Deloitte compensation trends_2013

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Deloitte compensation trends_2013

  1. 1. Compensation Trends Survey 2013 – 14DeloitteHuman Capital ConsultingMarch 2013
  2. 2. 2ContentsSurvey DetailsSurvey HighlightsGeneral Industry AnalysisDetailed Sector-wise AnalysisContact Us
  3. 3. 3ContentsSurvey DetailsSurvey HighlightsGeneral Industry AnalysisDetailed Sector-wise AnalysisContact Us
  4. 4. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Survey DetailsScope of the SurveyThe Deloitte Compensation Trends Survey is an annualstudy conducted by Deloitte Human Capital Consulting.The aim of the survey is to understand keycompensation trends across sectors in the Indianmarket. This is the third edition of this survey4Elements detailed in the Compensation TrendsSurvey 2013 – 14• Salary Increase for 2013 – 2014• Variable Pay given / to be given for 2013 – 2014• Key Benefits given across sectors• Attrition rate and key reasons for attrition faced byorganizations• Key Human Resource Challenges faced by organizations
  5. 5. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Survey DetailsSurvey Methodology5Design the Survey InstrumentThe parameters of the study were finalized and a structuredquestionnaire was designed as a primary data collection toolFinalization of Target BasketThe sectors covered in the study were finalized along with theleading organizations from each sectorInvite and Seek Consent for ParticipationA formal invitation e-mail was sent to the Human Resources in thechosen organizations requesting for participationData Collection and ValidationThe responses received from all participants were validated andchecked for accuracy and intended interpretationData AnalysisThe data received was collated and analyzed to get detailed insightson sector wise practices and compensation trendsCompensation Trends Survey 2013 – 14 Report
  6. 6. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.10%15%19%50%6%<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr. >1000 Cr.26%27%23%11%6%6%<500 500 - 2000 2000 - 50005000 - 10000 10000 - 25000 >25000Survey DetailsParticipant Profile6Industry-wise participation155 organizations participated in the Compensation Trends Survey for 2013 – 2014Annual RevenueEmployee Strength• The greatest participation in this survey came from the Manufacturingsector, followed by Financial Services, IT and ITeS sectors• Annual revenue of majority of the organizations (50%) is ` 500 – 1000Cr. This is followed by 19% in ` 300 – 500 Cr. range and 15% in the` 100 – 300 Cr. range• Majority of the organizations (27%) who participated in the surveyhave employees between 500 – 20007%24%7%10%12%8%9%5%7%6%5%Consumer Business & RetailManufacturingInfrastructure & Real EstatePharmaceuticalsFinancial ServicesInformation TechnologyITeSAdvertising & MediaEnergy & Natural ResourcesHospitalityLogistics
  7. 7. 7ContentsSurvey DetailsSurvey HighlightsGeneral Industry AnalysisDetailed Sector-wise AnalysisContact Us
  8. 8. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Survey HighlightsExecutive Summary8• The median salary increments across sectors is projected at 11.3%• Highest increment figures have been reported in the Pharmaceuticals, Health Care and Life Sciences sector at13.1%• The Financial Services sector continues its trend from last year, of being the most conservative sector in termsof increment projections for 2013 – 2014 at 9.6%• Overall Variable Pay (as a % of CTC) across sectors is 17.3 % which is an increase of 1.3% points overlast year• The highest variable pay percent median is observed in the Financial Services sector at 20.1%• The overall average attrition rate across industries is 14%. Better career opportunities and better pay havebeen cited as the key reasons for attrition across most sectors• The highest attrition rates have been recorded in the ITeS (17%), Advertising & Media (16%) and IT (15%)sectors. These sectors are followed closely by Pharmaceuticals (14%) and the Infrastructure & Real Estatesectors (14%)• Hiring and Retaining skilled talent has been identified as a perennial challenge for organizations across mostsectors. Developing potential future leaders is an emerging concern in many sectors
  9. 9. 9ContentsSurvey DetailsSurvey HighlightsGeneral Industry AnalysisDetailed Sector-wise AnalysisContact Us
  10. 10. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisMarket Overview10• The Indian Economy is currently going through a challenging phase as GDPgrowth slowed down to nearly a decade low in 2012-13 with domestic as well asexternal factors playing a part in this downfall• Macroeconomic issues such as high public expenditure, depleting investment andsaving levels, worsening current account balance as well as depreciation of theRupee have added to the present economic pressures over-shadowing positiveaspects such as moderation in inflation and recovery of stock markets during theyear• Since the global financial crisis of 2008-09, the Indian economy grew to a healthy8.6% till 2010-11. Since then, growth started declining. The trend continued in2012-13 with a disappointing growth rate of 5.4% in the first half, resulting inlowering of expectations. The second quarter’s growth at 5.3% is one of the lowestquarterly growth rates seen in the last decade and the annual growth of 5% will bethe lowest since 2002-03• The latest Index of Industrial Production (IIP) figures indicate that the industrialsector has grown at a rate of 0.7% during the period April ’12 to December’12compared with a growth rate of 3.7% in the corresponding period last year, overallfar lower than the annual growth of 6.8% in 2010-11. Worrying figures primarily inthe mining and manufacturing sectors have contributed to this• The Government is focusing on cutting costs to curb rising inflation. At the sametime, it is planning on introducing proposals to induce more investments byencouraging Infrastructure Debt Funds and providing incentives for themanufacturing sector undertakings to invest more in plant and machinery• This state of the Indian economic environment should shed some light on thereason behind increment and variable pay decisions taken by organizations thisyearSource:Economic Outlook 2012 – 13Deloitte Budget Publication
  11. 11. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)11• The overall annual increment median for this year is projected at 11.3%• Highest increment for this year is expected in the Pharmaceuticals industry at 13.1%. It is the only sector whereincrements are expected to be higher than last year• Financial services sector maintains a conservative estimate given the overall mood of the economy and is expected tohave the lowest increment median at 9.6%• This year, two new sectors have also been introduced – Hospitality (11.1%) and Logistics (9.8%)• The most significant decline in increment medians is observed in the Manufacturing and Infrastructure & Real Estatesectors• Employers have shown a trend this year of an increased focus on variable pay percent to compensate for the low annualincrements projected in most of the sectors12.0%15.0% 15.0%12.0%10.0%11.0%12.0%11.0%13.8%11.5%10.6%10.0%11.2%10.6%13.1%9.6%10.7%10.3% 10.2%12.4%11.1%9.8%0.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%ConsumerBusiness & RetailManufacturing Infrastructure &Real EstatePharmaceuticals FinancialServicesInformationTechnologyITeS Advertising &MediaEnergy &ResourcesHospitality Logistics2012-13 2013-14
  12. 12. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisAnnual Increment 2013 – 1412Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top Management• The median levels of Junior and Middle Management incrementsare expected to be lower than the overall median level incrementof 11.3%• There is not much variation seen between Junior and MiddleManagement increments across the ranges• Increments for the Top Management in the Pharmaceutical sectorare significantly higher than the cross-sector median increment forTop ManagementIncrement Percentiles10th 25th 50th 75th 90thJM 7.1% 8.4% 9.8% 11.6% 13.9%MM 7.9% 9.2% 10.9% 12.1% 14.4%SM 8.3% 10.1% 11.6% 13.8% 15.0%TM 9.1% 11.7% 12.5% 14.7% 16.1%Organizations across industries are expected to continue their trend of being conservative, especially giventhe reserved outlook of the economyComparison of Level-wise Median Increments Across Sectors8910111213141516JMMMSMTM
  13. 13. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)13Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top Management• At the median level, the increments across sectors areexpected at 11.3%, displaying a slight reduction comparedto last year’s median• Most organizations across sectors have adopted acautious approach to increments this year• A significant decline of 2.2% points has been witnessed atthe Junior Management level over last year’s incrementfigures for the same level• Higher increments across sectors are still expected aroundthe 15% mark. However, on the lower side, the incrementshave also reduced to 7.5%• All in all, companies are giving lower increases this yearand higher variable pay percentages, so that the risk ofnonperformance is mitigatedMedian Increments Across Levels10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 9.0% 10.0% 12.0% 14.1% 15.1%2013-14 7.5% 9.8% 11.3% 13.2% 14.9%Increments have reduced across the ranges; highest decline projected for Junior Management and acorresponding increase seen for Top Management12.0% 12.0%11.0%10.0%9.8%10.9%11.6%12.5%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14
  14. 14. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisAnnual Variable Pay Trends14• The median variable pay percent projected across all industries is 17.3%• Across most industries, variable pay percent at the median level has increased, indicating a focus of organizations onbuilding competitiveness within their markets to maintain profitability and steady growth rates in an environment that is notcurrently conducive for the same• Although the Manufacturing sector is showing a slight decline in the variable pay percent, this level is still higher than thecross-sector median• Financial Services sector is expected to provide the highest median variable pay at 20.1%• Similarly high levels of variable pay are observed in all service oriented sectors18.2%20.0%15.0% 15.0%20.0%15.1%13.5%10.5%13.3%18.8%17.8%15.4%18.0%20.1%16.3% 16.1%14.4%16.5%17.5%15.6%0%5%10%15%20%25%ConsumerBusiness & RetailManufacturing Infrastructure &Real EstatePharmaceuticals Financial Services IT ITeS Advertising &MediaEnergy &ResourcesHospitality Logistics2012-13 2013-14Hospitality and Logistics arenew sectors in this survey.Hence, variable pay percentprojections are not available
