Tech Industry’s Salary Secrets Exposed: Why Salaries Are Plummeting

Tech Industry's Salary Secrets Exposed: Why Salaries Are Plummeting

In the domain of the technology sector, the increments in salaries for potential recruits have notably contracted, plummeting below fifty percent of the preceding levels in the past year, as reported by ET. The broader industry-wide deceleration in recruitment across major tech segments, including IT services, products, and technology-driven startups, has resulted in reduced enthusiasm among companies to acquire candidates with high-end specialized tech skills at any cost. Experts in the field have observed this evolving trend.

The once conspicuous average salary growth has now decreased from the range of fifty to one hundred percent to a more modest thirty-five to forty percent for skill sets in demand, such as full-stack engineers, data engineers, front-end engineers, SRE/DevOps specialists, data scientists, and back-end engineers. This data has been compiled by specialized staffing firm Xpheno for ET.

This contrast marks a noticeable departure from the previous year, when job seekers had numerous job offers to choose from, leading to a widespread practice of seeking the best offers, while employers were engaged in a fervent rush to hire.

For instance, the standard pay range for a full-stack engineer with four to seven years of experience has now contracted to Rs 10-26 lakh annually, down from the earlier Rs 15-32 lakh at the end of 2021-22. Similarly, the bargaining margins offered by employers have decreased from fifty to one hundred percent during that period to twenty to thirty-five percent now.

In the realms of data engineering and data analytics, the potential for salary hikes has now reduced to 25-35%, a drop from the 40-90% seen a year ago. The figures for salary increments for front-end engineers have dwindled to 15-35%, a decline from the previous 50-90%. SRE/DevOps roles have experienced a reduction in hike percentage to 20-35% from 40-80%, while data scientists are now being offered increments in the range of 20-35%, in contrast to the prior 40-100%.

Anil Ethanur, co-founder of Xpheno, remarked, “We are witnessing the quintessential ‘calm after the storm’ in recruitment discussions.” According to him, following downward adjustments in budgets across roles in 2022-23, current salary ranges for offers have now stabilized, without any unusually high increments.

Ethanur further noted that despite candidate expectations, there have been corrections from the employer’s end, leading to normalized negotiation ranges, which now revolve around the average 35% increment threshold. While exceptional offers and negotiations still occur occasionally, they are infrequent, he observed.

The outlook on anticipated increment levels has also witnessed a significant cooling, decreasing from 70-120% at the end of FY22 to the current 30-40%, according to the data.

Anshuman Das, the CEO of Longhouse Consulting, acknowledged that specialized skills still command a premium due to the ongoing demand-supply dynamics. However, Das highlighted that the salary inflation prevalent in 2021-22, a period marked by fierce competition for tech talent across IT services and startups, has subsided.

The situation has evolved for IT services firms as they narrow their negotiation scope to focus on utilization. Similarly, startups, facing a funding slowdown, have shifted away from unrestricted spending.

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