IT Firms Form Cartel To Keep Freshers’ Salaries Low, Says Mohandas Pai
Big Indian IT companies have formed a cartel to keep salary of entry-level engineers low: T V Mohandas Pai.
Big Indian information technology companies have formed a cartel to keep salaries of entry-level engineers low, alleged industry veteran TV Mohandas Pai, as he made a strong pitch for a better deal for freshers.
Pai echoed Infosys Ltd. co-founder NR Narayana Murthy’s recent observation that salaries of freshers in the software industry have stayed stagnant in the last seven years, while the same for senior-level employees have grown multi-fold.
Pai, a former chief financial officer of Infosys, told PTI that companies are taking advantage of “oversupply” of engineers and seeking to command the market.
There is a cartel...there has been a cartel, there is no doubt. They [big IT companies] talk to each other, sometimes tell each other not to increase, that’s been there for a long time.TV Mohandas Pai, Former CFO, Infosys
“I know that people [big IT companies] used to get together and tell each other not to raise [entry-level] salary. If one took into effect inflation, the remuneration of freshers in the IT industry has in fact come down by 50 percent in the last seven years,” he said.
Stagnant entry-level salary has led to bright minds not joining the IT industry, according to him. “They can afford to pay better salary. They have to make sure they don't pay more at the top, and they pay more at the bottom. They have to learn to adjust,” Pai said.
“To me, it’s an ethical, fairness issue; they can afford to pay more. [Not raising entry-level salary is] ethically and morally wrong,” Pai said.
He said bigger firms such as TCS and Infosys should take the lead in giving freshers a better deal.
People who are paid low should get more. Best guys don’t want to come and join the industry. It’s important for them to raise the salary, make sure people at the bottom feel much more comfortable.T V Mohandas Pai, former Infosys director, told PTI.
"It's very depressing (freshers not getting good salary). What to do? Supply is more," Pai said.
"Also, education that they get is not good enough to get them job straight away. They have to be trained." The IT companies' stand that they spend lakhs of rupees on training freshers is valid, he said, but added that such a scenario has been there for about 20 years now, and it's not a recent phenomenon.
"They should pay more because people need to live properly, they don't get enough money to live," he said.
Unless this is done, Pai warned, big IT companies will end up becoming training ground for other companies, who will not hire freshers and recruit only trained people, so that they can save on training costs.
"It's bad for big IT companies themselves," he said.