MNCs score over domestic IT cos in entry-level recruitment

Written by Vrishti Beniwal | New Delhi, Jan 1 | Updated: Jan 2 2008, 07:00am hrs
Multinational companies like Google, Accenture and IBM are giving a tough competition to their Indian IT biggies for entry-level recruitments. TCS and Infosys, which have so far set the benchmark for other IT companies in deciding the wages of freshers, are now being increasingly marginalised at leading engineering colleges.

As global investment banks, consulting firms as well as financial services firms plan a multi-fold increase in their India headcount over the next few years, there is an increased focus on ramping up recruiting at the undergraduate level. Approaching students with hefty pay packages, these MNCs are becoming their preferred employers.

A wide talent pool at the entry level has always given a cost advantage to the domestic IT companies. In the instance of a slowdown in the sector during the past, TCS and Infosys have controlled salary escalations, resulting in Wipro, Satyam, HCL to follow suit. But now, analysts say, it will be difficult for them to remain the price setters. Furthermore, they will be under pressure to match salaries with those offered by MNCs.

"Companies like McKinsey, AT Kearney, Accenture, Google, Microsoft, and Yahoo are increasingly recruiting at the undergraduate level and have emerged preferred employers who are accorded day zero/one status. This has diminished appeal of mainstream Indian IT companies, forcing them to increasingly reach out to other colleges and strategise to establish themselves as anchor companies," said equity research firm Edelweiss.

Until recently, MNCs in India were not recruiting in large numbers at the entry level. The hiring drive focused mainly at junior-to-mid level professionals. However, as they plan to grow bigger in India, there is an increased need to hire from campuses. Both IBM and Accenture will have one-third of their global services staff based outside by 2010.

While entry-level hiring is constantly going up in the leading five Indian IT companies, with freshers comprising about a quarter of the total workforce, top 10 MNCs are also expected to hire over 1 lakh people over the next two years. Considering the scarcity of employable workforce in India, this may result in an increase in the wages, say experts.

Though the difference in salaries is not huge, MNCs score over domestic firms because of a bigger brand and the perks they offer. Definitely this will lead to a 10-15% year-on year rise in entry-level wages in IT, said Vinamra Shastri, partner, Grant Thornton.