Indian IT CEO Pay Increased 160% in Last 5 Yrs, While Freshers Pay Rises Only 4%

The salaries of top executives at TCS, Infosys, HCLTech, Wipro, and Tech Mahindra have increased by over 160% in the past five years. In contrast, freshers have seen a salary growth of just 4%, from ₹3.6 lakh to ₹4 lakh, according to the data sourced by Moneycontrol.com

The median annual pay for CEOs in FY24 was close to ₹84 crore.

The pay gap between CEOs and freshers is striking. For example, Wipro's ratio stands at 1,702:1, while TCS's ratio is 192:1.

Critics, including former Infosys CFO Mohandas Pai, have raised concerns about the growing disparity and its detrimental effect on economic consumption. Pai highlighted that rewarding top executives generously while freshers remain underpaid is wrong.

The IT sector is grappling with challenges such as high attrition rates and fewer on-site opportunities, which impact compensation structures. Experts point out that while CEO salaries align with global benchmarks, the growing disparity worsens inequality and negatively affects middle-class workers.

This issue has sparked a debate about the fairness of compensation structures in the IT industry and the need for companies to address the growing wage gap.

Pay Gap Ratios

The pay gap in India's IT sector is quite pronounced. Here are some details about the pay gap at the leading Indian IT companies:

1. Tata Consultancy Services (TCS): The CEO-to-fresher pay ratio is 192:1
2. Infosys: The CEO-to-fresher pay ratio is 677:1.
3. HCL Technologies: The CEO-to-fresher pay ratio is 707:1
4. Wipro: The CEO-to-fresher pay ratio is 1,702:1
5. Tech Mahindra: The CEO-to-fresher pay ratio is 1,383:1

These ratios highlight the significant disparity between the compensation of top executives and entry-level employees in the IT sector. Critics argue that this growing wage gap can negatively impact economic consumption and overall employee morale.

Average Salary Increment In Infosys, TCS and Wipro Down To Single Digits

In the financial year 2023-24, major Indian IT firms like Infosys, TCS, and Wipro reduced salary hikes to single digits due to economic pressures, said a Times of India report.

Infosys: Known for its higher average annual increments, Infosys saw average hikes fall to 9% in FY24, down from 14.6% in FY22, with FY23 noting 9.9%.

TCS: TCS reflected a similar trend, granting average hikes of 7-9% in FY24, compared to 10.5% in FY22.

Wipro: Employees at Wipro experienced a median remuneration hike of 9.4% compared to the previous year.

Tech Mahindra and HCLTech have maintained average hikes between 5% and 7%. HCLTech reported an average hike of 6.8% in FY22, which dropped to 5% last year. Tech Mahindra's average increment stood at 5.6% in FY24, down from 6% in the previous year and 5.2% during the pandemic year when other firms provided double- digit raises.

While top performers still receive substantial hikes, most employees witnessed a moderation in salary increments. Recruiters highlight higher raises for niche skill sets in AI, ML, cybersecurity, and data analytics, driven by digital transformation. Rising employment costs also impact most IT professionals.

Exceptions

While most employees at Infosys, TCS, and Wipro experienced single-digit salary increments in FY24, there are exceptions:

1. Top Performers: High-performing employees continue to receive substantial hikes, often exceeding the average. Their contributions to critical projects and niche skill sets (such as AI, ML, cybersecurity, and data analytics) are rewarded.

2. Niche Skills: Professionals with specialized skills in emerging technologies receive better increments. Companies prioritize talent in areas like cloud computing, blockchain, and automation.

3. Leadership Roles: Salary hikes for leadership positions (such as project managers, architects, and directors) tend to be more generous due to their strategic impact.

4. Promotions: Employees who receive promotions can expect larger increments, especially when moving to higher job grades.

Industry-wide trends in salary increments can vary based on factors like economic conditions, occupation, and company policies. Over the past decade, the average annual salary increase has hovered between 3% to 5%. However, this can vary significantly based on individual circumstances.

