The global economic slowdown will force companies in India to trim costs, say expertsMUMBAI: After getting high on a globalisation-induced salary bonanza, it’s time to sober down. The tremors of the US economic crisis are being felt in India as well and experts say they will affect salaries and the job market here. But while companies will be forced to trim pay raises, the experts say a no-increment-no-recruitment situation may not come about.The average rate of salary hike across sectors in 2008 was 14.8%, down from 20% some time ago, according to estimates by HR consultancy Hewitt India. That figure is likely to go down to 13.9% next year. But Sandeep Chaudhary, business leader (consulting), Hewitt India, soothes frayed nerves, saying the war for talent is not over and firms know they need to manage talent for the long term. “Contrary to expectations, there hasn’t been any dramatic move to downbeat macro-economic factors on compensation,” he says.The major difference, the experts say, will come about in the way salaries are packaged: the proportion of the variable pay component will increase. Judhajit Das, HR chief, ICICI Prudential Life Insurance, pegs the variable pay component at 20-25% of the net income this season. But others say this is an optimistic figure. “The fixed pay component will be kept low and emphasis will be on performance-based pay, especially in service-intensive sectors like insurance and IT, where employees have a direct link with the company’s profitability,” says K Sudarshan, global vice-president, marketing and communications, EMA Partners International — an executive search firm. So, from 90:10 some time ago, the fixed to variable ratio could become 60:40 or even 50:50 in sectors like insurance.A look at how jobs and increments are likely to be in different sectors:ITBPO: The ITBPO sector will be one of the first to be hit by the slowdown since some of them had US investment banks as key clients. After the collapse of these banks, salary hikes may slide to 8-12% in ITBPO companies from an average of 15% last year, says Ganesh Natarajan, chairman, National Association for Software and Services Companies (Nasscom). Recruitments may also come down. This year, firms like TCS, Patni, IBM and Satyam fired employees based on performance. Nevertheless, biggies like TCS and Infosys would still be recruiting about 30,000 and 25,000 people, respectively.
Overall, says Natarajan, the ITBPO sector would create about 2,00,000 jobs by the end of March 2009.Banking & finance: Pay raises in this sector would be in the range of 13-15%, says S Bhattacharya, HR head, Axis Bank. Hiring, experts say, would be in tandem with the expansion plans of firms. Subhro Bhaduri, executive vice-president (HR), Kotak Mahindra Bank, says over 650 MBAs would be hired by his firm this year since new branches would be opened. “From 196 branches, we would go up to 250 by the end of this fiscal. Hence the need for more people.”Insurance: Increments will average between 12% and 14% in this sector. Priya Gopalakrishnan, director (HR), ING Vysya Life Insurance, says: “The quantum of salary increment is determined by market forces in the talent market. The growth of the overall economy and specific industries will impact the demand side of the market forces.” Hiring would be based on the expansion plans of companies. B Anant, HR head, ICICI Lombard, says his company will increase its branches from 360 to 700 by the end of this fiscal. “We will recruit a minimum of 300 MBAs.”Retail: Though sectors like retail are not directly linked with the economic crisis, there is nervousness in the market, says Nihar Ranjan Ghosh, senior vice-president (HR), RPG Retail. “Last year our increments averaged 15%. This year they were 13%.” But, he says, about 4,000 people would be recruited this year to man the 300 stores the company has lined up.Real estate: The realty sector, which in the US is reeling under the sub-prime crisis, will be hit the hardest with firms lowering pay hikes to much below last year’s average of 15%. “The raises could be in the range of 8-10%,” says Sampath Shetty, vice-president (permanent staffing), TeamLease Services — a Bangalore-based staffing firm. He says the situation is unlikely to improve over the next three quarters.As for hiring, it is too early to comment as this depends on the number of contracts developers are likely to get, says an official from Jones Lang LaSalle Meghraj, a property consultancy. Recently, realty biggie DLF laid off over 300 employees owing to a shortage of funds, Shetty says. The bleak prospects in realty have led several people to move into infrastructure, where there are several long-term projects involving similar skill sets.
6 months ago