A post on X (Twitter) on Cognizant’s entry-level salary went viral on Tuesday. While it was for non-IT jobs, the post opened a Pandora’s box on how the salary offered by large IT service companies to engineers fresh out of college has not seen a big increase in the last decade. On the contrary Global Capability Centres (GCCs) and product companies offer a good package to freshers and thus woo many of them from the colleges.
The post said, “Cognizant has announced an exciting off-campus mass hiring drive, welcoming applications from candidates belonging to the 2024 batch. Application deadline - August 14. Package - ₹2.52 LPA (lakhs per annum).”
The tweet created an uproar. Responding to the post, a person reacted, “technology companies hiring is a good sign, while taking the recent layoffs into context. But ₹2.52 LPA is seriously concerning. Ten years ago, the average package was around ₹3 LPA. Instead of the emoluments growing, we have lower payouts now.”
However, sources said the job posting was for entry-level trainees or college freshers with three-year graduate degrees and not for engineers.
The post stirred a debate on the low package offered by the bulk recruiters - the top software companies - for fresh engineers. The package for college freshers is ₹3.5 lakh to ₹5 lakh while a decade ago it was ₹2 lakh to ₹2.4 lakh, said Aditya Narayan Mishra, MD & CEO, CIEL HR, a recruitment company. These are for large services companies. These salaries are significantly lower than what IT product companies, GCCs and tech teams of startups pay because the skill requirements are different, he told businessline.
In comparison, GCCs are paying higher salaries at ₹8 lakh to ₹12 lakh. There are some scenarios where they pay as high as ₹30 lakh, he added.
It is a pure demand and supply issue because there is talent available at scale. However, in 3 to 5 years, they climb the salary lattice quite quickly. If they quit and join another company, in three years, they earn ₹8 lakh to ₹10 lakh, an official of an IT company said.
MS Prasadh, Head of Workforce Research, Xpheno, a specialist staffing company, says salary level at the bottom of the engineering talent pyramid continues to be impacted by two factors - oversupply of talent and employability of the pool. The employers’ narrative of ‘employability challenges’ with freshers has been strong and unchallenged for decades now. With no major sweeping changes in academic interventions, the employability narrative remains the achilles heel of freshers, which puts a vast majority of them at a disadvantage.
The per capita spend to make freshers job-ready has remained high with enterprises budgeting for 6 to 9 months before they become billable. Employers, hence, split their costs on freshers into two buckets as compensation costs and training costs. As training costs continue to grow year-on-year and are not entirely in the enterprises’ control, what’s fully controllable is the compensation cost of freshers.
The oversupply of talent at this layer and the rising enterprise training costs on this layer will keep their compensation packages low. Uncertain macroeconomic climate, as witnessed since 2023, will further give a sufficient backdrop for enterprises to pitch their offers low this season, he said.
The IT sector collective of services, products, startups and tech in non-tech had a net headcount growth of 150,000 last year while the GCCs registered a net headcount growth of 60,000 and replacement hiring of 250,000 during the last year, he said.
A placement officer of a larger engineering college said in the history of software and support services industry, the advantage India had was cost and time (12-hour difference) as 100 per cent of the service was for companies located in the US. Hence, the job roles positioned in those services have not seen significant growth.