  15. 15. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.81012141618202224JMMMSMTMGeneral Industry AnalysisVariable Pay 2013 – 1415Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top Management• The overall median variable pay percent across sectors is 17.3% -an increase of more than 1% point over last year• Across all levels, the spread of variable pay percent is relativelywide with Junior Management getting variable pay from 8.9% -26.4% and Top Management receiving 10.9% - 31.2%• Lowest variable pay percent at the Junior Management isexpected in the Infrastructure & Real Estate sector• Median variable pay percent for Junior, Middle and SeniorManagement in the Financial Services sector projected to havemarginal variationVariable Pay Percentiles10th 25th 50th 75th 90thJM 8.9% 11.9% 16.4% 22.2% 26.4%MM 9.4% 12.7% 17.1% 23.8% 27.1%SM 10.1% 13.4% 17.7% 24.6% 29.3%TM 10.9% 14.1% 18.5% 25.1% 31.2%Variable pay projections expected to increase across all ranges compared to last yearComparison of Level-wise Variable Pay Percent Across Sectors
  16. 16. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisVariable Pay 2013 – 14 vis-à-vis 2012 – 1316• The trend lines seen for the annual increments across levelsthis year are countered here. Junior Management haswitnessed an increase in the median variable pay percent, witha corresponding decline at the Top Management level• A decrease of 4% points is expected in the median variable paypercent at the Top Management level• The higher range of variable pay across sectors is expected at30.8%, and on the lower side the variable pay percent isprojected at 9.2%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top Management10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 8.9% 12.0% 16.2% 20.1% 30.1%2013-14 9.2% 12.7% 17.3% 23.4% 30.8%Variable pay percent increase opted for by many organizations; increased focus on higher performance underthe current economic circumstances, especially at the Junior Management level14.0%15.1%20.0%22.5%16.4% 17.1%17.7%18.5%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14
  17. 17. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisKey Benefits17Leave encashment allowed by 40% companies, with median of 34 Days; Mobile Allowance not provided tomany companies to Junior Management, provided on actuals to Top Management by 60% companiesVehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs 4.8 11.7 13.4 -5 – 8 Lacs 1.2 8.5 20.6 14.28 – 12 Lacs - 1.4 32.6 25.1> 12 Lacs - - 1.0 54.0Not Applicable 94.0 78.3 32.4 6.6Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 7.1 23.5 7.4 -8000 – 12000 1.7 12.1 19.1 5.212000 – 15000 - 3.8 32.7 18.1> 15000 - - 11.1 35.1On Actuals 0.8 1.4 10.4 25.8Not Applicable 90.4 59.2 19.3 15.9Driver: 61.5% and 45% of the companies across all sectorsprovide Driver or Driver Allowance for the Top and SeniorManagement respectively24.5% of the companies across sectors provide LTIPs to theiremployees. The most frequently provided LTIPs are ESOPs andDeferred CashLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 52.0 48.0 33.3 10.35000 - 10000 9.9 17.7 16.1 6.910000 - 15000 1.3 15.9 43.3 22.8On Actuals - - 6.5 60.0Not Applicable 36.8 18.4 0.8 -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 40%Median number of days encashable across sectors: 34 DaysLeave Encashment10%1%54%35%Employee OnlyEmployee & SpouseEmployee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  18. 18. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisAttrition18• Attrition rates have reduced slightly across sectors. However, it continues to be aconcern at the Junior Management level• Highest attrition rate recorded at the Junior Management level in the ITeS sector(25%)• This sector also faces the highest overall attrition rates (17%), closely followed by IT,Pharmaceutical and Infrastructure & Real Estate sectors• The most prevalent reason employees leave organizations is better careeropportunities – entry into the market of many foreign players across sectors hasincreased the job opportunities especially at Junior Management level, allowing easymovement of the workforce• Employees are also leaving for better pay elsewhere as well as for personal reasonsand better work-life balanceKey Reasons for Attrition1 Better career opportunities2 Better pay elsewhere3 Personal reasons15%13%14%18%21%18%25%23%13%14% 14%15%11%13%17%16%15%18% 18%12%14%11%12%10%12% 12% 12%11%14%15%12%13%10%9%12%14%13%11%10%13%15%13%12%9%0%5%10%15%20%25%30%ConsumerBusiness & RetailManufacturing Infrastructure &Real EstatePharmaceuticals Financial Services IT ITeS Advertising &MediaEnergy &ResourcesHospitality LogisticsJunior Management Middle Management Senior Management Top Management13% 12% 14% 14% 15% 15% 17% 16% 12% 13% 11%Average Attrition Rate
  19. 19. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.General Industry AnalysisHR Challenges19• Across all sectors there is an intense competition for hiring the right talent with theright skill sets• Given the diverse skill-sets available in the market, several sectors vie for the sametalent pool as these people possess transferable skill-sets• Retaining critical talent is also becoming an increasing challenge for organizations asthere are a vast number of organizations looking to recruit from the same talent pool.Employees are likely to leave organizations for even the slightest pay hike• Under the current economic climate of the country and the need for stabilization aswell as innovation, organizations are finding it a challenge to develop potential leadersfor the future; leaders who will be able to innovate and lead from the front andspearhead a resurgence for these companies• As one can see, the critical challenges lie within the employee talent lifecycle,signaling that increased focus and investment on talent initiatives is a necessity inorder to gear up for future growth plans within all sectorsKey HR Challenges1 Hiring skilled talent2 Retaining critical talent3 Developing potential leaders
  20. 20. 20ContentsSurvey DetailsSurvey HighlightsGeneral Industry AnalysisDetailed Sector-wise AnalysisContact Us
  21. 21. Consumer Business &Retail
  22. 22. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailExecutive Summary The median annual increment in this sector is10% - significantly lower across most levelsas compared to last year The variable pay percent in the sector standsat 18.8% at the median level – a slightincrease over that of last year Attrition rate for this sector on average is13%. Highest attrition rates for Junior andMiddle Management – 15% - which is mainlydue to the attrition rates in Retail Organizations attribute attrition mainly toBetter Career Opportunities and Better PayElsewhere Hiring and Retaining Talent is a key challengefaced by the sector22
  23. 23. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailSector Snapshot23Industry Overview Key Challenges• India’s FMCG sector was able to perform relatively well despitethe slowdown in the overall Indian economy during 2012• The outlook for Indian FMCG is positive because of growingsales, strong financials of leading players and ever increasingurbanization• The Indian Retail sector contributes to 22% of the country’sGDP and also accounts for approximately 8% of the totalemployment in the country• The biggest highlight for the Retail sector in India in 2012 wasthe decision of the Indian Government to allow Foreign DirectInvestment (FDI) in Multi-Brand Retail formats• Rising per capita income is helping the sector grow. Our Deloitteresearch shows a constant increase in per capita spend since2010. The total retail spending is estimated to double in the nextfive years• E-tailing is showing a high promise for exponential growth overthe next few years• Diverse spread of customers requires stores to stock a wide andvaried mix of merchandise to cater to such a broad demographic• People prefer to buy most of the fruits and vegetables on a dailybasis and approaching a corner store for groceries still, therebycreating a challenge for supermarkets / hypermarkets• It is difficult to find suitable properties in central locations forretail, primarily due to fragmented private holdings, infrequentauctioning of large government owned vacant lands andlitigation disputes between owners• The indirect taxation structure is complex in India with varyingtax rates, multiplicity of taxes and multiple tax enforcementauthorities. This has a significant impact on the Retail set up• Challenge to mom-and-pop stores’ revenues by big foreignbrands entering the market and selling goods at discountedratesSource : Deloitte Retail POV “Opening More Doors”; GRDI 2012; IBEF; www.emergingmarketsdirect.com;• Indias retail sector is expected to grow to about US$ 600 billion by 2015 and to US$ 850 billion by 2020• Traditional retail is expected to grow at 7% and reach a size of US$ 650 billion (about 76%), while organized retail isexpected to grow at 25% and reach a size of US$ 200 billion by 2020• The FMCG sector in India has grown at 17% over the last five years and is expected to grow to US$ 100 billion by 2025Performance Highlights
  24. 24. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailParticipant Profile24• 64% of the companies participating in this sectorhad an annual revenue between 500 – 1000 Cr.• The second highest number of participants fell inthe 100 – 300 Cr. rangeAnnual Revenue Wise Break UpEmployee Strength• 45% of the companies participating from thissector have an employee strength of 500 –2000• The second highest participation came fromorganizations who had an employee strengthbetween 2000 – 5000 and less than 50018%9%64%9%100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr. >1000 Cr.9%45%18%18%9%<500 500 - 2000 2000 - 5000 5000 - 10000 10000 - 25000
  25. 25. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.8910111213141516JMMMSMTMConsumer Business & RetailAnnual Increments 2013 – 1425• The median annual increment projected for this sector is 10.0%• The range between the Junior and Top Management incrementmedians is one of the largest of any sectors• When compared to other sectors, the increments for JuniorManagement are lowest at the median level at 8.4%Increment Percentiles10th 25th 50th 75th 90thJM 7.1% 7.9% 8.4% 11.7% 12.5%MM 8.0% 9.1% 9.6% 12.9% 13.8%SM 9.3% 9.9% 10.3% 13.1% 14.6%TM 10.7% 11.6% 12.0% 14.2% 15.4%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementMedian annual increment in this sector projected to be one of the lowest this yearComparison of Level-wise Median Increments Across Sectors
