The Hindu : Business : Individual performance key to salary increases in IT firms, says study

Online edition of India's National Newspaper
Wednesday, Feb 16, 2005

Business

Business

Individual performance key to salary increases in IT firms, says study

By Our Staff Correspondent

MUMBAI, FEB. 15. More than 80 per cent of Indian IT organisations rate individual performance as the most important criteria for decisions regarding salary increases.

According to the `Nasscom Hewitt Total Rewards Study, 2004' released here today, while a majority of organisations position the top performers in the third quartile or above, the average performers, on the other hand, are positioned typically in the second quartile.

The study showed that an increasing number of organisations lay emphasis on variable pay and align rewards to business goals, with more than 85 per cent organisations having prevalence of variable pay.

The third successful year of the Nasscom Hewitt Total Rewards study forms a platform to provide deeper insights on Total Rewards to Nasscom member companies in IT and ITES industries.

Sunil Mehta, Vice President, Nasscom, said, "Today, the Indian IT industry employs about 8.20 lakh people and it is therefore essential that companies in the IT sector devise the right compensation and rewards mix in order to attract and retain talent. By undertaking the study with Hewitt, Nasscom as an apex body, has taken a step to establish a benchmark for Indian IT and ITES companies to follow, based on benefits, people practices and rewards and recognition systems.''

Other findings in the study revealed that the average accession rate in IT and ITES industries are higher than the attrition rate. However, attraction and retention of employees remain a key issue for IT and ITES organisations with the IT industry reporting an average attrition rate of 18 per cent for 2003-04 and the ITES industry reporting a higher average attrition rate of 32 per cent across levels. The study found that Bangalore continues to be the most expensive city in terms of compensation for IT, reporting 8 per cent higher salaries compared to the national average. For ITES, Bangalore and National Capital Region (NCR) were one per cent higher than the National average.

"Increasing number of organisations are using the pay for performance philosophy to build a high-performing organisational culture, which then translates into better business results and company profitability,'' said Nishchae Suri, Business Leader, Consulting, Asia Pacific, Hewitt Associates.

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