Software Industry Salaries will not match inflation, this financial year

According to a survey by HR Statistical Division from Ma Foi Randstad, the average compensation increase for the year 2012 will not be well received by employees around the country. The Salary Survey Guide has predicted that remuneration increase is notched at 11.2 percent this year, lower when compared to 12.4 percent, last year. Even the knowledge intensive industries, known for being good paymasters, will be going slow this year.

The main reason for this is pegged at increased wage cost and reduction in margins. With slow economic growth and inflation in the last two quarters of FY 2011 business sentiments have not been very robust. Inflationary pressures in other markets such as the EU and USA have also affected the economy adversely. Moving forward, a lower increase in base pay is expected with salary tilting more towards long-term and short-term incentives. At present 58 per cent of an executive’s salary is fixed and the rest 42 per cent is variable. But 2012 may see organizations increase the variable proportion in the overall compensation-mix. Indian firms are learning from their global counterparts, where companies stress on protecting shareholder interests and balancing risks and rewards during uncertain times

Among the sectors the automotive and energy sectors which led growth in 2011 do not seem to share a very healthy 2012 with current business situation.  The banking segment which has seen some revival last year, is also playing safe this time, keeping in mind the higher interest rates and inflation.

Organizations are currently being cautious in terms of hiring and expansion. However, it is interesting to note that organizations have started giving distinctive eminence to bringing out the differentiators by planning and distributing the average compensation hike between high and low performers, a trend that is expected to bring in healthy change in the industry.

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