These raises counteract inflation by adjusting salaries to match the current cost of living. Given the economic impact of the COVID-19 pandemic, inflation rates have risen significantly.

Technology transformation sector is driving pay raise trends in 2024, with an impressive 63% surge. Supply Chain and Procurement, Sales and Marketing, and Human Resources also show substantial Increases. Retail, Hospitality, and Product and Skilled Trades have seen the largest base salary increases recently. 

Professionals switching jobs, especially in talent-short fields like tech, can anticipate substantial pay raises ranging from 10% to 15%.

Sr. Management of IDFC FIRST Bank Volunteered for 10% Cut in Compensation in Current FY' 2020-21

IDFC FIRST Bank today announced that its senior management has volunteered to take a 10% cut in compensation in the current financial year 2020-21. Mr. V Vaidyanathan, MD & CEO, IDFC FIRST Bank, has voluntarily offered to take a pay cut of 30% in his compensation including Fixed compensation as well as all allowances. Mr. Vaidyanathan said, “Such pay cut forms part of the Bank’s austerity measures which start at the top. Further, we feel the pain our customers, big, small, micro enterprises and people at large are going through, and we also want to be empathetic to the situation.”

The management is reviewing the impact of the pandemic every day and is making all efforts to safeguard customer interest in line with its mission statement which recognizes the customer as its First Stakeholder. The Bank’s branches and customer service teams have been operating at near-to-full capacity with minimal reduction in services throughout the lockdown to meet its customers’ needs.

On the employee front, the Bank has honored all offers that were made to new hires before the pandemic, including all lateral hires as well as 550 management trainees. This is in keeping with the Bank’s philosophy of honoring its commitments in all circumstances.

The Bank also paid 100% of the variable pay to 78.2% of employees for the period pertaining to FY 19- 20 despite the arrival of the pandemic. Variable pay for FY 19-20 was cut more, progressively, for employees with greater seniority, and bonus for senior management was cut by 65% of the eligible amount.

IDFC FIRST Bank’s employees voluntarily contributed one day’s salary totaling Rs. 3.29 crore to the PM CARES Fund. In addition, the Bank contributed Rs 5 crore to the PM CARES Fund to support the nation’s fight against coronavirus. In addition, Mr. Vaidyanathan personally contributed Rs. 47 lacs to COVID relief, including Rs. 25 lacs to the PM CARES Fund for COVID Relief and Rs. 5 lacs for Chief Ministers COVID Relief Fund. Inclusive of employees’ contribution, the Bank contributed a total amount of Rs. 10.86 crore towards the COVID Relief related activities so far and continues its work in this area. A large number of these activities are centered in Maharashtra.

The Bank also launched a number of COVID relief initiatives that involved its customers and employees at large. These included Ask-for-Mask, Gaon-Gaon Mask, Shramik-Sahayata Program, Share-a-meal, Jaankari mein Samajhdari, COVID Warrior-on-Wheels, and Give India Foundation programs. Under these programs, the Bank has selected women borrower customers and is paying them at commercial rates for producing 3.5 lac masks which are distributed in their own rural and urban communities, providing cash support of Rs. 3000 to migrant laborers, paying select customers and NGOs for preparing and distributing meals for displaced workers, spreading awareness about COVID prevention through catchy videos in vernacular languages, and providing home-to-hospital-to-home car pick-up service for doctors and healthcare workers. The implementation of these programs is monitored at the highest levels at the Bank.

The Bank is committed to playing its part in supporting customers as well as vulnerable communities during this difficult period.

