02 April,2009 08:53 AM IST | | Kaumudi Gurjar
Frozen salaries and postponed appraisals cycle are some of the many issues that city-based techies u2014 the worst hit by the global meltdown are facing these days
Pune may be the hub when it comes to outsourcing, but the new buzzwords here are frozen salaries, postponed appraisals and thinner variable salary components. Forget salary hikes, most companies here areu00a0 forced to cut employees' salaries to stay afloat.
The companies involved in outsourcing are dependent on firms abroad for contracts. The recession has reduced demand for their services and they are unable to generate sufficient income. A senior techie working with a blue-chip company said, "The variable component of our monthly salary combines organisational performance and individual performance. Due to the downturn, the organisational performance is largely affected. So, it has put a damper on the variable pay components."
Zinnov Management Consulting, a Bangalore-based firm, recently carried out a survey that analysed the compensation trends of 30 product development companies in Bangalore, Pune and Chennai. Sahana Shetty, senior consultant at Zinnov, said, "Fifteen per cent of product development companies have postponed their merit increase cycle.
Similarly, 12 per cent have announced salary cuts ranging from 5 to 10 per cent." Shetty also said that this year, only 42 per cent of the companies surveyed have announced salary hikes and that too between 5 and 12 per cent. Last year, almost all the companies had granted hikes of 12 to 18 per cent.
NASSCOM Chairman Dr Ganesh Natarajan admitted that companies facing customer rate cuts have revised the variable pay component of their employees. "However, good companies have gone ahead with salary hikes, giving an average salary increase of 4 to 9 per cent," he pointed out.
According to Dr Natarajan, a good company has the ability to withstand the present scenario and also care for its employees. He clarified, "Companies facing customer rate cuts have reconsidered the variable pay components, but no company has cut basic pay."
Dr Natarajan said, "We have gone ahead with an average 6.5 per cent salary increase. Candidates with outstanding performances are even getting double-digit salary hikes." He, however, cautioned, "There are chances that demand will pick up only in January and February 2010. Until then we need to be careful about costs."
