India’s job market has shifted drastically since a year ago, when India Inc was on a hiring spree, offering generous pay packages, especially in tier II and III cities.
According to experts, the resurgence of in-office policies has led to a decline in compensation by over 40% for candidates located in smaller towns and cities. Companies have not only revisited dearness allowances, but has also done away with incentives that once facilitated remote working from these regions.
“The difference in compensation, including city allowances, led to a 20-40% difference in salaries for candidates from small towns. Companies have moved between either side of the pendulum in the last year and half,” said Hardeep Singh, president, Right Management India Pvt. Ltd, the Manpower Group’s consulting arm.
The decline in compensation follows a 40% dip in IT sector hiring compared to last year, with most firms preferring to acquire talent from metropolitan areas due to a sluggish market.
Recruiters said IT, outsourcing, manufacturing and engineering, as well as consumer recruitments have declined.
Those who were onboarded during the hiring frenzy when talent in larger cities was very expensive, are being asked to relocate to metros for the same compensation, forcing many to opt out, they added.
“Post-covid, they wooed talent from these towns and now are insisting everyone to work from office . Many employees are heading to satellite offices, and it will be taking some for hybrid work culture to settle down,” Singh added.
A year ago, IT and FMCG firms were recruiting from cities such as Vijayawada, Coimbatore, Bhubaneshwar, Visakhapatnam and Ahmedabad as professionals were willing to switch jobs for a 30% raise, while candidates from metros demanded twice their current pay. However, the dynamics have now shifted from being an employees’ market to becoming more favourable for employers. Nevertheless, recruiters have observed a distinction between lateral and junior level hiring.
“Compensation difference between tier 1 and 2 cities is 15% for laterals. Junior employees are hired at ₹4-4.5 lakh in metros while for small towns it is around ₹3 lakh,” Vijay Sivaram, chief executive, Quess IT Staffing, said.
“Pay difference can oscillate from 5% to 40% depending on the location . Dearness allowance includes the cost of living in a city. It is being taken into consideration now while it was more relaxed post-pandemic,” said Rituparna Chakraborty, co-founder director of TeamLease Services.
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Updated: 29 Aug 2023, 11:45 PM IST
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