Salary slowdown

Buster

As the US economy goes into hibernation, salaries in Indian technology companies are poised to cool after three years of a bull run. Annual increments are now being pared to five per cent; down form the close to twenty per cent of the earlier years. On-site deployment which is another money spinner for Indian software engineers is also shrinking to a low of twenty per cent of the workforce; down from close to thirty five per cent as it was till the middle of last year.

Allowances paid during on-site deployment is a major source of savings for coders and developers who travel on H1B visas and live rather frugally when based abroad. The resultant savings fuelled the boom for houses and cars in the hyper growth cities of Bangalore, Hyderabad and Chennai. The restaurant business was also a major beneficiary of the disposable income that was generated by allowances paid while travelling abroad. So was retail.

Mumbai and Delhi don’t seem to be as affected as these cities don’t depend overly on IT induced income.

When the slowdown will correct itself is still anybody’s guess but economists of US banks are cautioning their managements to tighten their belts till 2010.

Citigroup is generally the bell weather for US banks and till Vikram Pandit pulls off an effective rescue act for the troubled global behemoth, Wall Street analysts are not expected to send out buy signals on bank stocks.

Changing order

Wells Fargo has been a major gainer in the general chaos that has occurred in the banking industry. The retail banking giant has inched closer to Bank of America and JP Morgan in the market capitalisation sweepstakes. In fact, the bank has relegated Citigroup to the fourth position which was earlier occupied by Wachovia, the mortgage major, who have been deeply dented by the sub prime crisis.

Wells Fargo’s off shored captive unit in Hyderabad is reportedly one of the few banks who are still hiring in the midst of the freeze that defines the hiring marketplace today. Even in the general gloom that has descended upon the banking technology industry, Wells Fargo provides a silver lining.

Veterans quitting

Head hunters are of the opinion that several veterans of Indian software companies like Infosys, Wipro and TCS are now actively seeking a change.

Ms Preeti Rao’s departure from Infosys where she headed the "income predictable" technology infrastructure services division, is a pointer to this trend. There are many more virtually lifetime employees of these companies who have suddenly read the writing on the wall as the global delivery model of Indian software companies seems to be wearing thin. The cost arbitrage that India presented is no longer that visible.

At the same time, Indian technology companies have failed to produce a critical mass of subject matter experts which hinders them from developing sharp vertical expertise.

Infosys and Wipro typically rotate their senior managers across verticals and clients in a manner that is characteristic of the government where IAS officers are rarely known to subject matter experts. Maybe this model worked in the early stages of Infosys but it is certainly not the path for the future.