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4/20/2007
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Tata And Infosys Set The Bar: 15% Raises This Year In India

With talent spread thin, they announced the expected raises of 12% to 15% while reporting booming revenue and profit gains.

When publicly traded companies report financial results, they also tend to manage expectations about future revenue and costs. India's two largest IT outsourcing companies last week added one fact not often discussed: the size of salary raises they expect to give.

Executives from Tata Consultancy Services and Infosys Technologies said they plan to give India-based employees raises of 12% to 15% in the coming year. The disclosure was intended to assure investors--and their employees--that they'll pay up to retain workers during an era of fierce talent poaching in India. "There's no doubt there's intense competition for talent," says Surya Kant, president of the Americas for TCS. "Employees want to make sure they're getting fair salaries."

Such is the state of the talent wars in India--where an IT project leader makes around $23,000, according to the compensation research site PayScale--that it's fair to ask whether a 15% raise will be enough.

Tata hired 32,462 people in its fiscal year ended March 31 and kept 22,750 (70%) of those hires, ending the year with 89,419 employees. Infosys hired 30,946 in that time and kept 19,526 (63%), for a year-end workforce of 72,241. So while both companies increased their workforce about 35%, they only kept two out of three they hired. The rest skipped to better work or didn't measure up.

In comparison with those raises, U.S. IT staffers report median raises of 3.3% and managers 4.2%, according to preliminary results of the InformationWeek Salary Survey of more than 7,200 tech pros. The full results will be published April 30.

All this, and a raise

All this, and a raise

Photo courtesy of Bhojan/Bloomberg News/Landov
RECRUIT THE FAMILY--AND RETRAIN
Tata's strategy is to enhance raises with quality-of-life benefits for employees in India and their families. A program called Maitree (Hindi for friendship) is designed to engage employees' family members in social programs and let spouses do work such as teaching English in rural schools. Its concierge service can arrange bill payments, help find schools for employees' kids, and book vacations.

In December, Tata launched a program designed to transform science graduates into software professionals during a seven-month intensive training program, schooling them in technologies, such as Java and .Net, that aren't in the curriculum of many Indian universities. It has accepted 2,000 students so far. Other top Indian and U.S. companies doing business there have launched similar services and student-training programs.

Like other IT services firms, Tata, the country's largest, is trying to build staff in other low-cost areas of the world. Just 9.6% of its workforce is something other than India nationals, up from 6.5% last year. Its goal is 12% this year.

Sales continue to soar for these companies. Tata's net income rose 43% from last year to $950 million, while revenue rose 41% to $4.3 billion. Infosys, the country's second-largest IT services company, saw revenue grow 44% to $3.1 billion, and net income climbed 53% to $850 million. Wipro Technologies and Satyam Computer Services, the third- and fourth-largest IT service providers in India, last week also reported annual profit and revenue increases in the 40% range.

Foreign companies keep growing in India, too. Accenture aims to increase from 8,000 to 35,000 people, surpassing its U.S. employee base, and IBM's India staff jumped from 43,000 to 53,000 in six months. IBM in March signed a 10-year deal with India's Idea Cellular to transform the company's IT and business processes infrastructure for more than $600 million. It's just one example of how services companies will need to keep chasing tech talent, not just for global outsourcing deals, but to help Indian businesses bulk up their own often-wobbly infrastructure during these boom times.

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