  26. 26. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)26• The conservative outlook of the market is expected tocontinue to influence the increment levels in this sectorwith the median increments of Junior, Middle and SeniorManagement expected to be lower than last year• The highest reduction in increment is at JuniorManagement level – a 3.6% point drop• This is followed by Middle Management – a 2.4% pointdrop, and Senior Management – 1.5% points below lastyear’s median level10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 9.0% 10.8% 12.0% 12.8% 15.3%2013-14 7.4% 8.6% 10.0% 12.8% 13.9%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementThe annual increment median for this sector is projected to be 2% points lower than last year’s medianMedian Increments Across Levels12.0% 12.0% 11.8%10.0%8.4%9.6%10.3%12.0%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14
  27. 27. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailVariable Pay 2013 – 1427• Median variable pay percent for this sector is expected to be at18.8%• This is significantly higher than the cross-sector median andslightly higher than last year’s median for the same sector• Top Management median levels for variable pay percent isprojected to be 21.2%• The variable pay percent for this sector ranges from 8.9% to34.8% across levelsVariable Pay Percentiles10th 25th 50th 75th 90thJM 8.9% 13.7% 16.3% 22.3% 28.6%MM 10.4% 14.1% 17.9% 23.7% 30.3%SM 12.4% 15.5% 19.4% 24.4% 32.7%TM 14.3% 17.9% 21.2% 26.1% 34.8%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementRange of variable pay percent across levels is very wide; variable pay at all levels expected to be secondhighest across sectorsComparison of Level-wise Variable Pay Percent Across Sectors81012141618202224JMMMSMTM
  28. 28. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailVariable Pay 2013 – 14 vis-à-vis 2012 – 132810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 10.0% 14.3% 18.2% 19.0% 28.0%2013-14 9.8% 13.9% 18.8% 24.7% 30.2%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay has marginally increased across levels as compared to last year; almost no change at TopManagement level• The median variable pay percent has increased marginally from18.2% last year to 18.8% this year• Considering the high turnover rates in this sector, the highvariable pay percent may indicate that there is a continuedfocus within the sector of linking performance with pay acrosscadres to motivate employees across levels and maintaincompetitiveness• Through this, we can also infer that organizations areconsidering lower increments leading to lower fixedcomponents of employees’ salary and a greater emphasis onthe performance linked incentives15.0% 14.0%19.0%25.0%16.3%17.9%19.4%21.2%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14
  29. 29. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Most of Top Management and almost half of Senior Management receive Driver allowance; Mobile allowancenot made available to Junior Management by some companiesConsumer Business & RetailKey Benefits29Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs 9.1 18.2 18.2 -5 – 8 Lacs - - 27.3 9.18 – 12 Lacs - - 18.2 45.5> 12 Lacs - - - 45.5Not Applicable 90.9 81.8 36.4 -Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 9.1 9.1 - -8000 – 12000 9.1 18.2 18.2 -12000 – 15000 - 18.2 27.3 18.2> 15000 - - 27.3 36.4On Actuals - - 9.1 -Not Applicable 81.8 54.5 18.2 45.5Driver: 81.8% and 45.5% of the companies in this sectorprovide Driver or Driver Allowance for the Top Managementand Senior Management respectively18.2% of the companies in this sector provide LTIPs to theiremployees. The most preferred LTIP is Cash PlanLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 81.8 72.7 36.4 9.15000 - 10000 - 9.1 18.2 18.210000 - 15000 - 9.1 18.2 27.3On Actuals - - 18.2 45.5Not Applicable 18.2 9.1 9.1 -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 72.7 %Median number of days encashable in the industry: 26 DaysLeave Encashment64%36% Employee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  30. 30. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Consumer Business & RetailHuman Capital Trends30• Attrition rates in this sector are highest at the JuniorManagement level• Given this turnover, attracting and retaining skilled talentis the most immediate concern for organizations• Engaging and motivating the employees to remain withthe organization as well as to perform at ever increasinglevel is another significant HR Challenge• This also explains the increases in variable pay acrossgrades as organizations are trying to motivate employeesand incentivize loyalty as well as high performanceHuman Resource Challenges1 Hiring skilled talent2 Retaining critical talent3Reasons for AttritionBetter career opportunitiesBetter pay elsewherePursue further studies• With the introduction of international players in theindustry, organizations in this sector are finding itincreasingly difficult to retain their employees• The most common reason for attrition is better careeropportunities elsewhere as employees have a lot ofoptions to choose from given that their skills can be easilytransferable• Better pay elsewhere is also a frequent reason for attritionas employees are likely to move even for the slightest payincrease to get more cash in hand• Personal reasons is the third highest reason for attrition.This may be because many employees at the lower levelsconsider this sector, like the ITeS sector, as a stop-gapsolution while pursuing other avenues in their personallives123Engaging and Motivating Employees
  31. 31. Manufacturing
  32. 32. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ManufacturingExecutive Summary The increments in the Manufacturing sectorare expected to be around 11.2% - the samelevel as the overall cross-sector medianincrement Variable pay percent median for this sector isprojected at 17.8% The overall attrition rate for this sector is 12%.The highest attrition rate is at the JuniorManagement level (14%) Hiring skilled talent and developing potentialfuture leaders are key HR focus areas fororganizations in this sector32
  33. 33. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ManufacturingSector Snapshot33Industry Overview Key Challenges• Deloitte’s global index, 2013, for 38 nations, has ranked Indiathe fourth most competitive manufacturing nation, behind China,the US and Germany• The Global Manufacturing Competitiveness Index, 2013, basedon a survey of CEOs, executives and other officials of 550global manufacturing companies, has positioned India assecond five years down the line, next only to China• India’s manufacturing sector, which accounts for around 16 percent of the country’s GDP, also accounts for 1.8% of the globalmanufacturing pie• Corporate India reported an average overall attrition of 19.3%for 2012• Manufacturing industry in India took a hit in FY2012 in terms ofgrowth given the ever rising fuel costs, production cuts andtemporary plant shutdownsSource : Deloitte 2013 Global Manufacturing Competitiveness Index; IBEF• Purchasing Managers Index (PMI) - a measure of factory production - stood at 53.7 in November 2012, up from 52.9 inOctober 2012, indicating an improvement in the overall health of the Indian manufacturing sector• Manufacturing exports from India could increase from US$ 40 billion in 2002 to about US$ 300 billion by 2015, such anexpansion would make India rake-in a share of approximately 3.5 per cent in the world manufacturing tradePerformance Highlights
  34. 34. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ManufacturingParticipant Profile34• 55% of the participating companies have anannual revenue between 500 – 1000 Cr.• The second highest participation is accounted forby companies between 300 – 500 Cr., followed bythe 100 – 300 Cr., and less than 100 Cr. bracketsAnnual Revenue Wise Break UpEmployee Strength• The highest percentage of companiesparticipating have an employee strength of lessthan 500 and between 500 – 2000• This is followed by 26% of the companieshaving employee strength between 2000 - 50008%11%21%55%5%<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr. >1000 Cr.32%32%26%3%5% 3%<500 500 - 2000 2000 - 5000 5000 - 10000 10000 - 25000 >25000
  35. 35. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.8910111213141516JMMMSMTMManufacturingAnnual Increments 2013 – 1435• The median increment for this sector is 11.2%, which is at parwith the cross-sector median• The increment ranges across levels for this sector are quitenarrow, ranging from 9.3% to 15.9%• Top Management median level increments are expected to bearound 12.8% which is the third highest increment across allsectorsIncrement Percentiles10th 25th 50th 75th 90thJM 9.3% 9.8% 10.1% 11.8% 13.4%MM 9.9% 10.2% 10.9% 12.6% 14.0%SM 10.4% 11.0% 11.5% 13.3% 15.2%TM 10.8% 11.9% 12.8% 14.1% 15.9%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementThis sector is expecting a median annual increment of 11.2% - at the same level as the overall cross-sectormedian incrementsComparison of Level-wise Median Increments Across Sectors
  36. 36. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ManufacturingAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)36• Rising inflation impacting fuel, transport and wage bills hasimpacted the bottom lines of most organizations. This inturn has led to a significant review of the increments givenand a conscious effort has been made to provideincrements at a lower median level in this sector. Theincrements have come down from 15.0% last year to11.2% this year• The range of increments from 10th to 90th percentiles hasalso shrunk from 9.0% - 17.0% last year to 9.5% - 13.9%this year• The highest decline is seen at the Junior and MiddleManagement levels where the median increment levelshave witnessed a 3.9% points and 4.1% points decline• The increment given to Top Management remains thesame as the previous two years – in the vicinity of 12.8%10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 9.0% 12.0% 15.0% 15.0% 17.0%2013-14 9.5% 10.6% 11.2% 12.7% 13.9%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementAnnual increment level has shown a significant decline at the median level; highest decline at Junior andMiddle Management levelsMedian Increments Across Levels14.0%15.0%13.0% 13.0%10.1%10.9%11.5%12.8%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14
