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Have American-style salaries reached India?

January 01, 2007 08:38 IST

A graduate of one of the Indian Institutes of Technology gets a salary offer of $100,000 (Rs 45 lakh). One from an Indian Institute of Management gets offered more than twice as much. Have American-style salaries reached India?

Yes and no. Those two job offers were for postings overseas, not in India. But many Indian companies, struggling to keep pace with a heated job market, are beginning to find that they have to pay salaries that are beginning to be comparable (after some adjustments) with those in wealthy countries.

Take the field of advertising. A fresh graduate from an American University who gets hired by a large, full-service advertising agency to service its clients in the US, is likely to get a starting annual salary of $25,000-$30,000.

His counterpart in India, if he joins one of the top 10 ad agencies in the country, will be offered a starting salary of Rs 3 lakh ($6,700).

Adjust for differences in purchasing power (Rs 45 in India buy you more than a dollar does in the US; true spending power equates Rs 10 with a dollar-which is what economists call adjusting for purchasing power parity, or PPP), and the two salaries become uncannily comparable.

Those numbers reflect the emerging reality across many rapid-growth sectors in India. As the country tops the salary sweepstakes in Asia year after year, with annual hikes of 15 per cent being the average and some salary surveys in 2006 reporting a 22 per cent increase, the differentials with the rich countries are steadily reducing.

And as employees gain experience and ability, their salaries increase faster in India, and even begin to match American levels, dollar for dollar, with no PPP adjustment.

The head of one of the big accounting firms in India reports that an employee doing audit and tax practice in his firm, with 10 years' experience, would earn anything up to Rs 36 lakh (the equivalent of $80,000); check the websites and you find an ad for a chief financial officer in Orlando, Florida, with the pay offered being $75,000 to $90,000. There is no shortage of CFO's in India who earn the same salary.

Ironically, the cross-country salary differentials seem to be greater in the most happening sector of them all: software. The big three software companies pay their engineers in India a starting salary of about Rs 3 lakh (PPP $30,000).

In comparison, a survey done by the National Association of Colleges and Employers in the US last year reported an average starting salary for a computer engineer of $52,500. The representative of a software giant explained that they are flooded with job applications, and don't need to pay more.

In the sales profession, a reference check with salaries compiled by the US bureau of labour statistics suggests PPP parity with the levels in India; but when it comes to skilled workmen like carpenters, the differentials shoot up.

The moral of the story seems to be that if you are well-educated, have a successful career and hold down a good job in India, you are probably better off than your US counterpart.

BS Reporter in New Delhi
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