my opinion, is the most important segment of the video First- Due to salary inflation, a lot of smaller firms with less funding are finding it difficult to hire talent.

For example, Sarvesh, a founder of a 10-person startup, says- Things are very, very weird. Those from tier-one colleges get hired by the corporates like Amazon, Google, or Microsoft, as they offer a brand name as well as a good salary And the rest of the talent draws to other well-funded startups

Hence, he is forced to go into tier-two colleges for hiring due to which his hiring cost increases. He says-With tier-one colleges, out of every three or four candidates interviewed, you can expect to select one due to the quality, but with tier-two colleges, that is closer to one out of every five or 10.

Now a lot of you would think Maybe this is okay – survival of the fittest Basically, the startups that perform well and attract funding will be able to hire the best talent and those without funding will be unable to do so. What is wrong in that? This theory holds correct only when the funding being allocated to the start ups is done fairly If it is not fair, the small startups with great ideas will never be able to hire the best talent.

The second challenge is- the news headlines that we read about (the Mercedes or the iPad pro) are probably only being given to a few students Maybe the lives of the average students of these colleges have not changed much Kunal Singh, a PhD student at MIT and an IIT-Kharagpur Graduate had written a news article in 2014 that I think is still very relevant. He spoke about how many news outlets reported about the salary of IIT Kharagpur graduates in such a way as if all the students were doing well. Some articles claimed that more than 1000 students had secured placements. But he says that the reality is that while more than 1000 were placed,

Nearly the same amount were not placed. But the news does not report about those students! The IIT themselves are culpable. They only talk about the packages of the top students What about the average packages? Kunal Singh said that the average package of a student can be nearly one-fourth of the starting package that some IITs report Is the average package is increasing? We have no idea about that.

We only focused on comparing the top packages. Kunal also adds that such news reports that focus only on the top students can often increase the pressure on other students – because their families think that everyone at IIT is getting such good packages and Mercedes cars

Then why not their son or daughter? Third: Start-ups are able to offer such good packages because they have the funding right now But experts worry whether we are in a bubble and when these funding are cut down, the salary packages be cut down as well. India’s startup ecosystem went through a similar phase In 2014-15, there was a big boom But in 2016-17, packages were slashed with companies shutting down their offices So, maybe, history will repeat itself But many founders and recruiters do not believe that Varun Khona, Co-founder and CEO of a start up says that- That period is not comparable.

Because there is a massive difference in pre and post-Jio period He believes that the tech talent demand in the market will continue to grow and the companies will continue to hire. Moreover, founders believe that even if vc funding dries up from India, where would it get diverted to? Not China because Investing in China isn’t as easy India is a very good place for investment, as compared to the rest of the emerging markets So, maybe this will be a win win for both tech talent as well as the companies

But along with the news of Mercedes and BMW, we also need to focus on those students which did not acquire top packages; but their stories are equally important So, guys, hope you liked the video. See you next time!

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