This year, there has also been a shift from hiring freshers to those with two to five years' experience.
Salaries in the IT sector are on the rise again after remaining stagnant for nearly a decade.
The growing competition for talent from e-commerce start-ups and the bid to attract the best of the available pool of potential employees are forcing recruiters to revise their salary proposition.
The starting salary at large companies such as Tata Consultancy Services and Cognizant has increased 10-12 per cent, while for those with two to three years' experience, compensation has shot up by as much as 40 per cent.
While the increase has been good for employees, smaller companies that cannot afford to match the salary packages of larger companies are having a tough time in retaining talent, with employees leaving them in droves to join other firms.
"The situation is challenging. For us, attrition has gone up in the last two to three quarters. Add to this the fact that the segment with two to three years' experience has seen a sharp increase in salaries. The rise is anywhere between 30 and 40 per cent," says Sameer Bendre, chief people officer of Pune-based Persistent Systems.
However, even after the revision, IT salaries are no match to what is being offered by e-commerce companies.
At entry-level, IT salaries are now in the range of Rs 3.33 to Rs 3.35 lakh annually, compared to Rs 3 lakh to Rs 3.33 lakh earlier. In comparison, start-ups are paying Rs 5 to Rs 10 lakh to new recruits.
Some are paying more. Experts say employees with expertise in segments like cloud, mobility and big data are commanding a higher salary increase than the rest.
Those with knowledge in areas of digital, analytics, data visualisation and mobile computing are also in demand.
Sambhav Rakyan, data services practice leader (Asia Pacific), Towers Watson, says that while median salary movements have been in line with the broader market trend, there are outliers who have benefited more than others.
"Latest technology-driven products and services that demand a speedy 'go to market' strategy are typically areas where companies need critical skill staff and are willing to pay a premium," says Rakyan.
This year, there has also been a gradual shift from hiring freshers to those with two to five years' experience. Kamal Karanth, managing director, Kelly Services and Kelly OCG, says one reason why the demand for freshers has fallen is because companies are now keen to utilise their bench staff and outsource contingency staffing.
"There are also more contract workers being hired. Now IT firms are particularly seeking specialised staff with two to five years' experience. Hence, these professionals are at an advantage with respect to salaries," says Karanth.
For instance, he says, someone with experience in iOS or Android development can now easily get a 40 per cent jump as opposed to 15 per cent last year. He also says that the increase in the valuation of e-commerce companies has contributed to the salary boom.
Whether e-commerce companies can sustain the salary trend in the long-term is unclear. Many believe it is a short-term phenomenon.
"A lot of e-commerce companies have created valuations and are now being asked to deliver on their plans. The desire to get to the market in a short time is driving a lot of companies to pick ready talent that is critical to project success rather than groom talent internally. E-commerce companies have deep pockets that enable them to pay more," says Rakyan.
However, others see it as part of the industry's evolution. K K Natarajan, CEO, Mindtree, says, "A few years back the trend for engineers was to go to captives and maybe to product firms, but as e-commerce players are becoming technology firms there will be some talent that will prefer going there. So now the focus is e-commerce, products, and captives."
