According to data sourced by Moneycontrol, the salaries of top executives at India’s five leading IT companies have increased by over 160% in the past five years. In contrast, freshers saw a meager salary growth of just 4%. The median annual pay for CEOs in FY24 was close to Rs 84 crore, while freshers salaries rose from Rs 3.6 lakh to Rs 4 lakh. The companies included in the data are TCS, Infosys, HCLTech, Wipro, and Tech Mahindra.
Critics Highlight Widening Pay Gap Amid India’s Slowing GDP Growth
Amid concerns over a widening pay gap, India’s GDP growth slowed to 5.4% in the second quarter of FY25. Critics, including former Infosys CFO Mohandas Pai, have raised alarms, arguing that rewarding top executives generously while freshers remain underpaid is wrong. Pai highlighted the growing disparity and its detrimental effect on economic consumption.
The pay gap between CEOs and freshers in these IT companies is striking. For example, Wipro’s ratio stands at 1,702:1, while TCS’s ratio is 192:1. This issue is made worse by the sluggish wage growth in other sectors, like engineering and manufacturing, which increased by only 0.8% annually between 2019 and 2023.
Challenges in IT Sector: High CEO Pay vs. Stagnant Freshers Salaries
The slowdown in salary growth for freshers is attributed to the pyramid model, where a large pool of fresh graduates leads to low entry-level salaries. Gaurav Parab from NelsonHall explains that the high supply of freshers and their low compensation are due to the significant training required, which raises costs for companies.
The IT sector is grappling with challenges such as high attrition rates and fewer on-site opportunities, which impact compensation structures. Experts point out that while CEO salaries align with global benchmarks, the growing disparity worsens inequality and negatively affects middle-class workers who are struggling with increasing living costs.
Critics advocate for companies to address the issue by increasing fresher salaries to at least Rs 5 lakh annually, a change many believe is feasible for these profitable firms.