  37. 37. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.81012141618202224JMMMSMTMManufacturingVariable Pay 2013 – 1437• Median variable pay percent for this sector is expected to be at17.8%• This is approximately 0.5% point higher than the cross-sectormedian variable pay percent• The range of variable pay at all levels has also significantlyexpanded, especially at Junior Management level where thevariable pay percent ranges from 9.8% to 27.1%• There is a significant leap of 1.6% points in the median variablepay percent of Junior and Middle ManagementVariable Pay Percentiles10th 25th 50th 75th 90thJM 9.8% 13.1% 15.9% 21.7% 27.1%MM 11.1% 14.8% 17.5% 22.4% 27.8%SM 13.9% 16.2% 18.4% 23.3% 28.9%TM 15.2% 17.5% 19.8% 25.5% 31.4%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay percent for this sector are projected to be more than competitive with the market level variable payprojectedComparison of Level-wise Variable Pay Percent Across Sectors
  38. 38. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ManufacturingVariable Pay 2013 – 14 vis-à-vis 2012 – 133810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 12.0% 16.3% 20.0% 25.0% 30.0%2013-14 10.1% 13.6% 17.8% 22.9% 27.7%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay percent projection has seen a decline in this sector; Median variable pay across levels largelyunchanged• The range of variable pay percent for the overall sector hasremained the same, albeit it has declined by a couple ofpercentage points at all percentiles• The variable pay percent median levels for Junior and Middlemanagement show a slight increase over last year’s figures,while those for the Senior and Top Management show acorresponding decrease over the same period• The lower variable pay projections can be explained by theconservative approach that organizations are bound to beadopting for the coming year in the manufacturing sector, asthe industry as a whole witnessed a slowdown in the growthrate15.0% 15.0%20.0%21.8%15.9%17.5%18.4%19.8%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14
  39. 39. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Car provided to some Junior and Middle Management in the sector; Leave encashment median at 30 DaysManufacturingKey Benefits39Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs 7.9 13.2 7.9 -5 – 8 Lacs 13.2 18.4 23.7 26.38 – 12 Lacs - 15.8 26.3 36.8> 12 Lacs - - 10.5 23.7Not Applicable 78.9 52.6 31.6 13.2Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 26.3 36.8 26.3 -8000 – 12000 - 15.8 21.1 15.812000 – 15000 - 5.3 15.8 21.1> 15000 - - 15.8 31.6On Actuals 2.6 2.6 10.5 31.6Not Applicable 71.1 39.5 10.5 -Driver: 89.5% and 23.7% of the companies in this sectorprovide Driver or Driver Allowance for the Top Managementand Senior Management respectively18.2% of the companies in this sector provide LTIPs to theiremployees. The most frequently provided LTIP is RestrictedStock UnitsLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 15.8 21.1 10.5 -5000 - 10000 5.3 21.1 23.7 15.810000 - 15000 5.3 26.3 34.2 26.3On Actuals - - 31.6 57.9Not Applicable 73.7 31.6 - -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 44.7%Median number of days encashable in the industry: 30 DaysLeave Encashment13%53%34%Employee OnlyEmployee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  40. 40. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ManufacturingHuman Capital Trends40• There is a challenge hiring skilled talent in manufacturingindustry as the skilled talent is more likely to chooseworking in the Hi-tech industry because of better pay andother benefits• Identifying and developing potential leaders for future, inorder to ensure the long term success of the organizationsand increased growth of the sector, is a major challengein manufacturing industry• Due to better pay in IT and other Hi-tech industry, talent isalso likely to shift from manufacturing industry to theseother sectors, making retaining critical talent a key HRfocus area for the sectorHuman Resource Challenges1 Hiring skilled talent2 Developing Potential Leaders3Reasons for AttritionBetter career opportunitiesBetter pay elsewherePursue further studies• Attrition at the Junior management level is relatively lowcompared to the other sectors. However, it is still aconcern for organizations in this sector• Due to the competitive nature of the market, companiesare losing employees to better pay elsewhere mostly insales sector• Pursuing higher studies is another key factor for attrition.Employees in the engineer cadre are likely to pursuemanagement degrees in order to increase their chances ofrising up the management ranks123Retaining Critical Talent
  41. 41. Infrastructure &Real Estate
  42. 42. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Infrastructure & Real EstateExecutive Summary Increments have been conservative at 10.6%;increments have dropped considerably at themedian level for this sector The median variable pay for this sector is15.4% - almost 2% points lower than thecross-sector median Annual average attrition rates for this sectorhave been indicated to be 13% - this isconsistent across all levels of management Career management, retaining critical talent,etc. cited as key HR challenges in this sector42
  43. 43. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Infrastructure & Real EstateSector Snapshot43Industry Overview Key Challenges• In 2012, the real estate and infrastructure sector accounted for25 per cent of the total FDI inflows into India which is expectedto grow even further in 2013. Construction is expected toaccount for a major chunk of this investment• Construction development sector (including townships, housing,built-up infrastructure & construction-development projects) hasattracted a cumulative FDI worth USD 21,765.55 million fromApril 2000 to November 2012.• Total revenue from real estate sector is around USD 75 Billionwhich has been growing at a CAGR of 10%• India has seen a high demand for residential space, commercialspace, retail space and space for hospitality industry. This canbe attributed to urbanization, growing economy, easy financingoptions and growth in tourism• Challenges to the Real Estate industry continue to revolvearound transparency of dealings, an inability to forecastaccurately as well as off-the-books deals and impropermaintenance of land records. This is further affected by the lackof proper and systematic, urban and rural planning anddevelopment activities by the Government• With the slowing Indian economy and reduced consumerinterest, real estate firms are facing a difficult time. They areincreasingly turning to private equity investors to fund theirbusiness as the traditional means of funding from banks aregetting tougherSource : Deloitte POV “End Use Monitoring for Real Estate Industry”; IBEF; www.investindia.gov.in• This sector is expected to grow at the rate of 30% over the next 10 years• Increasing Government support for FDI in the real estate and infrastructure sector is expected to give a major boost for theexponential growth predicted for this sectorPerformance Highlights
  44. 44. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Infrastructure & Real EstateParticipant Profile44• Half of the companies participating have anannual revenue between 500 – 1000 Cr.• The second highest participation came fromcompanies with an annual revenue between 100 –300 Cr. and less than 500 Cr.Annual Revenue Wise Break UpEmployee Strength• 50% of the companies participating from thissector in the survey have an employee strengthof 500 – 2000• 40 % of the companies have less than 500employees20%20%10%50%<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr.40%50%10%<500 500 - 2000 >25000
  45. 45. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.8910111213141516JMMMSMTMInfrastructure & Real EstateAnnual Increments 2013 – 1445• The overall median increment for this sector is 10.6% - lower thanthe overall cross-sector median increment level• Senior and Top Management levels in this sector are set toreceive increments that are in the range of the overall cross-sector median of 11.3% at the median level• While increments in this sector vary from 7.6% to 15.6%, whencompared to the rest of the sectors, this sector fares somewhatwell on an averageIncrement Percentiles10th 25th 50th 75th 90thJM 7.6% 8.4% 9.7% 11.8% 13.1%MM 8.5% 9.7% 10.4% 12.4% 13.9%SM 9.3% 10.0% 11.3% 13.1% 14.7%TM 10.9% 11.5% 12.2% 13.9% 15.6%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementProjected median annual increment for this sector is 10.6%; Junior Management expecting an increment of9.7% at median levelComparison of Level-wise Median Increments Across Sectors
  46. 46. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Infrastructure & Real EstateAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)46• Increments have declined across all levels except for TopManagement, where the increments, after fallingconsiderably last year, are beginning to look upwardsagain• The highest decline is witnessed at the SeniorManagement level which was otherwise consistent ataround 15% for the last two years10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 6.4% 10.0% 15.0% 15.9% 16.8%2013-14 7.9% 9.2% 10.6% 12.2% 13.5%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementIncrements have significantly declined at the median level – from 15.0% last year to 10.6% this yearMedian Increments Across Levels12.0%12.5%15.0%10.0%9.7%10.4%11.3%12.2%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14
  47. 47. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.81012141618202224JMMMSMTMInfrastructure & Real EstateVariable Pay 2013 – 1447• There has been a marginal increase in the overall median variablepay percent level from 15.0% to 15.4%• At Junior Management level, the sector has one of the lowestvariable pay percent medians compared to all the other sectors• The range of variable pay percent at the Junior Management levelis also wide, going from 7.9% to 20.3%Variable Pay Percentiles10th 25th 50th 75th 90thJM 7.9% 10.0% 12.2% 17.1% 20.3%MM 9.8% 12.5% 14.8% 17.8% 21.8%SM 11.1% 13.8% 15.9% 19.1% 23.4%TM 12.9% 14.7% 17.0% 21.4% 24.7%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementJunior Management expected to receive lowest variable pay percent at median level when compared to rest ofthe sectorsComparison of Level-wise Variable Pay Percent Across Sectors
