The former Infosys CFO called the practice "morally and ethically" wrong.

Big IT companies have formed cartel to keep freshers salaries low Mohandas PaiPTI File Photo
news IT Sector Friday, December 29, 2017 - 19:43

Big IT companies in the country have formed a "cartel" to keep wages of freshers low and this is "morally and ethically" wrong, former Infosys CFO TV Mohandas Pai has said.

Speaking to PTI, the Chairman of Manipal Global Education (Manipal University) said that the salaries of entry-level engineers have been stagnant in the past seven years. But at the same time, the salaries of those in the senior level have seen a manifold hike.

"There is a cartel...there has been a cartel, there is no doubt. They (big IT companies) talk to each other, sometimes tell each other not to increase, that's been there for a long time," he said.

"I know that people (of big IT companies) used to get together and tell each other not to raise (entry-level) salary. If one took into effect inflation, the remuneration of freshers in the IT industry has in fact come down by 50 per cent in the last seven years. That's why attrition in the first five years is very high," he added.

Mohandas Pai also said that low salaries for freshers was acting as a deterrent for many bright young people from joining the IT sector.

"To me, it's an ethical, fairness issue; they can afford to pay more. (Not raising entry-level salary is) ethically and morally wrong," he said.

This is however not the firsmet ti that the former Infosys board member has raised talked about the issue.

In February, Mohandas had said that companies were taking advantage of the oversupply of software engineers by paying them low wages at the entry level.

Reports suggest that while freshers were offered Rs 2.25 lakh per annum until 20 years ago, the amount has only risen to Rs 3.5 lakh now, thus pointing to a huge decrease in real wages from an inflation-adjusted perspective.

Infosys co-founder NR Narayana Murthy, who has been advocating the practice of "compassionate capitalism" too made the same point earlier this month.

Addressing students of IIT-Bombay, he said that while salaries of freshers have only stagnated in the last seven years, those of senior level employee have seen a 1,000% increase.

"If all of us make sacrifices, then the youngsters will understand," he said.

Earlier this year, Narayana's comments over the board-approved compensation hike for Chief Operating Officer UB Pravin Rao had stirred up a controversy.

He termed the hike as "not proper" and said it will "erode the trust and faith of the employees in the management and the board".

In an email, he said that giving nearly 60 to 70 % increase in compensation for a top level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6-8 per cent is "in my opinion, not proper".

"This is grossly unfair to the majority of the Infosys employees including project managers, delivery managers, analysts, programmers, sales people in the field, entry level engineers, clerks and office boys who are toiling hard to make the company better. The impact of such a decision will likely erode the trust and faith of the employees in the management and the board.

"With what conscience, can a decent person like Pravin (a man schooled in Infosys values for over 30 years) tell his juniors that they should work hard and make sacrifice to reduce cost and protect margin? I have got so many mails from these people asking whether this resolution is fair. No previous resolution in the history of the company has received such a low approval," he added.

With IANS inputs

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