The current slowdown has not only battered the job market, but also resulted in slimmer pay packets. Increasingly, corporates are shying away from loosening their purse strings to hire talent.
“Companies are looking to balance the pressure of inflation and lower their HR budgets,” said Shiv Agarwal, CEO, ABC Consultants Pvt Ltd. IT, BPO, financial services, and investment and corporate banking sectors are facing the brunt of the slowdown.
Many companies have increased performance linkages to counter fixed pay increases. Real estate player Orbit Corporation Ltd, for instance, has increased the variable pay component in salaries it offers to keep its budget intact.
“Real estate will continue to face the impact of slowdown for the next 12-18 months,” said Ram Yadav, head, finance and strategies, Orbit Corporation Ltd. As a result, salaries are taking a beating. “The average salary hike during a job switch in the real estate sector will be about 20-25% instead of the present 50%,” said Yadav.
Some corporates are also looking at innovative ways to cut peripheral costs like travel and recreation rather than cutting down on employee salaries or learning and development expenses. This is being done with an aim to manage talent supply for the long term and not just the downturn.
A Hewitt Associates study has revealed that global economic slowdown, US sub-prime crisis and rising inflation have caused Indian companies to revisit budgets for 2009. Average salary projections across sectors for the coming year are lower by a percentage point at 13.9 %, from 14.8% in 2008.
According to the study, 25% of the companies surveyed are looking to reduce staff budgets, with cuts largely in the areas of travel and recreation. 9% companies have resorted to a reduction in training budgets. Another 4 % of the companies surveyed have taken recourse to promotion freeze. All these firms are from the IT, ITES and BFSI sectors.
However, Arunima Sharma, head-executive research, INX Executive Pvt Ltd feels that most cost-cutting measures have not been put in practice as yet. “This is there in the minds of people, but has not yet been implemented by many. Companies however are becoming cautious about their spending while hiring talent.”