  48. 48. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Infrastructure & Real EstateVariable Pay 2013 – 14 vis-à-vis 2012 – 134810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 9.5% 12.8% 15.0% 15.8% 18.5%2013-14 8.2% 11.0% 15.4% 19.1% 22.5%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay percent increase seen at Junior Management level; unchanged at the Top Management level• The overall variable pay percent range for this sector goes from8.2% to 22.5%• Junior and Middle Management have seen virtually no changein their variable pay percent levels at the median mark• At the Senior and Top Management level, the variable paypercent has seen a significant decline of 4.1% points and 3%points respectively• Last year’s trend, shown by companies in this sector, of movingaway from ad-hoc payments and more structured and plannedvariable pay policies seems to be continuing. Especially at theSenior and Top Management levels, variable pay seems to bebecoming more standardized across the sector12.0%15.0%20.0% 20.0%12.2%14.8% 15.9%17.0%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14
  49. 49. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.LTIP not a common practice; Fuel Allowance by half the companies to Middle Management and by 90% of thecompanies to Senior Management; 40% companies allow leave encashmentInfrastructure & Real EstateKey Benefits49Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs - 10.0 20.0 -5 – 8 Lacs - - 30.0 10.08 – 12 Lacs - - 30.0 20.0> 12 Lacs - - - 70.0Not Applicable 100.0 90.0 20.0 -Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 10.0 20.0 10.0 -8000 – 12000 10.0 30.0 20.0 -12000 – 15000 - - 40.0 10.0> 15000 - - 10.0 30.0On Actuals - - 10.0 60.0Not Applicable 80.0 50.0 10 -Driver: 90% and 70% of the companies in this sector provideDriver or Driver Allowance for the Top Management andSenior Management respectivelyNone of the participating companies provide a Long TermIncentive Plan in this sectorLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 50.0 50.0 50.0 -5000 - 10000 40.0 - - -10000 - 15000 - 40.0 50.0 10.0On Actuals - - - 90.0Not Applicable 10.0 10.0 - -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 40%Median number of days encashable in the industry: 33 DaysLeave Encashment20%60%20%Employee OnlyEmployee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  50. 50. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Infrastructure & Real EstateHuman Capital Trends50• Hiring talent has become a key challenge for theInfrastructure players. The reason for this can beattributed to better salaries and growth opportunitiesoffered by the foreign players• Infrastructure sector has been facing a middlemanagement crisis where the middle management is notgroomed for the future roles. This results in attrition atmiddle management due to lack of developmentopportunities. As a result, developing potential leaders isa key HR challenge• Most of the companies are also struggling to define acareer path for the junior managementHuman Resource Challenges1 Hiring skilled talent2 Developing potential leaders3Reasons for AttritionBetter career opportunitiesBetter pay elsewhereBetter work life balance• Increasing FDI in infrastructure and consistent growth ratecould be the key drivers for the better career opportunitiesin the sector• 70% of the participants think Better pay elsewhereprovided by competitors is one of the key reason forattrition• Some of the participants also believe that better work lifebalance could be one of the reason for the attrition ininfrastructure and real estate sector123Career management
  51. 51. Pharmaceuticals,Health Care andLife Sciences
  52. 52. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care andLife SciencesExecutive Summary The median annual increment in this sector isthe highest across all sectors – at 13.1% At 18%, the variable pay percent median ofthis sector is also higher than the cross-sector median The average attrition rate for this sector is14%. This is due to the attrition rate at theJunior Management level which includesSales staff (17%) Retaining and Engaging / Motivatingemployees is a key challenge faced by thissector52
  53. 53. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care and Life SciencesSector Snapshot53Industry Overview Key Challenges• The expected CAGR from 2012-16 for the Indianpharmaceutical market is 14-17%• At the same time, the domestic pharmaceutical market isexpected grow at a fast pace of 13-14% in 2013• The Ministry of Commerce has proposed an ambitious StrategyPlan to double pharmaceutical exports from US$ 10.4 billion in2009-10 to US$ 25 billion by 2013-14• The Government has also planned a Pharma India brandpromotion action plan spanning over a three-year period to givean impetus to generic exports• There is a need felt within the sector for improvements inworkforce training and development, integration of informationtechnologies, upgrades and expansions of clinical services,physician alignment and cost reduction• The GDUFA (Generic Drug User Fee Act) has been introducedin the US. As per this act, the generic companies are required topay user fees to USFDA, for application of drugs andmanufacturing facilities. This fee will be utilized by USFDA toengage additional resources in order to reduce current andpending applications and speed up the approval process. Thisact was passed in 2011, which was signed into Law in July 2012• The threat of controlled licenses being awarded to companies tomanufacture patented drugs at cheaper rates• There is a major challenge for small and mid sized companieswho are losing their patents.• Another challenge is the rising influence of retail in the Indianmarket. This will have a result in the shift from Physicians andmanufacturers to retail over the counter medicinesSource : IBEF; Department of Industrial Policy and Promotion (DIPP) Report; Pharmaceutical Exports Council of India• The cumulative drugs and pharmaceuticals sector attracted foreign direct investments (FDI) worth US$ 9.78 billionbetween April 2000 to November 2012• Indias exports of drugs, pharmaceutical and fine chemicals grew by 27% to USD 11.19 billion for the year ended March2012Performance Highlights
  54. 54. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care and Life SciencesParticipant Profile54• Majority of the companies participating in thissurvey have a revenue between 500 – 1000 Cr.,followed by 100 – 300 Cr.• A small percentage of companies also haverevenues of less than 100 and between 300 – 500Cr.Annual Revenue Wise Break UpEmployee Strength• Companies with an employee strength of 2000– 5000 account for 40% of the participants inthis sector• The second highest participation (20%) comesfrom companies with an employee strength ofless than 500 and between 500 – 20007%40%7%47%<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr.20%20%40%13%7%<500 500 - 2000 2000 - 5000 5000 - 10000 10000 - 25000
  55. 55. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care and Life SciencesAnnual Increments 2013 – 1455• At 13.1%, the median annual increment level for this sector is thehighest across all sectors this year• Across all levels, increments are the highest as compared to anyother sector• Increments in this sector range from 10.5% to 15.0% for JuniorManagement, 10.8% to 15.9% for Middle Management, 11.2% to16.7% for Senior Management and 12.3% to 17.5% for TopManagementIncrement Percentiles10th 25th 50th 75th 90thJM 10.5% 11.7% 12.4% 13.9% 15.0%MM 10.8% 11.9% 12.8% 14.5% 15.9%SM 11.2% 12.8% 13.7% 15.3% 16.7%TM 12.3% 13.6% 15.1% 16.2% 17.5%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementMedian annual increment in this sector projected to be the highest across all sectors at 13.1%Comparison of Level-wise Median Increments Across Sectors8910111213141516JMMMSMTM
  56. 56. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care and Life SciencesAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)56• When compared to the increment range from last year, therange this year has increased from 11.0% to 16.1% for theoverall sector• While the increments were standard across all sectors lastyear, a sharp increase in Top Management increments canbe observed this year – a jump from 12.0% to 15.1%• Senior Management has also received considerably highincrements this year (13.7%), while those for Junior andMiddle Management have increased within the range of1% point10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 10.4% 11.5% 12.0% 12.8% 13.8%2013-14 11.0% 12.3% 13.1% 15.0% 16.1%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementAcross all ranges, the increments for this sector have risen considerably, with the highest increase seen at TopManagement levelMedian Increments Across Levels12.0% 12.0% 12.0% 12.0%12.4% 12.8%13.7%15.1%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14
  57. 57. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.81012141618202224JMMMSMTMPharmaceuticals, Health Care and Life SciencesVariable Pay 2013 – 1457• Median variable pay percent for this sector is expected to be at18.0%• This is significantly higher than the cross-sector median andslightly higher than last year’s median for the same sector• Top Management median levels for variable pay percent isprojected to be 21.2%• The variable pay percent for this sector ranges from 8.9% to34.8% across levelsVariable Pay Percentiles10th 25th 50th 75th 90thJM 9.8% 12.5% 16.0% 21.0% 25.2%MM 10.7% 13.4% 17.2% 22.5% 26.1%SM 11.3% 14.1% 18.9% 23.8% 27.5%TM 12.0% 15.2% 20.1% 24.9% 28.8%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay percent for this sector are projected to be competitive with the marketComparison of Level-wise Variable Pay Percent Across Sectors
  58. 58. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care and Life SciencesVariable Pay 2013 – 14 vis-à-vis 2012 – 135810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 8.7% 9.5% 15.0% 16.5% 32.0%2013-14 10.5% 14.1% 18.0% 23.0% 27.9%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay percent increase seen at Junior Management level; unchanged at the Top Management level• At 18%, the median variable pay percent for this sector ishigher than the cross-sector median variable pay percent• While Junior Management has received lower increments thanthe rest of the levels, the variable pay percent for this level haswitnessed a significant leap to 16.0%, indicating a push fromthe companies in this sector towards greater competitiveness• Sales incentives and performance linked pay has beenidentified as the most suitable way of retaining critical salesforce employees as well as driving higher growth rates of theorganizations as well as the sector11.0%15.0%20.0% 20.0%16.0%17.2%18.9%20.1%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14
