TCS, Cognizant Up Salary Offers For Entry-Level IT Jobs: Report

In good news for engineering students across the country, IT giants Tata Consultancy Services (TCS) and Cognizant Technology Solutions (CTS) have upped fresher salaries for first time in many years, according to media reports. Entry-level employees hired from engineering campuses will get 10-12 per cent higher salaries that last year, reports said.

Fresher salaries in the nearly $150 billion outsourcing industry have been under pressure because of increasing automation and oversupply of qualified manpower, analysts say.

Accenture, Cognizant, Infosys, TCS and Wipro – the biggest recruiters of Indian IT employees – are all in the process of automating a significant part of their work. Large-scale automation has weighed on hiring in the IT sector, particularly on entry-level IT jobs which are more susceptible to being automated.

Oversupply of engineers is another big factor that has swung bargaining power in favour of big outsourcers. According to Kotak Institutional Equities, 1.3 million engineers graduated in 2014-15 as against net hiring of just 2.5 lakh engineers (including lateral hiring) last year.

In 2013, Credit Suisse said that real wages of entry-level staffers in the IT sector was at the lowest in more than 15 years.

Outsourcers may have been forced to up salary offers in the current placement season because of rising competition from start-ups, analysts say. Domestic start-ups are doling out handsome pay packets, with junior level employees getting more than Rs 5 lakh a year, according to a report.

That’s much higher than Rs 3 to Rs 4 lakh IT companies used to pay for entry-level hires.

Analysts say higher wages for entry-level employees will not be much of a burden for IT companies; margins may dip by just 25 basis points in 2016-17 fiscal, according to research carried out by some analysts.