IDFC FIRST Bank was created by the merger of IDFC Bank and Capital First in December 2018. The Bank provides a range of financial solutions to individuals, small businesses and corporates. The Bank offers high attractive solutions for savings and current accounts, NRI accounts, salary accounts, demat accounts, fixed and recurring deposits, home and personal loans, two-wheeler loans, consumer durable loans, small business loans, forex products, payment solutions and wealth management services. Customers can choose where and how they want to bank: 464 bank liability branches, 128 asset branches, 356 ATMs and 652 rural business correspondent centres across the country, net banking, mobile banking and 24/7 toll free Banker-on-Call service.

Tips To Increase Your Take-Home Salary

Assessing one’s earning potential by the means of one’s CTC figure is one thing, but it is quite another to assess it by evaluating one’s take-home salary. After being slashed by various taxes and charges, it is possible that your lucrative salary package does not amount to the in-hand paycheck you were hoping for.

That is why every working professional should be well-versed with a few basic points to help them increase their take-home salary, even if there are no changes to their CTC. As a result, you will also be able to increase your earning potential and gain greater financial freedom. All in all, the methods of increasing your salary amount to two major factors:

1. Restructuring your CTC, and
2. Making the most of tax-saving investments

Restructuring your CTC

Typically, the offered CTC figures vary from one company to another, and their structures vary as well. The Indian government mandates minimum contributions for sections such as Employee Provident Fund (EPF), gratuity and Employees’ State Insurance. But otherwise, there are no fixed rules on setting the CTC. Therefore, it falls upon you to restructure, or make the most of, your current CTC structure to maximise your take-home pay.

Here are a few tips you can follow:

• Salaried employees paying rent for their accommodation can claim exemptions on House Rent Allowance or HRA. It is the only component in your CTC that is not fully taxable. Therefore, the amount you pay towards your rent is eligible for partial tax exemption. You can also restructure your basic pay to increase your HRA and bring the number as close to your rent amount as possible.


• You should also make use of Leave Travel Allowance to reimburse your travel expenses and save on tax. It is exempt from tax under Section 10(5) of the Income Tax Act and allows for 2 journeys within the span of 4 years.


• Components such as medical allowance and food coupons are also efficient ways of increasing your take-home pay, saving taxes and enjoying additional benefits. Upto Rs. 15,000 every year can be claimed for medical reimbursements while claims for food coupons can go up to Rs. 26,400.

Tax-saving Investments
Other than these, you can maximise your take-home pay by making investments that help you save a considerable amount of taxes annually, such as:

1. National Pension Scheme
   The National Pension Scheme is a useful tool not just to save for retirement but also to avail tax benefits as an employee. Self-contributions to NPS are exempted up to Rs. 50,000 under Section 80CCD(1B). Moreover, under section 80CCD (2), the employer contribution to NPS is eligible for deduction up to 10% of your basic plus DA.



2. Section 80C
   A host of investments are eligible for deductions under Section 80C:E

• Equity Linked Savings Scheme: Such schemes typically have a comparatively low lock-in period, provide exceptionally high returns and have a minimum investment amount of just Rs. 500.

• Employee Provident Fund: The EPF is primarily a retirement benefits scheme. It can also double as a tax-saving investment. The employee’s contribution to the EPF is eligible for deductions under Section 80C.
• Term Insurance: Availing a term insurance plan can ensure ample coverage for your family at low costs. The premiums for term insurance are eligible for deductions under Section 80C for up to Rs. 1.5 Lakh.

There are also other investments that not only help you avail tax deductions under Section 80C, but also provide essential benefits.
You too can increase your take-home salary by finding effective ways of maximising allowances and reducing your tax burden, as mentioned in these tips. However, apart from saving taxes, it is important to safeguard the financial future of your family by making an investment in a reliable term plan. What’s more, with a term plan, you can effectively avail of deductions and exemptions not only on your premiums, but also on the payout you receive, under Section 10(10D).

You can opt for Aegon Life Insurance Aegon Life Insurance plan. Their iTerm plan provides life cover up to the age of 100 years as well as offers a whole host of benefits. You can also customise your term plan by opting for one of the 3 different term plan variants as well as a number of rider options.