Low entry-level pay in IT due to cartelisation: TV Mohandas Pai

Hyderabad: Big Indian IT companies have formed a cartel to keep salary of entry-level engineers low, alleged IT industry veteran T.V. Mohandas Pai, raising a strong pitch for a better deal for freshers. He agreed with Infosys co-founder N.R. Narayana Murthy, who said that in the last seven years, the salaries of freshers in the software industry have stayed stagnant, while the same for senior-level employees have grown multi-fold.

Mr Pai, a former CFO of Infosys, said these companies are taking advantage of “over-supply” of engineers and seeking to command the market, terming this trend “totally wrong”. “There is a cartel...there has been a cartel, there is no doubt. They (big IT companies) talk to each other, sometimes tell each other not to increase, that’s been there for a long time,” Mr Pai told PTI.

“I know that people (of big IT companies) used to get together and tell each other not to raise (entry-level) salary. If one took into effect inflation, the remuneration of freshers in the IT industry has in fact come down by 50 per cent in the last seven years,” he said. “That’s why attrition in the first five years is very high”.

Stagnant entry-level salary has led to bright minds not joining the IT industry, according to him. “They (big IT companies) can afford to pay better salary. They have to make sure they don’t pay more at the top, and they pay more at the bottom. They have to learn to adjust,” Mr Pai said. “To me, it’s an ethical, fairness issue; they can afford to pay more. (Not raising entry-level salary is) ethically and morally wrong,” Mr Pai said. He said biggies such as TCS and Infosys should take the lead in giving a better deal for freshers.

“People who are paid low should get more. Best guys don’t want to come and join the industry. It’s important for them to raise the salary, make sure people at the bottom feel much more comfortable”, Mr Pai said. “It’s very depressing (freshers not getting good salary). What to do? Supply is more,” he said. “Also, education that they get is not good enough to get them job straight away. They have to be trained.”