Are policy changes in the west to blame for low pay hikes in Indian IT companies?

Stressed out employees are taking to social media to protest, while companies blame the economic cycle and western administrative policy.
Are policy changes in the west to blame for low pay hikes in Indian IT companies?
Are policy changes in the west to blame for low pay hikes in Indian IT companies?
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“Western policy dominates India’s Information Technology (IT) sector. This leads to factors like single digit hike and employee layoffs,” says Sathiesh M, General Secretary of Forum for Information Technology Employees (FITE) for Tamil Nadu region. Employees from various IT firms such as Tata Consultancy Service (TCS) and Capegemini have begun complaining about single digit hike in salaries on Facebook and Twitter. 

The employees respond to low hike

On April 23, reports stated that TCS had emerged as India’s first $100 billion company. “Congrats fellow TCSers!! $100 billion!! But don’t forget the hike percentage,” an employee posted on the Facebook TCS Confessions page. 

After TCS’s comments on less salary hikes, employees from Capegemini began posting complaints about a one-digit hike on their Twitter page.  They took a jibe at meagre hikes saying cashbacks from Paytm were more than the hike from Capegemini, and with this pay, they could only afford coffee from Indian Railways.

Others called it a useless organisation that is demotivating and devaluing employees with less hikes. Capegemini has been named as the world’s most ethical company in 2018 for the second consecutive year based on Ethisphere institute’s Ethics Quotient framework. The employees accused the organisation for utilizing their hike money to obtain this recognition. 

But there are major concerns grappling the industry that need to be addressed, rather than this being a fight for pay between the firms and employees. 

Concerns of the IT sector

The overall economic depression in the country, due to changes in policy in the west is the first reason for such low hikes. There is an organisational restructuring. The Trump administration and Brexit has led to demand for employing locals in the west. India and Philippines are two countries that offer human capital to the IT sector in the west due to low cost workforce. This new policy to employ locals is a challenge financially for India’s IT firms.

“Foreign nationals need to be paid a minimum of $3000 to $4000, which is Rs 1-1.5 lakh in Indian rupees. Workers from India and Philippines work for Rs 25000 – 30,000 as a starting pay package. Sometimes the salary is as low as Rs. 15,000 a month. Low salaries for employees from east would ensure 15-20% profits for firms. But this has reduced significantly due to the demand for foreign local labour, since firms have begun cost cutting. This leads to salary hikes of single digit percentage, which is just Rs 50-100 annually,” Sathiesh says.

Another reason for low hikes is the tectonic shift in the organisations, which has led to automation. This is due to technological advancements. Earlier, organisations would conduct manual testing.  Nowadays, there are machines to perform these tasks that employees would earlier. This has led to need for less manpower. Since firms already have employed many, the way to protect the employment of such employees is to allow them to work for less pay. Or else, they would lose their job. 

State of the IT sector

“IT firms often experience financial issues after eight to ten years. The economic cycle leads to such conditions. Firms had experienced a similar situation around 2008 and 2009. The concerns now in 2018, nine to ten years later are similar,” Sathiesh informed TNM. 

Companies usually tell the employees that it is one of the years in the economic cycle. Organisations are witnessing a financial crunch. The situation will resume to normalcy in future. 

Employee issues due to low pay

Employees are stressed out due to low pay hikes. They are not content with such hikes. 

Inflation has led to rising prices. This increases the cost of living of employees. Many employees work in cities away from home and live in rented apartments. This rent ranges from Rs 20,000-25,000 monthly. Low pay, along with low hikes makes it difficult for employees to manage living in the city. 

Other problems

IT sector functions as a “Flexible Market”. In such a scenario, one can hire and fire an employee anytime. Employees live in anxiety, due to the uncertainty in the job market, because they could be unemployed any time. Employees prefer to stay silent to continue being on the pay rolls of the organisation. They feel that some money is better than no money in hand. 

The IT sector is a private sector. Every firm has its individual policies and agreements of employment. It does not function as per the pay commission guidelines of the government. This autonomy in decision making pressurizes employees due to lack of proper mechanisms and time in change of policies that could lead to them losing their jobs.

The employees feel that government needs address this concern during their discussions on foreign policy and economic relations.   

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