3 Companies

"Itna paisa mein itna hi milega"- said "Bai" by Bai. Though, we IT workers are a little more sophisticated than that, the sentiment is the same and if you think you are on the lower side of the pay scale, I have been doing some work on the kind of companies and how they compensate employees. So, read on!!

Broadly, in my interactions, I came across three kinds of companies. The first are your general IT Services/Solutions providers, the second are the in-house IT departments and the third are product companies who have setup R&D departments in India. My analysis here is of technical delivery positions only, not sales or management.

General IT Services/Solution providers, hire people en-mass usually to fulfill a project's immediate requirement. They don't pay well!! The reason, for that is the way accounting is done within the companies. The business of these companies is services and their biggest cost is employees. They have to reduce the cost of employees. A perfect example is a "Grade Mix" metric which their projects have, which try to ensure that the overall team mix includes lower-cost trainees.

The other thing, to be noted about such firms are - a) They are not to focused on developer productivity to a large extent, preferring to hire more people than develop conditions for better developer productivity. This is actually better for them, especially in Time and Material Projects where they can bill per person. For example, no such firm will ever worry about lighting or how developers are seated which are known to increase productivity by 5-10%. The marginal increase is more than compensated for by the number of developers.(or so they think!!) This is not to say they don't care about developers, it's just their business model.

This is also reflected in their compensation models. If you ever interview for them, they shall simply take your current compensation add a reasonable factor to it(depending on urgency of requirement) and that's your new compensation. They do not take into account talent!! Frankly, I think they don't need it. They need a few talented individuals, but not "Rock-stars". It's just the nature of work they do.

In fact, it is kind of assumed in these companies that what employees make as lower base salaries, will be compensated for by "on-site" assignments. Hence, there is a huge jostle in these companies for assignments to the west.

For these companies the real talent are it's management. They will go out of the way to hire management consultants at high prices, since they realize maximum gains by having a smart management team.

In-house IT houses, have the reverse problem. They need their developers, and pay handsomely. They take care of developer productivity and go out of their way to make sure the developers have the best facilities possible. The reasons are simple!! 1) Most of their work is very boring!! 2) There is usually no on-site opportunity.

I have recently had friends join the IT arms of big investment banks. While, they are enjoying the perks and other things, some of them are already contemplating the next switch thanks to the work. This is not to say, that all their work is boring. Indeed, Fidelity Investments has given us the "DOJO" framework and some of their work is scintillating. But, all this comes in cycles, only when a major transitional project comes along.

By all means, these are the companies you should join, if you want a good salary with a stable life, since in general during business as usual conditions, these companies have predictable working hours and patterns.

The last kind of company is the R&D or product firms that are mushrooming, in India. These guys want talent , they want productivity, they want it all and are ready to pay for it. However, there is a catch!! Most companies(barring a few) have set-up R&D or "Product Development" centers in India, to reduce cost!!! Of-course they want to leverage talent in India as well, but they don't do it the way they do in their home countries. Usually, fringe work of a core product is given to the India Centers, with the main design and important work still being done in the US/UK or wherever else they are setup.

In the new decade I sincerely hope that Product and R&D based "Indian" companies would rise in prominence to compete with their global counterparts, as dependence on cost reduction is removed as the fuel that actually runs the IT industry in India currently. We need to do to the IT industry , what Japan did to the automotive industry, and I know a lot of effort is going into this. I hope to see some exciting new things, in the coming years....

Of course, there are exceptions to every category of companies I mentioned above(So, don't flame me saying, my company is of type X but does this!!). I would love feedback from others, on how they think their company works and pays.

A happy and propsperous new year and new decade to all!!!