Xpheno reposted this
The debate over how much #freshers should be paid compared to #CEOs is never-ending. Should we look at the supply-demand imbalance than just pointing to the inequality that is making headlines? "My maid is making more than these #freshersalaries." "I pay my driver higher than these." "IT companies are giving single-digit hikes to their employees, whereas they are hiring CEOs at huge salaries from the market!" If you turn to Enterprises, the concern is about high churn at entry level across industries. BFSI, Pharma, IT, Hospitality, and Retail have an average of 30% plus attrition at the entry-level. Freshers not being sure which Brand/Role/Industry or pay is right for them in the first three years is also causing this churn. Would higher entry-level pay reduce this churn? The GCCs, where entry-level salaries are higher than other industries, tell a different story. - On an entry-level talent base of 60,000 over the last 12 months, 24,000 made job switches -Their entry-level churn is at 38%, suggesting that lower pay may not be the criteria for this attrition. -The top 120 GCCs in India have an average churn of 12%, But if you look at just numbers, 1,60,000 professionals made a job switch last year. Is the nature of the job also causing the churn? In the non-tech sector, most job openings are for Sales and customer support. A high-pressure job that the entry-level graduates haven't been prepared for? Let us shift our focus to entry-level talent supply. As per AISHE's 2022 report (All India Survey on Higher Education) - There were about 1.07 crore passouts in 2022 against 95.4 Lacs in 2021 -Bachelor of Arts(24 Lacs), Bachelor of Science (12.5 Lacs), Bachelor of Commerce (11 Lacs) and Bachelor of Engineering (8.47 Lacs), BBA (2 Lacs) -At a postgraduate level, MA(7 Lacs+), MSc (3.6 Lacs), MBA (2.3 Lacs) & MCom(1.9 Lacs) The active demand for entry-level jobs currently is about 55,000. If you take the MBA context out of the 2.3 lacs who passed out this year, only 9000 entry-level job openings are listed for #MBAs. We all know there could be a spillover from last year when entry-level hirings were equally lower. Will the oversupply of talent at the bottom of the tech pyramid and rising enterprise training costs to prepare them for the job continue to keep compensation packages stagnant or record minor movements, if any? With an overflowing supply of not-so-job-ready talent, should enterprises burden themselves with a higher entry-level pay package just because the fresher salaries have remained stagnant or because the organisations' median salaries need to be at a relatively healthier than CEO Compensation? Supply_Demand mismatch?
Very informative! We know that Infosys, Wipro, TCS, etc. CEOs' salary increased 1,500% while freshers' salary was up only 50% in the last 10 years. 35% IITians unplaced. And median campus offer at RVCE is 22 lacs , up from 19 lacs last year. What's happening here? I am not talking about the bottom rung colleges here, of which there are 2000 BTech students , even after 2 years of being offered, still waiting for joining dates from Tata Consultancy Services ! GCCs seeing 38% churn at the bottom of the pyramid is shocking and shameful at the same time. As you rightly said Kamal Karanth , the quality of work and nature of work demands may be pizzling them. MCA since 2014, as ritual asks for CEO salary vs Median staff salary ratios but can't do anything when Wipro ex CEO's salary vs Wipro staff's median pay gap was 1700%. He worked from France...Not all Wipro staff work from France. Wipro's Median salary is Rs. 8.9 Lacs. How encouraging does this number sound? In Total Rewards, the first principle says: Compensation is a matter of capacity and willingness to pay! CEOs are global roles whole 99.9% roles are local Would be interesting to have comments from Total Rewards experts from Unity Willis Towers Watson Mercer Mercer India
Guess everyone feels that they are entitled! Thank you for bringing up this multifaceted issue Kamal Karanth. The supply-demand imbalance indeed plays a significant role in determining entry-level salaries. However, it's essential to consider other factors such as job readiness, the nature of the job, and employee expectations.
A demographic dividend can quickly become our demographic debacle. If we want our economy to grow at 8% yoy, the only way out is for more entrepreneurship and jobs in tier 2/3/4 cities - and not just tech jobs alone!
Good analysis Kamal. Highly informative and good learning to me as well 👍
Great insights Kamal Karanth ! The entry level pay is perpetual debate I believe the salaries are function of supply vs demand, if there is more demand than supply, its bound to increase. If you remember the times of 2021, the demand was so high, the enginers in 2-5 yrs bracket were able to negotiate the salaries 2-3x of current pay. Outside India majority of freshers are able to find the jobs fairly easy, provided they have skills. If we are churning out over 1 cr of undergrads every year, there has to be a differentiator in terms of skills in the candidate, so as to withstand the competition. Since the skills are not meeting corp standard, the comapnies are spending 3-6 months in training these freshly minted engineers. Shouldn’t the onus be on the colleges and universities to upgrade the syllabus. There are very few universities, who have tweaked their curriculum, which actually is moving with changing times. Time for rethinking the curriculum and imparting skills. While being all this true, time for companies and industry bodies, to think of, and align on bare minimum wage for some of the common roles, as in metro cities the starting salaries would not be enough for basic standard of living.
Perhaps the focus should shift to developing more specialized skills during education to increase their value proposition. Additionally, we could explore alternative compensation models, such as performance-based bonuses or skill development programs, to address both retention and fairness concerns.
Useful info, Kamal
Founder and CEO | Workforce Management, HR Solutions
2moOversupply of Talents which is getting churned every year will always be an issue in India as the number of job openings to absorb the lot will be far far less. GDP growth percentage may be respectable in our country but Per capita income will always be less ( hovering around 3000$) and can only improve when employment increases substantially. It is unfortunately a vicious cycle. Also in India the salary of the CEO should be relooked and also their percentage rise of compensation year on year. Entry level salary is absolutely low and needs to be increased. But as long as the supply of talent is much more than the demand the entry level talents have to compromise. Solution - more startups, more growth across all industries , thinking of new fields of business, commerce, attracting national and multinational companies with good investment and serious intent from the government to boost this space. Focus - how to substantially increase the net employment index year on year. Lastly there has to be serious initiative to curb the corruption and kickback culture in our country. It is our responsibility to say no and also the government should mean it to eradicate. Sorry to say it's a terminal disease which we are carrying.