[anumod]

With first hands experience from the Industry, in 2005 , a college fresher was hired to the one of the top paying company with a CTC of 7 lakhs and 58 thousand. The same company is giving a fresher an offer of 41 lakhs now .. That is almost a 600% increment in the last 15 years .. Which is higher than stock market indices .. I am agreeing to the forum sentiment here. This is not a sustainable growth. And this growth has peaked in the last 5 years. Before that it was linear. In the last 5 years, after the startup boom, this craze has gone up.

[C300]

Originally Posted by VaibhavShatna95

The only point I raised was against the negativity being pushed against all Indian IT firms like how they were evil incarnated and used cheap labour rates. People like to portray new age product based companies as a messiah for us oppressed Indians.

The negativity around our IT services is usually ignorance and lack of understanding of the sector. The breadth and depth of our service offerings is unmatched. Add to that the wealth/jobs creation over the years. Most of the companies are cash rich with minimal debt and healthy OPM.
On this same forum we were writing Obituaries of IT companies citing Fintech, Agile and so on. That turned out to be a false alarm.

[Foxbat]

Originally Posted by Samurai

Now freshers from Bangalore engineering colleges (not IIT/NIT) are being offered 40L to work in Bangalore.

At first I thought it is US salary. Then I was told these companies have branches in Bangalore and this is where they will work.

When I was in campus in IIT more than a decade ago and then at a Top B-School in India I used to hear these CTCs as was like

But you have to take these numbers with a mountain of salt.
Typically 40L CTC = 15L fixed, 4L annual bonus, 18L Equity Shares(spread over 4 years) + 3L Benefits (free food, cab, Insurance etc.).

So actually they are earning about 23-24L a year. My current team has people with 2-3 years experience who earn in the similar range with a similar salary breakup.
When I was doing my MBA Amazon, Microsoft and Google used to come on campus and quote these unbelievable CTCs, they all used to quote 4 years of Equity Shares
in 1 years CTC since they were allotted in the 1st year of employment but could only be sold over 4 years.

[alphahere]

I am an erstwhile Indian IT employee with about 10 years of experience currently. I knew what I was being paid that time when I was in India, I knew what I was worth because I happened to have information on what my employer was charging their client for my services. The difference was nothing short of mind bending. Of course they need to do this to even out the drain from senior officers who are so called leaders and are not billed to the client. But personally do I have to care about this aspect of the organisation if I have a choice? The below is what followed.

There was a huge crowd of people fighting for visas and I was one of the lucky few who managed to bag one. For reasons of my own I decided to leave this employer and I decided to fly my way out of the country to work for myself because I wanted to realise the actual worth of my knowledge. This is similar to the risk that anyone takes when they set up a business. Since my actions to move to the IT sector abroad were based on solid figures, I can happily say that I have been successful in achieving my goals so far.

Of course the regulatory documentation needed was a different ball game altogether without having a local employer to support and it was a carefully calculated approach from my side, which everyone may not be able to swallow. I have not taken any illegal path to glory. It was just hard work to find a 'client' across the 7 seas who was in need of a person with my skillset and get them to sign me up as an employee giving assurance to them that they would see me in their office the very next day if they paid me what I asked for and also provide a rubber stamp for the permit documents. I had the honour to work on their premises as their employee alongside contractors deployed by a well respected Indian MNC. I could see the pressure that was being applied by the management of that company on their employees just to get a word of appreciation from the client.

Now I am not with that employer anymore but was invited to work for the same IT MNC who was present with the above client for their office outside India and I can happily confirm that the salaries and benefits that they were willing to pay are way above what anyone can dream to make for the same position in India. In fact it is also way higher than the salaries and benefits offered to Indian employees who are asked to fly abroad to work for the client (called 'onsite' in Indian IT jargon). The only caveat to arrive at this position would be that the employer should be the party who is in need of the employee; not the other way round. Also the 'pressure' scenario that I described above seems to apply only to employees of India Inc. for some strange reason. Aren't we all human beings, India or abroad?

Looking backwards it really makes so much sense to employers why India is considered as an IT assembly line, the costs are so low to keep this up and running. People are ever so ready to sacrifice anything to please their managers/clients. The motive could be 'onsite' or promotion or better appraisal outcome all of which translate to more money in hand. But unfortunately since the population is so high, there may be limitations to what can be achieved vs what is actually possible if the IT game is played right. At this point in life I am glad that I am out of that Indian IT Industry vs 'Onsite aspiration' nexus. Life is so much more peaceful on the other side.

[NetfreakBombay]

Originally Posted by Foxbat

they all used to quote 4 years of Equity Shares
in 1 years CTC

+1

This is a dobule-endged sword. As you mentioned take-home is pretty good but not as eye-popping.

