BANGALORE: For at least a decade now, freshers' salary in the IT industry has remained between Rs 3 lakh and Rs 4 lakh per annum and HR experts say workforce dynamics could reshape fresher salary structures over time, and that they attribute this to many factors including oversupply of engineers.
"The salaries of entry-level engineers at IT services firms have been flat over the decades due to a combination of factors such as oversupply of engineering pass outs, the cyclical nature of the IT services business, lower skill levels among these engineers, education loan burden on these graduates, the training investment required by IT enterprises, and the high churn of these freshers post joining," Kamal Karanth, Co-founder, Xpheno, a specialist staffing company, told TNIE.
IT services companies are the largest consumers of fresher engineering talent, and traditionally, they have offered differentiated salaries based on the skills of the trainees they hire.
According to the latest All India Survey of Higher Education (AISHE) report on academic output, about 8.47 lakh engineers graduated from various streams in 2021-2022. With that output available, enterprises have a sufficient supply to choose from, and graduates are only happy to get a job, considering the significant number of students who take out student loans, he says.
“The starting salaries are from Rs 3.6 lakh to Rs 11 lakh, depending on the institute and the proficiency of the students they hire. As these companies hire a few thousand each year and train them for 6-9 months before they become billable, the IT services companies keep salaries competitive at the entry level, as not all hires make the cut in the final assessment post-training," he explains.
To a question on why freshers' salary has remained the same, Wipro chief human resources officer (CHRO) Saurabh Govil at the company’s post- earnings conference said, “This is a demand-supply issue. It’s not a very Wipro-centric issue. It is a market-driven and industry-driven issue. I can only say that at any level in the organisation, we will always pay competitive compensation and as things change, we will obviously be changing."
Kapil Joshi, CEO, Quess IT Staffing says while mid and senior-level salaries in IT services have seen notable growth, fresher compensation has remained largely stagnant for over a decade.
"This is primarily due to the oversupply of engineering graduates and the industry’s continued focus on cost optimisation. This trend may gradually shift as demand rises for niche skills in areas like AI, machine learning, and cybersecurity. Freshers equipped with these specialised capabilities are likely to command higher starting salaries, and rising attrition at junior levels may further compel organisations to enhance compensation to retain talent," he says.
While any change will be incremental rather than immediate, the evolution of skill demand and workforce dynamics could reshape fresher salary structures over time, he adds.
Interestingly, only Indian IT services companies pay less salary compared to others. When asked about it, Karanth says although funded start-ups, GCCs, consulting companies, and product companies (like FAANG) hire freshers from engineering colleges, each of them hires in hundreds, whereas, Indian IT services companies hire in thousands.
"The GCCs and FAANG companies pay almost double or three times in many cases to freshers. One has to remember that they hire from the premier colleges like IITs, BITS Pilani, NITs of the world, and they hire only the highly skilled ones in small numbers. Hence, the salary comparisons between those companies and the IT services companies are like Apples and Oranges," he says.