India IT and ITeS salaries to grow at 16% and 15.4% in 2006

The 10th annual salary survey conducted by Hewitt Associates covered 29 industries, 652 countries and 900,000 employees. It was conducted to measure actual and projected salary increases, and compensation packages of five specific job categories, namely - senior/top management, manager, professional/ supervisor/ technical, clerical/support and manual workers.

The survey shows that salaries are slowly getting stabilised in India and no dramatic movements are taking place. Hewitt expects salaries in India to rise by 13.8 per cent in 2006, a minor drop from the 2005 figure of 14.7 per cent. India's average salary increase in the range of 11.4 to 15.4 per cent in 2005 was the highest in the Asia Pacific region.

Compared with other countries in the Asia-Pacific, India shows the most positive growth trend at 14.1 per cent with Philippines coming in second with an expected increase of 8.2 per cent. China is occupying the third place with 8.1 per cent expected hike in salaries. Hong Kong fares lowest at 2.9 per cent, the second lowest being Singapore with 3.9 per cent and Taiwan with 4.1 per cent.

Of the five employee levels - senior management, manager, professional/supervisor/technical, clerical support and manual - the professional/supervisor/technical level is projected to receive the best pay hike of 15.1 per cent in 2006. This group of employees led the pack last year too with a salary increase of 15.4 per cent.

The five industries which can expect the highest salary growth this year are - asset management companies with an expected growth of 16.6 per cent; Infotech with 16.15 per cent, Accounting/consulting/legal with 15.5 per cent, ITES with 15.4 per cent and Entertainment/communications/Publication with 14.6 per cent.

The industries expected to get the lowest salary increases are non-profit organisations at 8.8 per cent, banking at 10.7 per cent, airlines/travel related services and hospitality at 10.7 per cent, chemicals and petrochemicals at 11.3 per cent and consumer durable goods/electronics at 11.6 per cent.

To ensure to retain their critical skills, interestingly, the survey demonstrated that locally owned Indian organisations are giving higher salary increases that multinational companies in India. In 2005, locally owned organisations saw an overall salary increase of 14.7 per cent while foreign owned organisations saw an overall increase of 13.8 per cent and the trend is expected to continue this year.

Companies are increasingly becoming performance-and market-oriented in their reward strategy. The study also highlights that the use of variable pay as a strategic lever continue to be an important means of attracting and retaining talent, with 89 percent of respondents saying they have variable pay plans in 2005

The survey also revealed that companies are increasing focused on measuring and managing performance with 99.5 percent saying they have formal platforms for performance management and a growing number of companies saying they are conducting biannual performance reviews.

The survey also notes that attrition rates have fallen slightly from 14.5 per cent in 2004 to 14 per cent in 2005. Stability in salaries have come as companies are now practicing planful budgeting which is being done as per a logical continuation of what existed (in terms of salary) before.

 Top Stories

Federal IT spending through GSA declined
INPUT has revealed that the annual spending on IT through the US General Services Administration's Multiple Award Schedule (GSA MAS) has declined by 2 percent from USD 16.8 billion during FY 04 to USD 16.5 billion in FY 05. The US Federal IT spending forms a major portion of revenues of the IT outsourcing sector. Despite the decline, IT spending through GSA MAS, accounts for approximately one-third of Federal IT spending. The decline, however, does not pertain to the whole Federal IT spend market and contrarily the overall market spending is on the rise. According to INPUT, the two main reasons of the decline in GSA IT spending was a general shift in using other contract vehicles for Federal IT procurement and a decrease in the demand due to IT infrastructure consolidation in Government agencies. INPUT had recently predicted that the overall Federal IT spending will reach USD 18 billion by FY 2010.

Offshore suppliers to win onshore contracts in 2006, says NOA
The UK National Outsourcing Association (NOA), in a report detailing the major outsourcing trends expected to emerge in 2006, has predicted a large scale increase in the adoption of the 'Global Delivery Model' by offshore outsourcing companies by expanding their presence the European region. The expansion may be through acquisitions as well as establishment of onshore offices. The study claims that with a 60:40 ratio of offshore to onshore European presence, companies can achieve the requisite integration with the end client while retaining the necessary offshore cost advantage.

Provident Investment Counsel outsources institutional back-office to Mellon Financial
Mellon Financial was selected by Provident Investment Counsel to provide the back office support services for its institutional clients. Mellon will provide trade processing, securities clearance and settlements, valuation, client billing, client statements, cash management support services, and performance and analytics measurement services. Mellon Financial was also selected by Evercore Asset Management (EAM) for supporting its back office administration. Mellon will provide transaction processing, custodian reconciliation, performance measurement and analytics, and investor reporting services to EAM. ABN AMRO Mellon, a financial outsourcing services joint-venture of ABN AMRO and Mellon Financial was selected by Glasgow Investment as the depositary and custodian for its Mackintosh Investment Funds ICVC. The contract win is the first deal made by the UK Trustee & Depositary Services unit of ABN AMRO Mellon.

