Salaries skyrocket in outsourcing firms

NEW DELHI: Salaries in outsourcing companies are getting attractive. It’s not shortage of professionals that is driving the wages, but options beyond the plain vanilla BPO companies, as fresh graduates are being offered salaries which are five to six times more than what BPOs pay. Fresh graduates (usually MBAs, CAs, engineers, law graduates and so on) with Knowledge Process Offshoring (KPO) and Legal Process Offshoring (LPO) companies are being offered starting packages of Rs 35,000 to Rs 40,000 per month.

And some entry-level professionals engaged in complex processes with firms such as Exevo, Evalueserve or Pipal Research could be taking home salaries as high as Rs 50,000 per month. Just a couple of years back, this amount was less than half, at Rs 25,000 per year. Interestingly, according to HR experts, salaries for corresponding profiles in US has gone up by just 15 percent in the last two years. However, in the US such professionals get upwards of USD 55,000 a year.

Meanwhile, as far as hikes are concerned, most IT-ITeS companies now offer bi-annual salary hikes which range between 15-18 percent. Thus, the effective annual hike for many employees comes to about 30-36 percent. At this rate, the salary differential between US and India is narrowing fast.

But that does not mean that India is losing out on the salary advantage front. On the contrary, experts say that since the kind of work getting outsourced to Indian BPOs and KPOs is of a high-end nature now, calling for a lot of value addition - salary rise is bound to happen.

“It’s not just about the cost competitiveness anymore. The salary growth, which has taken place in the last few years, has been commensurate with the value addition that is being done,” says associate partner of Elixir Web Solutions Perry Madan. Elixir Web Solutions is a Delhi-based HR firm.

Experts say that major salary growth has only been restricted in case of high-end and research based outsourcing jobs with KPO and LPO companies. “As far as legal outsourcing is concerned, there still is a major demand-supply mismatch. Clients’ concern is quality of the job. Till these factors are there, salaries will continue to see a meteoric growth,” says Som Mandal head of Noida-based LPO Fox Mandal IT (FMIT).

Other experts feel that salaries will continue to rise in India without eroding India advantage. Evalueserve COO Ashish Gupta said: “India will sustain its cost position for at least the next 10-15 years. There are two basic factors to that. On an absolute (not percentage basis), the hourly rate is going up very fast overseas compared to India. Secondly, demographically India is a younger nation and that talent arbitrage will continue to widen with young population in other nations stagnating.”

Currently, Indian outsourcing industry operates at about 60 percent of the cost in US, in KPOs however, the salaries levels are about 80 percent of that in US. BPOs however operate at salary levels of USD 7,000 per annum. At senior levels however, the trend is almost opposite. On the other hand, in areas such as equity and pharma research people are getting a handsome packet.

A MBA from a good B-school armed with a decent engineering degree can easily demand a package of Rs 6-7 lakhs per annum. On the other hand, an IIM or an IIT degree can take the compensation package up to Rs 10 lakh or above, depending upon the type of company. On the other hand the same qualification fetches about USD 40,000- USD 60,000 in US.

“The salary gap is being narrowed. But in contrast, the SLAs (Service Level Agreements) and quality of work is getting higher,” said Chandraveer Jain, senior product manager at Pipal Research. According to US BLS (Bureau of Labour Studies), Paralegal and legal assistants in US get about USD 39,220 per annum while business and financial support professionals earn about USD 52,559 per annum. Computer professionals get about USD 60,350 while computer operators take home about USD 22,740 per annum.