BENGALURU: Infosys is paying over Rs 1 crore to more than 1,800 employees in its overseas locations, 150 of whom were hired in the previous fiscal year, data accessed by ET shows, highlighting the cost challenge India’s second largest IT services company will face as it seeks to expand its workforce in developed markets.
These salary numbers assume significance because last month Infosys announced it would hire 10,000 people in the US — a mix of freshers and experienced people — as the outsourcing industry seeks to combat the threat of rising automation as well as protectionism in its biggest market.
In fiscal 2017, the Bengaluru headquartered company paid salaries of over Rs 1 crore to only 50 of its Indiabased employees. Infosys employs 151,956 people in India.
In contrast, of its 48,400 overseas employees 1,800 are already crorepatis in rupee terms. To be sure, the high salaries for skilled professionals in developed markets are a reflection of them being paid in foreign currencies and commensurate with several years of experience.
Indian IT companies are likely to hire freshers in the US initially.
But even that strategy will not mitigate cost pressures for long as companies compete for similar talent.
“The firms are trying to address this to some degree by hiring out of college and these wages will be lower and more in line with the $70,000 for first year workers. But the wages will quickly climb to the market average of $125,000$150,000 (Rs 8096 lakh) as these employees gain experience,” said Peter BendorSamuel, CEO of IT advisory firm Everest Research.
For instance, in a market like Dallas, wages for an experienced software developer is likely to start at $125,000 a year and move up to over $200,000 for a senior architect. Indian IT companies typically disclose the number of employees who earn over Rs 1 crore in India but salary figures for overseas employees are not routinely disclosed.
“Infosys’ hiring overseas in FY17 was similar to FY16, and the average salaries in both years have been consistent. Any potential impact arising out of our recently announced US recruitment strategy has already been factored into our margin guidance,” Infosys said in response to ET’s questions.
The onshore hiring cost burden is likely to be faced by the entire sector. With increasing visa restrictions, the Indian IT services industry has been rapidly increasing headcount in the US. Wipro has said about half of its employees in the US will be local by the end of June. Tata Consultancy Services and Cognizant have also talked about scaling headcount onshore.
Since CEO Vishal Sikka took over in August 2014, Infosys has been focussing on building software and platforms for which the company has been poaching top talent from across the industry, including from Sikka’s former employer SAP. Over 700 people, earning over the Rs 1 crore, were hired overseas after Sikka joined Infosys, the data showed.
Infosys’ head of digital Scott Sorokin, who joined from interactive agency Razorfish, is paid over Rs 7.3 crore. Abdul Razack, global head of Infosys Platforms, was paid Rs 5.26 crore. Sanjay Rajagopalan, head of design and research, is paid a little over Rs 5.2 crore. Navin Budhiraja, head architecture & technology, earns over Rs 5.3 crore. Ritika Suri, global head of corporate development, has a total gross salary of over Rs 5.1 crore.
While Razack, Rajagopalan, Budhiraja and Suri moved from SAP, the company has also hired talent from Microsoft, Samsung, Bank of America, Dreamworks and IBM at salaries north of Rs 2 crore.
“We continue to focus on building capabilities in new services and software for which it is essential to hire talent with specific skill sets, which often come at a premium. To attract and retain top quality talent, it is essential for us to compensate our executives on par with global competitors,” the company statement said
Infosys’ hiring spree won’t come cheap. Though average annual salaries for hover around $70,000 (about Rs 45 lakh) for IT professionals at Indian IT firms in the US, IT industry experts say a brewing bidding war for talent and the advent of new regulations will push that higher.
“There is not a chance that the average will stay around $70,000. This has already increased closer to the $100,000(Rs 64 lakh) mark. If Trump’s H1B proposals get passed, this will likely be mandated at $130,000 (Rs 83 lakh) minimum,” Phil Fersht, CEO at HfS Research, told ET.
“If the Indian firms seek to compete against the likes of Deloitte, and Accenture they will need multiple leaders over $1 million. If the Indian firms are going to capture a significant portion of the digital market then they will have to aggressively hire across all levels,” Everest’s BendorSamuel said.