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I cannot predict. But I wish for positive salary correction instead of negative workforce trimming or higher unemployment. 

If there is going to be workforce trimming, then new recruitments will be at "corrected" salary. Ultimately, there will be good balance of earnings vs inflation.

Cost-cutting (easy decision and easy execution) will be there for sure in the short-term. Good companies might focus on efficiency improvement as well.

I believe Salary Correction will happen, and it may not be that positive. But this may be corrected as we move out of this downturn. A true techie will always update him with new skills and that makes him insulated from this short-term corrections.

I belive it will be a correction stage for IT/ITeS companies.

Srideep: During this crisis, salary correction (cut or deflating the inflated salaries) is a "very positive" move compared to capable people losing jobs (workforce trimming is negative and painful). I used the words "positive" and "negative" to convey this meaning.

For starters I feel, attrition will reduce drastically in the industry. There is always a positive corelation bwtween attrition and salary levels. that said, companies will definitely cut down work force sizes and salary increases may just be a single digit. However for those who add value none of this is valid.

I think company has to abide with economic pressures /changes too or else it gets affected, so in that context, we must look at the salary correction on positive note, this pressure may force to take harsh decision of trimming workforce which is very sad.

From everyone's survival point of view, salary correction is a positive way out then trimming workforce.

The sad truth is that when it comes to Domain Knowledge, actual worthwhile senior level project management experience and expertise in different specific aspects of IT/ITES, the pool of people availablein India is still a small pool. Imagine a pyramid that is very short but wide at the base. At the base are the freshers.

The top of the pyramid will continue to demand and get premium salaries although they may see some declines if they are just managers rather than technocrats with proven successes in the past.

The bottom of the pyramid was also under extreme salary inflation just in the last three or four years. This will deflate in a hurry and entry level salaries will come to a more reasonable levels.

There needs to be some parity between ability and compensation. When it goes out of whack just because of demand, the bubble bursts and things go back to something more reasonable.

I appreicate your thought process and I agree with you in IT/ITES, the disparity issues in salary are there, its a challenge for HR professionals to bring in that balance in the salary structures in the organisational sphere (internal enviornment) and external enviornment forces (economic, political) will be pressure point.

Salaries in the IT /  ITES / BPO  segments will take a heavy beating, Primarily not only beause of reccession in the global / US markets but because of unjustified salary levels in theses industries. US melt down is only a tool for this correction, then it will stabilise.

Also remember salaries will determine the standard of living too, it is not for long one sector of people getting unreasonable levels of salaries that too while dependant on all other sectors for their survival of business.

The best examples are US, where their salary levels are very high not only in the tech sector but reasonably comaparable in other sectors too. Still when they came to india the primary reason being India cheaper than US otherwise most of all these jobs created would have remained in US itself. Now they cut their spending leaving the impact on tech salaries.

The lessson learned is If your slaries are linked to efficency and skill levels and accordingly arrived a base it may not get affected or painful the way things are unfolding.

Hence this is good for the industry and this correction would also bring down unneccessary inflation as well creating bubbles in Residential rentals / buying etc, which would not only ease for techies but for all the rest of us.

I guess skill shortages still hold true when we look around beyond technical skills and want someone who thinks strategically, who knows about change management and who has good interpersonal and communication skills. However, normal skillsets may not be as difficult to find in a market which seems to be slowing down more faster then anyone of us had assumed a quarter back. We saw an exceptionally long surge of economic growth which had dried up the available talents and hence there was almost a wage war.

The slowing economy would also force us to produce our services cheaper. In the new dynamics, I do see that we have a natural bias towards a downward correction on cost - after all we are not going to be lucky enough to get newer clients to pay higher for our services. It will be interesting to see how 2009 unfolds for all of us!

I think Rajan, yes it will be easing out to a certain extend.

I only wanted to convey irrespective of any economy in the world, being a HR professional, if we address the salary disparity issues (as mentioned in your content unjustified salary levels) there in there, it will narrow the gap/discrepancy in the salary levels in organisations.

Example,

When i recruit someone i do measure person's experience, qualifications, skill set, special skills, no of and kind of projects done in the work history, other basic soft skills, and of course graph of previous salaries, i weigh all this with existing workforce data and try to look at the disharmony factor or whether its rocking the boat or not ? and also by maintaining salary matrix based on education, experience and skill set this is one way to bring in control in terms of finalizing salary of a professional.

Lastly as mentioned by Lalit, It will be interesting to see how 2009 unfolds for all of us!

Thanks

In my opinion, Salaries will continue to go up for specific skill sets and talent, and performance based salary component will increase. Salaries of entry level recruits will will go down and non performers will be either fired or will need to take salary cuts. Though it wont be uniform for all type of skill sets and positions, companies will keep a major portion of salaries under scrutiny and tight control .

Best wishes for a happy and prosperous Diwali.

Hari

Companies will focus on increasing Value and productivity through internal measures (in absence of external growth, or much reduced growth). This would drive companies to look at Salary levels carefully - since that is the largest cost - compared to reducing headcount, a salary freeze or reduction is definitely a preferred option.

However, individuals who can deliver greater value, or could upgrade themselves through Trainings would be rewarded more. For them the downturn is a great place to differentiate themselves and also grow. The demand for special skills would continue to be high.

I think the people who would be impacted the maximum are people entering the job market, or who entered in the last 1-2 years -- For them it maybe a time to sharpen their skills.

Ankur

I was thinking as many are the salaries will see a cut or increases would freeze. But with recent windfall from Dollar to Rs conversion the correction may wait little longer!.

Raju

In my view the salary levels in our industry reached un lealistic levels and was supported maily by virual assets till now. With Virtual assets like interest futures and sub prime markets going bust the levels will have to come to the original levels and I beleieve the next your there will be either no salary hikes or marginal rise. With the assumption new projects will be hard to come demand for people will also come down meaning unealistic promises will also come down along with that

Gnana

In my reckoning ,  particularly , the IT / ITES segments (of the industry)  cannot afford to become highly sensitive when the scenario becomes discouraging.

Why -- because this will only send worng signals that this segment is not at all prepared to face any econimic challenges .

You cannot be liberal during good days and be different during testing times .

There must be consistency in our approach .

What is happening is only a temporary phenamnon and we have seen at least 3 such bad times in the last 2 decades -- so it is not uncommon.

What needs to be done is a  pragmatic approach -- " inward--outward looking mentality".

To save jobs during such testing times , secured others should come forward voluntarily  for an ad-hoc pay-cut to tide over the situation .

Then , all will fall in line -- and we can get revitalised.

Let us face it and manage it  -- for "we can do it".

I agree with you Mr. Srinivasan that we cannot be different in our approach and it has to have consistency.

I think its a challenge to be taken by each and every member of an organisation then cutting job of few and as you rightly said,

Let us face it and manage it  -- for "we can do it".

Gudluck to all of us to execute this in our professional actions too if such situations/crossroads come in our professional careers, its difficult to play the role practically.

I have personally experienced the trauma of people undergoing the exercise of layoff and victims of layoff, its painful.

I feel Mr. Srinivasan has put it aptly,

"To save jobs during such testing times , secured others should come forward voluntarily  for an ad-hoc pay-cut to tide over the situation .

Then , all will fall in line -- and we can get revitalised."

 Regards

Jyoti