  59. 59. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Leave encashment not a popular benefit in the sector; Mobile allowance for Top Management indicated to berelatively low by 40% companies; varying medical coverage provided across the sectorPharmaceuticals, Health Care and Life SciencesKey Benefits59Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs 6.7 20.0 13.3 -5 – 8 Lacs - 6.7 26.7 13.38 – 12 Lacs - - 40.0 26.7> 12 Lacs - - - 46.7Not Applicable 93.3 73.3 20.0 13.3Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 - 26.7 6.7 -8000 – 12000 - 6.7 20.0 26.712000 – 15000 - - 26.7 26.7> 15000 - - 6.7 6.7On Actuals 6.7 13.3 26.7 26.7Not Applicable 93.3 53.3 13.3 13.3Driver: 53.3% and 46.7% of the companies in this sectorprovide Driver or Driver Allowance for the Top Managementand Senior Management respectively33.3% of the companies in this sector provide LTIPs to theiremployees. The most frequently provided LTIP is Deferred CashLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 66.7 66.7 60.0 40.05000 - 10000 13.3 13.3 - -10000 - 15000 - 13.3 40.0 13.3On Actuals - - - 46.7Not Applicable 20.0 6.7 - -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 20 %Median number of days encashable in the industry: 40 DaysLeave Encashment13%7%47%33%Employee OnlyEmployee & SpouseEmployee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  60. 60. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Pharmaceuticals, Health Care and Life SciencesHuman Capital Trends60• High technology changes and advancements in themedical field has made it difficult to get skilled talent in theindustry• Employee turnover in this sector has made Engaging andRetaining talent a perennial burning priority in this sector• Due to increasing competition for developing new patentsthere is an increasing pressure on the employees toperform. This in turn has affected the motivation ofemployees• Retaining employees, especially at the sales force level,is a critical challenge for this sector, as sales employeesfind it easy to switch jobs due to easily transferable skillsHuman Resource Challenges1 Hiring skilled talent2 Retaining critical talent3Reasons for AttritionBetter career opportunitiesBetter pay elsewherePursue further studies• As many MNCs are investing directly in India and areopening many operations, career opportunities havewidened for people in this industry• This, coupled with the easy mobility and transferability ofskills that the sales force especially enjoys in this sector,has led to relatively high attrition levels in this sector at theJunior Management level• Such employees are also likely to switch companies foreven the slightest added benefit, or pay, making “betterpay elsewhere” a key reason for attrition• Pursuing further studies is the third key reason for attritionindicated in this sector123Engaging and Motivating Employees
  61. 61. Financial Services
  62. 62. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Financial ServicesExecutive Summary The median annual increment in this sector is9.6% This is a slight decrease over last year’sincrement The variable pay in this sector stands at20.1% at the median level The overall attrition rate for this sector is 15%- especially being a concern at the juniormanagement level where it is 21% The key HR challenges in this sector arehiring and retaining skilled talent, anddeveloping potential leaders62
  63. 63. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Financial ServicesSector Snapshot63Industry Overview Key Challenges• The growth of financial sector in India at present is nearly 8.5%per year. The rise in the growth rate suggests the growth of theeconomy. The financial policies and the monetary policies areable to sustain a stable growth rate• The financial sector in India had an overall growth of 15%,which has exhibited stability over the last few years althoughseveral other markets across the Asian region were goingthrough a turmoil• The opening of the financial market’s variety of products andservices were introduced to suit the need of the customer. TheReserve Bank of India (RBI) played a dynamic role in the growthof the financial sector of India• The number of foreign financial institutions are on the rise asIndia’s long-term potential makes it an attractive market for them• As their counterparts do in other countries, various regulatoryauthorities, including the RBI and the Ministry of Finance, playmajor roles in the Indian financial services system. While manyof the proposed changes have yet to be made, centralgovernment and RBI officials have stated their intention toreform and open the Indian financial services sector gradually,especially the banking sector.• The financial services industry is expected to grow at about 9% per annum• The recently concluded annual budget laid down various new initiatives for the financial services industry especially in thebanking sectorPerformance HighlightsSource: Deloitte 2013 Financial Services Industry Outlook
  64. 64. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Financial ServicesParticipant Profile64• 55.6% of the participating companies indicated anannual revenue of between 500 – 1000 Cr.• The second highest participation came fromorganizations with annual revenue between 300-500 Cr.Annual Revenue Wise Break UpEmployee Strength• The highest participation in this sector wasaccounted for by companies having between5000 – 10000 employees• This was followed by 22% of the organizationshaving between 2000 – 5000 and between10000 – 25000 employees10%15%19%50%<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr.17%6%22%28%22%6%<500 500 - 2000 2000 - 5000 5000 - 10000 10000 - 25000 >25000
  65. 65. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.8910111213141516JMMMSMTMFinancial ServicesAnnual Increments 2013 – 1465• The median increments across levels for this sector range from9.1% for Junior Management, to 10.8% for Top Management• The increments in this sector are the lowest across all levels andranges• The focus for this sector has been directed at performance linkedincentives this year. Hence, there has been a conscious decisionof setting annual increments at a lower level by companies acrossthe sectorIncrement Percentiles10th 25th 50th 75th 90thJM 6.9% 7.8% 9.1% 11.3% 13.0%MM 7.2% 8.5% 9.4% 11.7% 14.3%SM 7.9% 8.7% 9.9% 12.4% 15.2%TM 8.2% 9.4% 10.8% 13.1% 15.7%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementIncrements in the Financial Services industry are projected to be the lowest across all sectors at 9.6%Comparison of Level-wise Median Increments Across Sectors
  66. 66. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Financial ServicesAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)66• Compared to 2012-13, the industry as a whole haswitnessed a marginal decrease increments• While increments for Junior and Middle Management arelower than last year, Top Management increments haveshown a slight increase by 1.5% points• The general mood of this sector has been quiteconservative resulting in increments considerably lowerthan the overall cross-sector median level increment10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 7.6% 9.3% 10.0% 11.0% 12.9%2013-14 7.1% 8.5% 9.6% 11.5% 12.3%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementAnnual Increments this year have shown a marginal change from those of 2012 – 13; the highest difference isseen at the Top Management level10.0% 10.0% 10.0%9.3%9.1% 9.4%9.9%10.8%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14Median Increments Across Levels
  67. 67. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.81012141618202224JMMMSMTMFinancial ServicesVariable Pay 2013 – 1467• Variable pay % for this sector are the highest out of all the sectorswith the median across levels ranging from 19.2% to 22.3%• The range of variable pay across levels is very wide – rangingfrom 13.1% to 45.1%• The median variable pay percent for Junior, Middle and SeniorManagement are quite close to each other• This sector by far has the highest median variable pay acrosslevels when compared with all the other sectorsVariable Pay Percentiles10th 25th 50th 75th 90thJM 13.1% 16.4% 19.2% 28.4% 39.7%MM 13.7% 17.5% 19.8% 29.3% 40.6%SM 14.8% 18.3% 20.5% 32.6% 42.7%TM 15.5% 18.9% 22.3% 34.9% 45.1%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable Pay is the highest in the Financial Services sector at 20.1%Comparison of Level-wise Variable Pay Percent Across Sectors
  68. 68. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Financial ServicesVariable Pay 2013 – 14 vis-à-vis 2012 – 136810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 13.1% 15.8% 20.0% 26.3% 48.0%2013-14 13.4% 16.6% 20.1% 33.9% 42.4%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementMedian Variable Pay has increased for Junior Management, but reduced marginally for Top Management15.0%20.0%22.0% 25.0%19.2% 19.8% 20.5%22.3%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14• The spread of variable pay range has remained almost thesame as in 2012-13; across the sector the variable pay rangebetween 10th & 90th percentile is 13.4 – 42.4% as compared to13.1 – 48% last year• At the median level, the variable pay has not changed. Thismay also indicate that the sector is continuing its focus onperformance linked incentives rather than increasing fixed paycomponents, given the intense competition that is a feature ofthis industry• The increase in Junior Management variable pay indicates thatthe focus is now shifting on increasingly inducting juniormanagement to the performance driven culture of thecompanies in the sector
