In an environment marked by high employee attrition and turnover, a majority of Indian IT and ITeS firms have positioned their compensations above the market median, the second annual Nasscom-Hewitt survey on Total Rewards Management 2003 said.
A whopping 91 per cent of the IT companies and 97 per cent of the IT-enabled services firms have benchmarked their compensations against the market, with Mumbai becoming the costliest city in India in terms of compensation for ITeS companies while Bangalore is the most expensive city in terms of IT, the study said.
The study pointed out that average salary hike increased from 12.1 per cent in 2002 to 15.4 per cent in 2003 for ITeS companies and from 12.9 per cent to 14.5 per cent in the IT companies for professionals, supervisors and technical level staff, while adding that both the sectors are currently on a high-growth phase.
IT and ITeS companies have a high cash to benefit ratio of 75:25 with cash based components like base salary, cash emoluments and variable pay going up from last year whereas benefits like loan, conveyance and housing have gone down, the survey said.
While there was an 18 per cent rise in variable pay plans this year when compared to last year, performance based rise in the IT industry was pegged at 23 percentage points when compared to last year.
However, there was a 7-14 percentage point reduction in the allocated budget for recruitment, hiring and orientation.
Other major highlights of the survey on the People Practice segments are that 41 per cent of the IT companies saw a significant workforce reduction while for ITeS companies it stood at 11.5 per cent.
ITeS organisations are focussing on more long-term orientation for employees and the industry reported a 4.3 per cent increase in training hours over last year.
However, for the IT industry, the training hours decreased by 13 per cent.
Stock options are losing their charm in the infotech industry. A 10 per cent drop was reported in the prevalence of stock option programme between 2002 and 2003.
Sunil Mehta, vice president, National Association of Software and Service Companies, said, "Today the Indian IT industry employs 650,000 people and therefore it is essential that companies in the IT sector devise right compensation and rewards mix to attract and retain talent."
"In an environment marked by high employee turnover and attrition, companies are introducing innovative methods of attracting and retaining talents," Nishchae Suri, Hewitt India Business Consulting leader, said.
© 2026