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There
was a time when employee stock options (ESOPs), guided the career
path of many Indian software professionals. However, tumbling tech
stocks have ensured that this is no longer the case. ESOPs are no
more considered a lucrative benefit. This is just one of the examples.
In fact, the benefits that Indian IT professionals value have undergone
a sea change in the last couple of years. And it seems that the
slowdown has tempered the spirits to some extent. As a result, there
is a greater inclination towards more cash in hand and benefits
that provide greater security. The shift is slow but definitely
in line, point out experts. Nasscom, in association with Hewitt,
is also in the process of conducting a study on the benefits that
employees seek and value most in the IT industry, as well as arriving
at an industry benchmark.
Even
though compensation and benefit packages differ for each company,
most organisations agree to the shifting trends in what IT employees
are today seeking and are going to value in the future. Atul Srivastava,
head of people relationship management at Cap Gemini Ernst &
Young feels that there has been a marked change as far as employee
benefits are concerned. It is because the basic premises on which
employees evaluate their benefits are changing. Here is a peek into
some of the emerging trends. While many of the benefits have been
existing for quite some time, it is only now that they are gaining
momentum and might well turn out to be what employees in the IT
industry will value the most.
Risk
averseness
The
slowdown and consequent job cuts have made IT professionals more
averse towards risks. “They are happy looking at a compensation
and benefits package that gives security and assured income, that
is, one that reduces risk in an environment which is perceived as
unstable and risky,” says Kavitha Iyer, head of human resources
at First Apex. This, in effect, is shaping the look of future employee
benefits programmes.
ESOPs
losing sheen
One
clear indication which has emerged in the recent past is that ESOPs
are losing their sheen and have helped little in terms of retention.
“The scale and proportion has gone down. ESOPs are not as much
in demand as they used to be a couple of years back,” points
out PK Gupta, director of strategic development for intercontinental
operations at Legato Systems India. Apart from plunging stock prices,
another factor driving this trend is that employees now prefer any
immediate benefit, either in tangible or intangible form. They are
not ready to wait beyond a year for accruing any benefit, explains
Upinder Zutshi, COO of Infinite Computer Solutions. Some of the
companies have started moving to Economic Value Add (EVA) instead
of employee stock options.
Tangible
benefits
There
is an emphasis on tangible benefits like preference for cash in
hand as against facilities and provisions, and most employees and
potential recruits are more interested in their ‘take home’
salary. Employees want more and more rewards for their hard work
in tangible terms. Also, in line with the preference to have cash
in hand is the greater emphasis on performance-based variable pay.
Limited yearly salary raises are
making
people look for more cash rewards. Abhay Sinha, managing director
of Infogain’s India development centre, agrees that while appreciation
of greater monetary benefits as reflected in provisions like performance-based
variable pay packets will continue to grow, the trend will be more
in favour of consolidated compensation packages where the benefits
appear directly and upfront as monetary compensation. Employees
are showing increasing aversion to hidden or indirect benefits.
They prefer greater transparency in their compensation packages.
One
of the key trends that organisations are looking for is to provide
a prudent mix of fixed and variable compensations. The opportunity
to substantially increase the variable component based on performance
of the organisation and individual will take precedence in the coming
years, says Arjun Vaznaik, chief operating officer of Tracmail.
A performance-based compensation augurs well from the employers’
standpoint as well. The organisation benefits through increase in
productivity and better resource utilisation—and, a part of
the increased revenue can be passed on to the more deserving employees.
“Industry
benchmarks are moving northwards, hence a significant increase in
performance is the least an organisation can expect from its employees.
The market place is no longer local. It is becoming more and more
global. Hence, costs and competencies are becoming increasingly
co-related,” says Prasenjit Ganguly, vice president of Max
HealthScribe.
Greater
security
The
need for greater security is pushing employees to seek long-term
benefits like insurance cover. Sanjay Aggarwal, managing director
of HR Minds Consulting agrees that in the software industry IT professionals
now consider insurance cover for self and family as a significant
benefit. In fact, over the years, benefits like
provident fund, gratuity, superannuation, life
insurance, personal accident insurance,
insurance,
comprehensive medical benefits for the family would become more
popular and deciding factor about retention. “High attrition
will, in due course, become a part of the past. Employees will stick
to a company if it takes care of their basic requirements, provides
for a stable family life and for social securities,” adds Srivastava.
According to Manoj Mandavgane, general manager of HR at ICICI Infotech,
while at junior levels “cash in hand” is the driver at
middle and senior levels, family related benefits like medical and
LTA are sought after. Sales staff’s compensation could be linked
to orders obtained, i.e. sales-based incentive plan. At all levels
the employees also expect to take overseas assignments.
A
plethora of insurance companies are already tailoring programmes
to suit the specific needs of a company’s employees. A few
IT companies have even tied up with local hospitals and nursing
homes.
Greater
stability and social status
While
short-term benefits attach greater value, some of the long-term
benefits are also finding favour with IT professionals. Earlier
IT professionals were jumping quickly from one job to another and
were not interested in long-term benefits. However, Gupta thinks
that with the downturn and closure of many start-ups and small companies,
people are looking for stable and safer jobs, which in turn will
boost long-term benefits like company car, housing loans, etc. These
benefits are also finding favour with the IT employees on account
of the fact that the industry is quite young and hence finds value
in benefits that increase their social status. Aggarwal points out
that in case of loans, the company’s role is all about deducting
the monthly installment at source from the pay packet.
In
the ITES industry, there is an increasing value to benefits like
transport, round-the-clock cafeteria and medical facilities at office
premises. This is because of the very nature of the jobs in this
industry requiring employees to stay back during the night as well,
explains Prakash Toppo, vice president of HR at GlobalVantage India.
Simplified
compensation packages
One
of the key trends that seems to be emerging is a drive towards greater
simplification of compensation programmes because of amendments
in the Income Tax Act, which will make the structuring of compensation
packages very complex. This will also save the companies a lot of
paper work. Deepak Dhawan, vice president of HR at EXL Service maintains
that in future companies will be increasingly moving towards providing
some amount of money to their employees without pre-structuring
them into portions like Basic, HR, benefits, transport allowance,
etc. This, he feels, will give employees greater flexibility to
design their own salary in accordance with their needs as well as
the tax structure. It will however, take another two-three years
for the trend to catch up in a big way among the IT companies. Hinting
at a similar trend Arun Bhagat, general manager of HR and logistics
at Acer India says that increasingly benefits will go the ‘cost-to-company’
way and it will become more an issue of personal choice and hence
employees will like to choose their own benefit lifestyle.
Conclusion
As
conditions stabilise companies are once again getting into the recruitment
mode, and employers are more than willing to understand the employees’
requirements and design their compensation packages and employee
benefits programmes accordingly. While the focus for most companies
during the last couple of years was on survival, it is now time
for them to understand the changes in employee needs and bridge
the gap.
WHAT
EMPLOYEES WANT
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Preference for cash in hand
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Long-term benefits to ensure greater security
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Comprehensive medical benefits for self and family
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Life insurance
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Personal accident insurance
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Company car
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Housing loans
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