  69. 69. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ESOPs are a common form of LTIP in this sector; Leave encashment is not allowed in most organizations;Value of Car Amount provided to Top Management in majority of the organizations in this sectorFinancial ServicesKey Benefits69Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs 5.6 11.1 16.7 -5 – 8 Lacs - - 27.8 11.18 – 12 Lacs - - 22.2 11.1> 12 Lacs - - - 77.8Not Applicable 94.4 88.9 33.3 -Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 5.6 5.6 - -8000 – 12000 - 16.7 11.1 -12000 – 15000 - 5.6 27.8 11.1> 15000 - - 27.8 16.7On Actuals - - 11.1 72.2Not Applicable 94.4 72.2 22.2 -Driver: 88.5 and 61.1% of the companies in this sectorprovide Driver or Driver Allowance for the Top and SeniorManagement respectively44.4% of the companies in this sector provide LTIPs to theiremployees. The most preferred LTIP is ESOPsLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 38.9 50.0 33.3 -5000 - 10000 16.7 27.8 38.9 5.610000 - 15000 - 11.1 16.7 11.1On Actuals - - 11.1 83.3Not Applicable 44.4 11.1 - -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 22.2%Median number of days encashable in the industry: 38 DaysLeave Encashment11%50%39%Employee OnlyEmployee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  70. 70. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Financial ServicesHuman Capital Trends70• The turnover rate in this sector is high especially at the juniormanagement level making hiring and retaining skilled talent akey concern for this industry• The highly competitive nature of the industry and easytransferability of skills of the talent pool plays an importantrole creating a challenge for organization to engage andretain talent on a long-term basis.• This challenge in retaining talent also has a knock-on effecton the ability to prepare and develop future leaders within theorganization, thus making this another key HR challenge fororganizations in this sectorHuman Resource Challenges1 Hiring skilled talent2 Retaining critical talent3Reasons for AttritionBetter career opportunitiesBetter pay elsewherePersonal reasons• Attrition is a challenge faced by this sector primarily in theJunior Management level• Better career opportunities ranked as the number one reasonfor attrition. This may be explained by the fact that employees,especially at the junior level, may be in the habit of changingcompanies frequently in order to move upwards through theranks at a quicker pace• While organizations try and have competitive pay, they arestill losing employees to better pay elsewhere within, as wellas outside the sector• Personal reasons also ranks high as a reason for attrition inthis sector123Developing potential leaders
  71. 71. Information Technology
  72. 72. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologyExecutive Summary The median annual increment in this sector isprojected at 10.7% which is slightly lowerthan last year’s increment (11%) At a median of 16.3%, the variable pay thisyear for this sector has seen a considerableincrease from last year (15.1%) This sector has seen overall attrition of 15%across all levels. The highest attrition is seenat Junior and Middle Management levels –18% and 15% respectively Given the attrition rates, hiring and retainingskilled talent are the major concerns for thissector72
  73. 73. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologySector Snapshot73Industry Overview Key Challenges• The IT sector has seen the emergence of full service playersoffering not just traditional services such as applicationdevelopment, maintenance and testing, but also infrastructurefacilities, consulting and system integration.• The focus of the sector is also now shifting to a vertical-drivenapproach so that the depth of services are also concentratedupon – not just the breadth of services offered• With the emerging focus on applications of Cloud Computingand new platforms within the domestic market, the servicesprovided by the sector are getting increasingly diversified andthis represents an immense growth opportunity for the sector asa whole• Hiring and retaining critical talent is a perennial challenge forthis industry• The sector also faces a concern of the skill-levels of the talentpool that it sources employees from. Although there is anincreasing number of institutions that are providing engineeringeducation in the country, the skill level of the graduates remainsa concern due to the quality of the education that is imparted inthese institutions• The western markets – especially Europe – have been slow intheir path to recovery after the economic slowdown. Hence, thishas in turn affected the performance of the sector which is asdependent on the demand from foreign markets as it is ondomestic markets• IT outsourcing market is set to grow at a CAGR of about 8% over 2011 to 2013• The market for enterprise mobility solutions alone is expected to grow to USD 17 billion by 2015Performance HighlightsSource : NASSCOM; Deloitte POV “Technology, Media & Telecommunications India Predictions 2013”
  74. 74. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologyParticipant Profile74• At 38%, the highest participation in this sectorcame from companies with annual revenuesbetween 500 – 1000 Cr.• The second highest participation (31%) was thatof organizations with revenues between 300 – 500Cr., followed by 23% falling below 100 Cr.Annual Revenue Wise Break UpEmployee Strength• There was equal amount of participation (23%)by companies with employee strengths below500, between 2000 – 5000 and greater than25000• This was followed by equal participation (15%)by companies having between 500 – 2000 andbetween 5000 – 10000 employees23%8%31%38%<100 Cr. 100 - 300 Cr. 300 - 500 Cr. 500 - 1000 Cr.23%15%23%15%23%<500 500 - 2000 2000 - 5000 5000 - 10000 >25000
  75. 75. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.8910111213141516JMMMSMTMInformation TechnologyAnnual Increments 2013 – 1475• Across all levels except Top Management, the median annualincrement ranges are projected to be lower than the overallindustry median• Middle and Senior Management increments from the 10th – 75thpercentiles do not show much variationIncrement Percentiles10th 25th 50th 75th 90thJM 7.5% 8.6% 9.9% 11.1% 13.9%MM 8.1% 9.3% 10.5% 12.7% 14.8%SM 8.6% 9.8% 10.9% 13.2% 15.6%TM 8.9% 10.1% 11.6% 13.9% 16.2%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementMedian annual increments in this sector at the Junior and Top Management level are expected to be 9.9% and11.6% respectivelyComparison of Level-wise Median Increments Across Sectors
  76. 76. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologyAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)76• The Information Technology sector has shown a significantdecline in the projected annual increments for JuniorManagement from 12.0% last year to 9.9% this year• At the Middle and Senior Management levels, theincrements have risen only marginally. However, at theTop Management level the increments projected havegone up from 9.0% last year to 11.6% this year• The overall outlook for this sector is relatively restrainedand expected to be slightly lower than the market median.However, this sector has fared slightly better than the ITeSsector10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 8.9% 9.8% 11.0% 12.0% 13.3%2013-14 7.7% 9.0% 10.7% 11.9% 13.1%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementOverall annual increments in this sector are expected to remain almost consistent with last year, albeitdisplaying a fractional decline12.0%10.0% 10.0%9.0%9.9%10.5% 10.9%11.6%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14Median Increments Across Levels
  77. 77. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologyVariable Pay 2013 – 1477• The overall median variable pay percent for this sector is 16.3%• Across all levels, the spread of variable pay percent is relativelywide with Junior Management getting variable pay from 9.1% -23.2% and Top Management receiving 11.9% - 25.3%• The variable pay median received by Junior Management in thissector is relatively low compared to many other sectorsVariable Pay Percentiles10th 25th 50th 75th 90thJM 9.1% 11.5% 14.9% 18.3% 23.2%MM 10.7% 13.1% 16.1% 19.9% 23.9%SM 11.6% 14.4% 17.5% 20.2% 24.6%TM 11.9% 15.2% 18.7% 21.4% 25.3%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay ranges in this sector have shown a significantly wide spread across all levelsComparison of Level-wise Variable Pay Percent Across Sectors81012141618202224JMMMSMTM
  78. 78. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologyVariable Pay 2013 – 14 vis-à-vis 2012 – 137810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 8.4% 11.9% 15.1% 19.0% 27.5%2013-14 9.4% 12.8% 16.3% 20.5% 24.7%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementAcross the sector, variable pay has shown a pattern of leveling out across management levels• The sector median for variable pay percent is 16.3%, This isconsiderably higher than last year’s 15.1%• Across all levels, variable pay percent median for TopManagement is down to 18.7% from last year’s 25%, SeniorManagement is down to 17.5% from 20%, Middle Managementhas a slight increase from 15.0% to 16.1% and JuniorManagement has spiked from 10.5% to 14.9%10.5%15.0%20.0%25.0%14.9%16.1%17.5%18.7%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as % CTC)2012 - 13 2013 - 14
  79. 79. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Medical coverage extended to close family as well by majority companies; Fuel Allowance not provided atJunior and Middle Management; Leave encashment practice not followed by many companiesInformation TechnologyKey Benefits79Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs - 7.7 7.7 -5 – 8 Lacs - - 15.4 23.18 – 12 Lacs - - 23.1 38.5> 12 Lacs - - - 38.5Not Applicable 100.0 92.3 53.8 -Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 - 7.7 15.4 -8000 – 12000 - 7.7 15.4 7.712000 – 15000 - - 23.1 15.4> 15000 - - 7.7 38.5On Actuals - - 7.7 38.5Not Applicable 100.0 84.6 30.8 -Driver: 84.6% and 46.2% of the companies in this sectorprovide Driver or Driver Allowance for the Top and SeniorManagement respectively38.5% of the companies in this sector provide LTIPs to theiremployees. The most frequently provided LTIP is Deferred CashLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 61.5 46.2 23.1 7.75000 - 10000 - 15.4 15.4 15.410000 - 15000 - 7.7 61.5 38.5On Actuals - - - 38.5Not Applicable 38.5 30.8 - -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 38.5%Median number of days encashable in the industry: 60 DaysLeave Encashment46%54%Employee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  80. 80. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Information TechnologyHuman Capital Trends80• Given the growth prospects of this sector, and the jobopportunities available to employees, retaining criticaltalent is emerging as the key challenge for HR in thissector• There is an increasing need witnessed in this sector fordeveloping a robust talent strategy in order to not justretain talent but also source top quality talent from thebest schools and then developing them to go on tobecome future leaders of the organizations• Organizations in this sector are poised at a crossroadwhere they have an opportunity to deal with thesechallenges in time to be prepared for the growth predictedHuman Resource Challenges1 Retaining critical talent2 Hiring skilled talent3Reasons for AttritionBetter career opportunitiesBetter pay elsewherePersonal reasons• Employees in this sector are well aware of the globalopportunities that are available for IT professionals fromIndia. As a result of this demand, they face no problems infinding employment elsewhere and changing companiesfor a better opportunity• These opportunities are not only limited to internationaltransfers to other organizations, but also domesticallywhere a marginal increase in pay and other fringe benefitscan persuade a jump from one organization to another• Personal reasons also rank high in the causes for attritionand these may include marriage, further education (e.g.MBAs), etc.123Developing potential leaders
