A Moneycontrol artictle on 30 May caused the usual 3 day outrage and hyperventilating when it declared that – “IT CEO pay shot up 835% in a decade while fresher’s salary grew 45%” . Now that the din has died down- I have tried to dig deeper.
Summary of the Moneycontrol article
Ratio of pay between the CEO and the freshers
- 1,973 for Infosys
- 2,111 for Wipro,
- 1,020 for HCL Technologies,
- 676 for L&T Infotech,
- 644 for Tech Mahindra,
- and 619 for TCS,
Salary differentials are great clickbait- but the real problems are
Revenue per person is plateauing
- Revenue per person in 2021 (in USD)
- TCS- 43,409
- Wipro 42,775
- Infosys- 51,908
- Accenture – 71,126 ( 37% more than the nearest Indian rival)
Revenue per person in 2016 (USD)
- TCS- 46,758
- Wipro- 42,485
- Infosys- 48, 963
- Quality of work undertaken is low value and not improved over time
- Changes in leadership – have not increased productivity
- The promise of digital improving profits and productivity have not been realised
- Business model changes have not materialised and the comfort zone of Cost plus revenue model stays 37
Shrinkinflation in Retail = Pedigree shrinkage in IT Services
Lets say the big 3 Services firms hired from Tier 2/3 colleges for entry level jobs in 2010
They are now hiring from Tier 3/4 – which is not necessarily a bad thing – labour market dynamics means the better college folks are getting better jobs. But pedigree shrinkage cannot continue as below a certain category of college- the quality is of education is abysmal
High revenue per person means- More product & More consulting
Apart from Finacle ( infosys-banking platform) what are the top 5 products created by the Indian IT Services giants ?
Consulting teams at Accenture, Deloitte are far superior than what the Indian IT giants have been able to put together . Compensation differentials are telling – We did middle management roles for a client in IT strategy – and Accenture for someone with great pedigree and 10 years experience ranged between 40- 60,00,000 INR pa ; While similar pedigree folks in Infosys Consulting were at the most 40,00,000 INR pa
I would be really interested to see how Capco evolves in the Wipro ecosystem. A lot of earlier acquisition by the big 3 have been, for want of a better word- asset stripping for clients and talent and then left to languish as the better folks and leaders find other pastures
Radical Solution- 2 CEO's
Creating Products or getting a high level consulting revenue stream going are long gestation projects and paraphrasing Einstein – “We cannot solve our problems with the same thinking we used when we created them OR with the same organisation design and approach to Talent which created them
A leadership team under constant quarter/ yearly target pressure will regress back to normal- i.e take the easy way out – and continue business as usual
the new CEO can create an organisaiton focused on Consulting & Product Development and that would mean
- New organisation design, delivery structures & leadership.
- A totally different talent approach- profile of people, Compensation & Rewards, Development & performance management.
- Instead of losing your better people to product companies, captives, consulting firms and e-commerce – might as well “promote” them to a better business with higher productivity and revenue
- The Big 3 firms have the cash to do this tomorrow – the willingness & courage is a matter of choice!
By Omar Farooq. Founder & CEO. Ask us how you can win the talent war !
References
- IT CEO pay shot up 835% in a decade while fresher’s salary grew 45%
- TCS, Infosys, Wipro see decline in revenue per employee in FY16
- Why revenue per employee in IT firms continues to grow slow despite huge growth in digital
- TCS- Financial Results 2021
- Wipro Financial Results 2021
- Infosys Financial Results 2021
- Accenture 2021 Financial Fact sheet
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