However, actual earnings have been more then what were quoted in Campus.

1. US has appreciated over last 7 - 8 years
2. Stock prices of all tech companies have skyrockated

So, if stock portion of CTC was quoted as 15 lakh in 2015, that person would have made significantly more than 15 lakh by now.

[Jaguar]

Originally Posted by alphahere

Also the 'pressure' scenario that I described above seems to apply only to employees of India Inc. for some strange reason. Aren't we all human beings, India or abroad?

Life is so much more peaceful on the other side.

Many from our culture don't realize their worth and don't have the guts to put their foot down when the person on the other side is a foreigner, even if that person is a junior who's much lower down the ladder than them. And I am talking about MNCs with offices in India and abroad, where both the people are working for the same company, not a client-service provider scenario. Maybe be this can be attributed to our nature and colonial underpinnings of appeasing the white guy.

If you can set the right expectations and know your stuff, life can be peaceful here as well. But there will always be some Indians, on either side, trying their best to ruin the peace.

[alphahere]

Originally Posted by Jaguar

Maybe be this can be attributed to our nature and colonial underpinnings of appeasing the white guy.

Unfortunately, it always seems to be our own breed that makes life difficult for one another, not really the foreigner. At least in my experience. Our guys are expected to work long hours by our own guys and to over-deliver if they want to keep their 'onsite' position, else there is always the sword of returning to homeland hanging over their heads. Personal or selfish motives may be the driver of this kind of behaviour. The foreigners don't really understand the emotion behind onsite vs. offshore.

Are our guys who work 'onsite' even stopping a moment to think what they are earning compared to their foreign peers? Probably not, because all they are focussed on is the need to survive 'onsite' because if that focus is lost for a moment, there will be another person ever ready to snatch it from him.

Here is a perspective for a IT employee. All these figures are approximations and will vary slightly upwards/downwards depending on other factors but give a general idea of the situation:

Case 1
Indian Salary - 18,00,000 INR (24,000 USD)
Rate charged per hr by employer to client - 3,750 INR (50 USD)
Total charged for a yr assuming 2000 hrs a year - 75,00,000 INR (100,000 USD)
Profit to employer - 57,00,000 INR (76,000 USD)

Case 2
Onsite Salary - 60,00,000 INR (80,000 USD)
Rate charged per hr by employer to client - 7,500 INR (100 USD)
Total charged for a yr assuming 2000 hrs a year - 1,50,00,000 INR (200,000 USD)
Profit to employer - 90,00,000 INR (120,000 USD)

Case 3
Foreign Salary - 1,05,00,000 INR (140,000 USD)
Rate charged per hr by employer to client - 7,500 INR (100 USD)
Total charged for a yr assuming 2000 hrs a year - 1,50,00,000 INR (200,000 USD)
Profit to employer - 45,00,000 INR (60,000 USD)

Case 1 may be lucrative to the client because they are getting 2 individuals for the price of one. So more people can be placed by the Indian employer effectively doubling their profit.

Case 2 may be ideal for the employer but from the client's perspective since they are paying the local rates, the number of available spaces tend to be limited, which is probably the reason for the fight for onsite opportunities.

Case 3 is least profitable for all the mega parties but most profitable for an employee, which is what all of us should be aiming for if the passion is to work IT. Extrapolate these figures on a global basis and it's easy to see why most of the population and so called leadership are working out of India with only a few so called lucky people managing to secure overseas assignments

[dragonfire]

Interesting how a "how are they being paid so much" is now looking like "they are not being paid their worth".

It's a free market guys. People who want high pay hop more, haggle more and squeeze the last rupee out of the opportunity they get. And then there are the others who play safe, stick to a job, get paid less and be content with the life they are living. There is enough space for both the types.

I have a friend in IT who stuck to the same job for 2 decades, never got a promotion, and spends every rupee he earns. I haven't seen a person happier than him.

[Samurai]

Originally Posted by alphahere

[b]Profit to employer - 57,00,000 INR (76,000 USD)
Profit to employer - 90,00,000 INR (120,000 USD)
Profit to employer - 45,00,000 INR (60,000 USD)

Ok, so these are all zero cost employers. What about those with costs?

I don't really know the cost structure of body-shopping employers. However, don't they have costs associated with bench-strength, marketing, sales, administration, training, rent, recruiting, compliance, accounting, auditing, etc?

[sunilch]

Originally Posted by alphahere

Are our guys who work 'onsite' even stopping a moment to think what they are earning compared to their foreign peers? Probably not, because all they are focussed on is the need to survive 'onsite' because if that focus is lost for a moment, there will be another person ever ready to snatch it from him.