Royal Dutch Shell to hire 1,000 in India for technical research
The new centre - which complements two in the Netherlands and one in the United States - would provide technical studies and services related to oil exploration, refining and chemical operations, Shell's Indian head Vikram Singh Mehta said in a statement.

Aussie Talent2 alliance with Indian HR firm
The newly-created company is likely to help its Australian partner to recruit skilled professionals for Australian workforce which is facing severe shortages in certain sectors. TalentPro India is primarily expected to outsource recruitment and talent management for major local and multinational corporations operating in India

M&T Bank outsources retirement plan administration to Bisys
BISYS will support M&T Bank with its comprehensive suite of technology-driven retirement plan recordkeeping and administration services, including prototype plan design and maintenance, plan administration, forms and documents, customized marketing and sales support materials, reference resources, toll-free access to industry expertise and assistance, extensive Web and interactive voice response (IVR) inquiry capabilities, and Web-based planning tools and content.

Elpida establishes design centre in Bangalore
Elpida Memory, Inc, Japan's leading global supplier of Dynamic Random Access Memory (DRAM) silicon chips, on Monday announced that Edison Semi-conductor Pvt Ltd would serve as Elpida's new design centre located in Bangalore.

Gigabyte sets up India's first R&D centre at Goa
Gigabyte Technology is setting up India's first R&D centre at Goa. Announcing this new development at an IT meet, Richard Ma, Executive VP, Gigabyte Technology said that the company is planning to make India as one of the hubs for its APAC operations.

 Service Provider News

Philippine outsourcing industry optimistic about 2006 prospects
In a joint forecast by the Business Process Association of the Philippines (BPAP), Board of Investments (BOI), and the Commission on Information and Communications Technology, the Philippine outsourcing industry is expected to generate 103,000 new jobs in 2006, a 44 percent increase from 2005. The forecast also noted that the outsourcing industry is expected to generate 3.7 billion dollars in revenues this year, or a 52 percent growth over 2005. Some of the serious challenges faced is finding more quality skills to man the booming business process outsourcing (BPO) industry. The other is steep competition from other countries like India.

Intel plans chip plant in Vietnam
Intel Corp, the world's largest microchip maker, has sought permission to build a $605-mn plant in Vietnam to produce chips and computer parts, a Vietnamese government official said on Thursday.

Unisys Receives Contract From NASA Langley Research Centre
NASA) Langley Research Centre (LaRC), Hampton, Va., awarded the company a cost-plus-fixed-fee contract with an estimated value of up to $49.2 million for Simulation and Flight Information Technology Services. Unisys also will provide software and hardware analysis, design, development, verification, validation, operations, maintenance, modification and systems integration services for the NASA Langley Flight Simulation Facilities and Research Aircraft. Unisys is responsible for total IT systems operation and for quality assurance.

Convergys signs deal with Greek firm
Convergys was awarded a multi-year licensing, support, and maintenance contract with the Hellenic Organization of Telecommunications (OTE), a Greek telephony services provider. Convergys will provide billing services for around 5 million residential wireline customers of OTE. Convergys will also manage the migration of billing of OTE's residential wireline customers to a single platform which will also be used for all other OTE services.

TeleTech Renews, Expands Agreement With Leading Global Banking ...
Teletech announced that a Fortune 20 company in the financial services industry has renewed its relationship with TeleTech to provide customer management services to its retail banking customers through 2009. Additionally, TeleTech will centralize the client's delivery capabilities on to a single common platform.

Avanteos seals Goldman Sachs JBWere outsourcing deal
Avanteos was selected by Goldman Sachs JBWere to provide portfolio administration services. Under the terms of the contract, Avanteos will be responsible for ongoing service provision and portfolio administration of the Goldman Sachs JBWere Private Client platform business. As a result of the contract, the total funds under administered by Avanteos are now worth USD 8 billion.

IBM picks up B-to-B specialist Viacore
IBM acquired Viacore, a California-based BPO solutions firm, as a part of its strategy to strengthen its Supply-Chain Business Transformation Outsourcing (BTO) capabilities. The electronics and retail segments of IBM's Supply-Chain BTO are expected to draw most benefit from the acquisition.

Ness Technologies to buy Innova Solutions for $25 mln
Santa Clara, California-based Innova has over 700 employees, mainly in India, and generated revenue of over $30 million last year and was profitable. The acquisition, subject to customary closing conditions, is expected to close by March 31, 2006. Upon completion, Innova will be known as Ness Financial and Business Innovation Services

SanDisk to expand Indian design centre
Sunnyvale, US-based SanDisk, a maker of flash memory products today announced that it would ramp up the headcount of its R&D centre in Bangalore. Besides having a dedicated captive centre, SanDisk also has design services partnerships with Wipro and RelQ. The Indian centre will work on core development such as NAND Flash, ASIC and firmware.