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Rupee rise: No big pay hikes for IT, BPO staff
Vicky Nanjappa in Bangalore
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July 25, 2007

The appreciation of the Indian rupee has probably hit the IT and BPO sector the hardest. IT pundits say that the days ahead will be hard as the need of the hour is more time and dedication.

Apart from working extra hours, employees in the IT and BPO sector will now have to bear with cost-cutting, which would mean that their salary increments could be affected.

At least 47 per cent of the expenditure incurred by IT firms is in the form the salary paid to employees.

Says Ashok Sinha, an executive at an IT firm in Bangalore, "The pressure is on and it is difficult to give any of the employees an increment or make a salary correction, even if though attrition rates are high." He also says that most firms are toying with the idea of increasing the variable salary and this would mean that employees get paid more only if they work more or better.

The firms that will be hit hardest are the ones that have the biggest work-forces in India. A senior manager at an IT firm in Bangalore said that at a recent meeting on cost-cutting, employee salaries was the main item on the agenda.

Apart from reducing the headcount, which is the biggest threat looming over employees in this sector, the meeting also discussed doing away with the pool of workers that is being maintained to provide a buffer against employees quitting.

Sources also add that salary increments will now directly be linked to productivity and performance. Only if the employee delivers will he be considered for an increment.

Sainath P, an employee at an IT firm, says that they were expecting this. "I guess the party is over and the days of IT employees being highly paid will soon become a dream. What goes up has to come down and higher the elevation, deeper the fall. How can we forget that," he adds.

The BPO sector: The BPO sector too has plenty to worry about. The appreciation of the rupee has not been too kind on this sector either. In a bid to cut the workforce at least by 20 per cent most BPOs are now offering e-mail based solutions.

Those with a query or problem could send in an e-mail and they would get the solution through mail. Apart from this most BPOs are opting for the automated process to cut down on the workforce.

Ashish Vaidya, an executive at a BPO, says that salary increments will have to be put on hold for a while. He says that they would now have to be content with a small workforce. Most of the workforce in this sector is based in India and they are being paid in rupees.

"With the rupee appreciating our bosses abroad say that the days of big pay hikes will have to wait," he says Vaidya.

He says that those who have been getting salary increments in the range of 15 to 20 per cent will now have to be content with an 8 to 15 per cent hike. In case of those employees who get a 7 to 8 per cent hike, they would have to remain happy with a 3 to 5 per cent increment.

Just last week, there was some alarming news for those working in the BPO and IT sector. With the rupee strengthening against the dollar, many IT and BPO firms have decided that their employees will have to work on Saturdays too in order to counter the negative impact of the appreciating rupee.

While IT firms are toying with the idea of working on Saturdays, those working in the business process outsourcing sector may have to put in an hour extra everyday at work.

The BPO firms work all seven days of the week. On an average, BPO employees put in 40 hours every week. However, now with revised working hours, an employee would have to put in 50 hours a week.

Whether the employees would start the shift early or end late has not yet been decided.

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