Wages at IT multinationals start melting down

Software multinationals in India have begun freezing wage increases, slashing salaries and postponing merit-based hikes, a study by Indian consulting firm Zinnov has found. "Though Bangalore stands highest in its average salary for multinational R&D firms, followed by Pune and Chennai, the economic slump is causing undue pressure on them to retain compensation levels," Zinnov director for advisory services C S Chandramouli, said after the survey was made public. Hinting that IT salaries in 2009 would see a freeze across the board in a majority of the firms surveyed, Chandramouli said the average increment would be in the 5-12 per cent range. "Of the 30 representative multinationals surveyed in these three cities (Bangalore, Pune and Chennai), 27 per cent of them said they have frozen salary increases this year, while 42 per cent said they would provide salary increases and 15 per cent have postponed their merit increase cycle to take a call at a later stage if the economic scenario changes," Chandramouli said. As a preferred destination for IT services and R&D, about 680 multinationals operate in India. Many of them have more than one R&D centre and presence in one or two of the three cities surveyed.

According to Zinnov's annual report on "Compensation and Benefit Study 2009", 12 per cent of the MNCs have announced 5-10 per cent salary cuts either for senior management or across levels. "The survey highlights that multinationals are also shifting focus to the variable pay component to reward and retain top performers as opposed to fixed pay. Some of them have even restructured their compensation, linking employee rewards to individual and organisational results," the report said.