Better increments: IT services or product companies?

By Neha Singh Verma, TimesJobs.com Bureau

The mood of IT employees is not upbeat this year. While TCS has announced an average 10 per cent salary hike, Infosys has offered just 6.5 per cent.
A TimesJobs.com survey also showed that average appraisals in the sector will hover between 10-11 per cent this year, well below employee expectations. But what will be the appraisal trend inside the two divisions in the IT industry -product vis-a-vis services companies?

Aditya Narayan Mishra, president-staffing, Randstad India, a recruiting firm, told TimesJobs.com that product companies are expected to roll out better salary hikes than services companies.

"The average salary hike in IT product companies will be 12-18 per cent in comparison to the 8-14 per cent average salary hike in the IT services companies," said Mishra.

Since product companies have a smaller employee base and longer product cycle, they are willing to give better increments. Considering the smaller team size, delivery dependency is higher and finding replacementscostlier," added Mishra.

Services companies are process-driven while product companies are innovation-driven. To keep up the innovativeness, these companies are ready to shell out more money, he said.

But another recruiter disagreed.

Preety Agarwal, VP & head- IT Recruitment Practices of Gi Group, told TimesJobs that IT services companies would give slightly better appraisals as the average salary base in product companies was higher than services companies.

Agarwal said starting salaries would be higher for a fresher in a product company than in an IT services company. But after two or three appraisal cycles, a fresher in services would earn more than the one in product.

Services companies are client-oriented and owing to tough domestic competition, they don't want to lose talent directly dealing with clients and driving profit, she said.

Offsite vs onsite

Offsite IT employees are likely to receive 5-7 per cent higher increments compared to their onsite counterparts in foreign locations, Agarwal said. Onsite employees already have perks such as daily allowances, insurance and global exposure.

Mishra said average salary hikes for onsite employees would range between 2-8 per cent and offsite employees could receive 8-14 per cent average salary hikes. Infosys, a services company, has announced a mere 2 per cent hike for onsite employees. However, TCS is giving a one-time bonus to all employees this year, to balance the average hikes.