Hehe, this is true to a large extent. Simply because:

1) There are many dying to go 'on-site'
2) They believe they are in 'Heaven' compared to India because they are 'Abroad'. For a few understand this fallacy and are not swayed by this 'Abroad'. For the rest, it is what Yash Chopra and Yash Johar sold them.
3) The onsite is way better than any life they could have, had they not been in this IT role. For the last 10 years or so, most of the hiring at large IT Service companies is for grads from non Comp Sci fields or form low ranked colleges. The alternative fields/companies/projects for them are not that lucrative in terms of money and prestige.

Hence this fear and narrow focus. To each his own

[One]

Originally Posted by alphahere

Profit to employer - 57,00,000 INR (76,000 USD)

Profit to employer - 90,00,000 INR (120,000 USD)
Profit to employer - 45,00,000 INR (60,000 USD)

You may not want to use the term "Profit" in the message because it is Financially and technically incorrect. And the larger message of your post gets lost because of that. The actual margins of IT service companies are much much lower and their Annual Reports can be looked at to get a range of the actual margin.

This is a cut throat industry just like most services industries - just not the level of Auto Industry but extremely competitive nevertheless.

[hdus001]

Originally Posted by One

The actual margins of IT service companies are much much lower

Yes indeed. I worked for a service provider few years back. They were a "premium" service provider, charging clients on an avg AU$1500+ per day for their consultants. There was a high level of transparency, and I remember a resource manager mentioning that even at these rates, margins were so thin that out of the approx 20 chargeable days in a month for a consultant, money earned from 18 of those days just go towards meeting operating costs of the company. So basically, if a person on leave for more than 2 days a month, they actually end up costing the company.

That company had very generous employee policies so that would have been why their costs were high. However, many other service providers at the time (incl TCS/Wipro etc) on an average charges well less than half that rate for onsite resources, so I'd imagine margins would be really tight.

[hserus]

Originally Posted by VaibhavShatna95

They have helped in setting up the IT framework and laws like Kris Gopalakrishnan or Nandan Nilekani. For whatever good or bad the frameworks do seem to be working since we have developed in this industry so much. You could hold counter views and I am free to hold mine

And yet they are also responsible for that horrible mess called the current income tax portal. Nilekani in particular has branded himself as an expert on everything from security to blockchain now - with mixed results for India let us say.

Sikka might have brought a breath of something modern to the company but .. no, the old clique reasserted itself and continue to run things.

[ralto]

Originally Posted by alphahere

Case 1
Indian Salary - 18,00,000 INR (24,000 USD)
Rate charged per hr by employer to client - 3,750 INR (50 USD)
Total charged for a yr assuming 2000 hrs a year - 75,00,000 INR (100,000 USD)
Profit to employer - 57,00,000 INR (76,000 USD)

Case 2
Onsite Salary - 60,00,000 INR (80,000 USD)
Rate charged per hr by employer to client - 7,500 INR (100 USD)
Total charged for a yr assuming 2000 hrs a year - 1,50,00,000 INR (200,000 USD)
Profit to employer - 90,00,000 INR (120,000 USD)

Case 3
Foreign Salary - 1,05,00,000 INR (140,000 USD)
Rate charged per hr by employer to client - 7,500 INR (100 USD)
Total charged for a yr assuming 2000 hrs a year - 1,50,00,000 INR (200,000 USD)
Profit to employer - 45,00,000 INR (60,000 USD)

Hi Sir,
Unfortunately, this is not how it works.
1. There is never 100% productivity, which means you are not able to charge every possible hour.
2. There are a number of costs (direct and indirect) which, depending upon client/project/company, may be borne by the employer, not the client.
3. On an average employees stick to a company for 2 years, neither they are work-ready on day 1, neither can a project be availed to them as soon as they join. Similarly while leaving, there is a whole lot of time wasted.

I have barely summarised the top factors, but believe me, there are much more factors that come into play.

On a slightly different note, also not sure how true it might be for various scales/sizes of companies but as much as I have seen, the billable hours/costs have remained the same for the clients whereas the salary expense has significantly increased. I just hope this is not a disaster in making. Remember, lot many countries have jumped in and are capable of offering similar (or even better) services at even more competitive prices.

[NetfreakBombay]

Originally Posted by ralto

I have barely summarised the top factors, but believe me, there are much more factors that come into play.

Yes, average cost of "overheads" itself is around 12k USD per year. This would be things like IT Cost, Facilities Cost, Entertainment + Team Building cost + HR Cost + Non Billable Management , Sales, Client relationship Cost and so on.

Operating margin of companies is around 25 - 30%.

https://www.bloombergquint.com/quart...s-sequentially