Right time for IT engineers in India to hit the jackpot as salaries rocket

Technology-related hiring is always a hot topic. Now, more than ever before, the IT job market is a happening space.

One is IT services, which comprises IT services companies like TCS, Infosys and others. Then there are IT product companies. The third category Captives, which are basically large companies who have in-house teams which run into tens of thousands of employees.

Then there are consulting firms like EY, PwC, etc, who also have large teams who execute projects, so they are no longer just consultants. Lastly, there is the funded tech startup space.

In all, there were 2.29 lakh job openings across these five categories, as of end August.

According to Xpheno, this number is the second-highest count for the 18-month period, after the July number, which was about 2.31 lakh. There was a slight dip in August, compared to July.

Another measure to understand the importance of this 2.29 lakh job listings out there is seeing this as a percentage of the total white-collar job openings overall across industries like telecom, BFSI, auto, i.e. IT openings as a percentage of total white-collar openings.

The IT sector job openings comprised 82 percent of total white-collar job openings. Of the total workforce across the five IT sector categories, IT services is the biggest chunk but they are not necessarily the highest paying part of the IT ecosystem, in fact they are right at the bottom. The highest-paid would essentially be from the funded tech startup space.

The total workforce across the five categories works to 45.5 lakh people.

The most in-demand skills across the IT ecosystem are full stack engineers, data engineers, frontend engineers, developer operations, data scientists and backend engineers. This is across all five categories.

Across the skills in demand, full stack engineers are now expecting a 70-120 percent increase in pay. A year ago, the pay expectation from full stack engineers was in the range of 20-30 percent. Similarly, front end engineers are now expecting between 60 and 100 percent hikes as compared to 30-40 percent pay hikes a year ago. The numbers across the other four categories are also pretty similar.

The companies are now having to pay bigger hikes compared to a year ago during internal performance reviews. For full stack engineers it is 25-30 percent hike compared to 10-14 percent increase a year ago.

When an employees with a company gets an offer from a competitor, the companies have to pay top dollar to retain employees and that for full stack engineers could be between 50 and 70 percent hikes compared to 8 to 15 percent last year, which is a big, big jump.

All this means that the total wage bill for the entire IT sector is going to go up by $1.6-1.7 billion in FY22, the current financial year on a base of total wage bill, that works out to about a 4-5 percent increase, which is meaningful because it is the whole IT sector we're talking about.

All this also shows up when one speaks with companies or people in the hiring function, in IT organisations. They complain of big shortages, irrational salary increases and very high attrition levels.

It is a golden time for employees with the right skills who are juggling job offers and negotiating pay big time. Also for cities where the IT ecosystem is based like Bangalore, Hyderabad, Chennai, it means a booming real estate market and good discretionary consumption overall.

As for the IT companies themselves, while growth is solid, will wage inflation eat into profits big time.