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Mirage of Mid-term Pay Hikes

October 11, 2010 Leave a comment

Most of the IT companies are struggling to rein attrition. Some big (and Mature?) IT companies have already offered retention bonus or restricted stocks is the last quarter. However, there are media reports indicating towards mid-term hikes by many IT companies. I doubt if mid-term hike can help.

Employee are looking for something substantial before the next pay hike (expected in April’11). Mid-term hikes will not be as high as yearly hike since these were not budgeted in the annual plan.

Also the hikes will be effective October’10 (not April’10), so employees only get the benefit for next 6 months. Results show that a software engineer earning 5 Lacs will not gain more than 2 thousand a month, post 5% mid-term hike. However, the companies base salary does inflate by 5% for no good.

These inflated salaries will pose difficulty for companies to offer high increments in April’11. And the attrition problem continues! So, a mid-term hike can be summarized as ‘no short term gain but long term pain’. Yet, some companies might go for the hikes. It will be interesting to see what do they gain out of it.

Categories: Comp & Ben Tags: , , ,