  81. 81. Information Technology-enabled Services (ITeS)
  82. 82. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSExecutive Summary This sector is expecting a median annualincrement of 10.3% - a considerable decreasefrom the 12.0% median increments observedlast year At the median level, the variable pay in thissector has risen significantly to 16.1% -almost at par with the overall cross-sectormedian The highest attrition levels across all sectorsis seen in the ITeS industry – 17% overall and25% at the Junior Management level onaverage Key reasons for attrition noted in this sectorare better career opportunities and better pay82
  83. 83. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSSector Snapshot83Industry Overview Key Challenges• According to a NASSCOM report, the Indian ITeS industrycontinues to be the most cost-competitive provider of offshoreservices• One of the main reasons for this is the ready availability of alarge and qualified talent pool that is required for this industry tosource its people from• Non-captive organizations are able to tailor their services to thevarious needs of the clients and this flexibility in operations aswell as the round-the-clock services offered to cater to globalcompanies is a major advantage for this sector in India• The increasing computer literacy in the country’s youth alsocontributes to the increasing skill level of the talent pool that thissector can tap into• Increasing competition from other low-cost countries like China,Brazil, Mexico, Indonesia which has made India a less favoredmarket for the ITeS sector• Exposure to US and Europe slowdown has considerablyaffected the ITeS sector and it is currently recuperating from theafter-effects of the same• Changing policies in the host countries in Europe and the USare also affecting the ITeS sector by creating an environment ofuncertainty with regards to the future business plans• Economic uncertainties are also currently forcing organizationsto reset their operational costs and technology related spending• Compliance to standardized processes, regional statutorynorms and internal controls is another hurdle that the sector hasto deal withSource : NASSCOM, IBEF• Indias BPO sector exports are expected to grow by 12-14% in FY14 to touch USD 84 billion - USD 87 billion• The industry is moving towards a “Platform BPO” approach where service delivery is more platform-centric than peoplecentric and on a pay-per-use modelPerformance Highlights
  84. 84. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSParticipant Profile84• Companies with an annual revenue of 500 – 1000Cr. account for 50% of the total organizationsparticipating in this sector• The second highest participation is oforganizations falling in the 300 – 500 Cr. revenuebracketAnnual Revenue Wise Break UpEmployee Strength• The highest participation of companies in thissurvey from an employee strength perspective,comes from organizations who have between500 – 2000 and more than 25000 employees• This is followed by organizations who havebetween 2000 – 5000 employees and then lessthan 500 employees14.328.650.07.1<100 Cr. 300 - 500 Cr. 500 - 1000 Cr. >1000 Cr.14.321.421.47.17.128.6<500 500 - 2000 2000 - 5000 5000 - 10000 10000 - 25000 >25000
  85. 85. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSAnnual Increments 2013 – 1485• The median increment for this sector is expected to be 10.3% thisyear• Increments for this sector are marginally lower than those for theIT sector, across all levels• The range of median increment across levels in this sector isnarrow, ranging from 9.5% to 11.2%• Top Management is expected to receive some of the lowestincrement percentages across all sectorsIncrement Percentiles10th 25th 50th 75th 90thJM 7.2% 8.1% 9.5% 11.8% 13.3%MM 7.8% 8.9% 10.1% 12.7% 14.5%SM 8.4% 9.3% 10.7% 13.6% 15.3%TM 8.7% 9.8% 11.2% 14.4% 16.1%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementIncrements have been conservative; organizations in this sector continue to remain cautiousComparison of Level-wise Median Increments Across Sectors8910111213141516JMMMSMTM
  86. 86. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSAnnual Increments 2013 – 14 (Projections) vis-à-vis 2012 – 13 (Actuals)86• Increments this year have been cautious. This may beattributable to the degree of uncertainty that organizationsin this sector are currently operating in• Outsourcing policy reviews in the host countries oforganizations, in a bid to increase employment in thosecountries is a threat to this sector. As a result,organizations are adopting a conservative approach to theincrements, in order to optimize costs• Marginally higher increments are expected at TopManagement level. However, Junior and MiddleManagement have seen a significant decline in theincrement levels10th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 9.8% 10.0% 12.0% 14.0% 15.0%2013-14 7.5% 8.7% 10.3% 11.8% 12.7%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementOverall annual increments across the range show a significant decline from last year12.0%13.0%11.0%10.0%9.5%10.1%10.7%11.2%0%2%4%6%8%10%12%14%16%18%20%JM MM SM TM2012 - 13 2013 - 14Median Increments Across Levels
  87. 87. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSVariable Pay 2013 – 1487• The median variable pay percent for this sector is 16.1%• The variable pay percent for this sector ranges from 8.7% to 25 %- indicating a wide variation between organizations and levels• Junior Management has received the widest range in variable paythis year from 8.7% at the 10th percentile to 22.8% at the 90thpercentile• Compared to the IT sector, the variable pay percent in this sectoris marginally lower at all levelsVariable Pay Percentiles10th 25th 50th 75th 90thJM 8.7% 11.2% 14.6% 19.3% 22.8%MM 10.3% 12.7% 15.7% 19.8% 23.3%SM 11.2% 13.4% 16.5% 20.7% 24.1%TM 11.6% 15.7% 18.3% 21.9% 25.0%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementMedian variable pay for this sector is almost at the same level as that of the overall industry medianComparison of Level-wise Variable Pay Percent Across Sectors81012141618202224JMMMSMTM
  88. 88. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSVariable Pay 2013 – 14 vis-à-vis 2012 – 138810th Percentile 25th Percentile Median 75th Percentile 90th Percentile2012-13 12.0% 12.0% 13.5% 15.0% 15.0%2013-14 9.1% 12.7% 16.1% 19.9% 24.4%Please Note: JM – Junior Management; MM – Middle Management; SM – Senior Management; TM – Top ManagementVariable pay for this sector has seen a sharp jump across organizations at the Junior Management level andhas stayed constant at Top Management level• The sector median for variable pay percent is 16.1%, This isconsiderably higher than last year’s 13.5%• Variable pay percent at the median level for JuniorManagement has seen a sharp jump from 10.5% to 14.6 %since last year• However, Top Management variable pay has remainunchanged at the median level and Middle Management hasseen a slight decline from 18.5% to 16.5%10.5%15.0%18.5% 18.3%14.6% 15.7% 16.5%18.3%0%10%20%30%40%50%JM MM SM TMMedian Annual Variable Pay (as a % of CTC)2012 - 13 2013 - 14
  89. 89. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Almost all companies provide Driver to Top Management; close to half of the companies provide a DeferredCash plan as an LTIP; 13 Days leave encashable is the median for this sectorITeSKey Benefits89Vehicle Allowance - CarCar Value JM MM SM TM3 – 5 Lacs - 7.1 7.1 -5 – 8 Lacs - - 14.3 28.68 – 12 Lacs - - 21.4 35.7> 12 Lacs - - - 35.7Not Applicable 100.0 92.9 57.1 -Vehicle Allowance - FuelAmount (`) JM MM SM TM5000 – 8000 14.3 28.6 14.3 -8000 – 12000 - 7.1 14.3 7.112000 – 15000 - - 28.6 7.1> 15000 - - 14.3 42.9On Actuals - - 21.4 -Not Applicable 85.7 64.3 7.1 42.9Driver: 92.9% and 71.4% of the companies in this sectorprovide Driver or Driver Allowance for the Top and SeniorManagement respectively46.2% of the companies in this sector provide LTIPs to theiremployees. The most frequently provided LTIP is Deferred CashLong Term Incentive PlanMobile Allowance (Bill Reimbursement)Amount (`) JM MM SM TM0 - 5000 57.1 42.9 21.4 7.15000 - 10000 - 14.3 21.4 21.410000 - 15000 - 14.3 57.1 35.7On Actuals - - - 35.7Not Applicable 42.9 28.6 - -All figures provided are in terms of % of companies providing the benefitamount at the particular levelMedical InsurancePercentage of companies allowing leave encashment: 57.1%Median number of days encashable in the industry: 13 DaysLeave Encashment43%57%Employee, Spouse &ChildrenEmployeee, Spouse,Children & Parents
  90. 90. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.ITeSHuman Capital Trends90• Since the skills in this sector are easily transferrable todifferent organizations within the same industry, retainingcritical talent becomes a major challenge for the HumanResource Department of this sector• To address the high attrition percentage faced by thissector, they need to be aggressive in their hiringstrategies and have to go for recruitment in large numbersespecially at the lower level. In this quest for largenumbers and that too in a competitive market, hiringbecomes their second most critical challenge• As a retention mechanism, providing added incentivessuch as career growth and training becomes one of theother major challenges for the organizations in this sectorHuman Resource Challenges1 Retaining critical talent2 Hiring skilled talent3Reasons for AttritionBetter career opportunitiesBetter pay elsewherePersonal reasons• Attrition is a challenge faced by this sector primarily in theJunior Management level where there is plenty ofmovement across organizations in the same industry• While organizations try and pay competitively, they are stilllosing employees to better pay elsewhere and this is aperennial problem faced by all organizations in this sector• The reason other than an attractive pay, in this industry, isthe tendency of the junior level of employees to go forfurther studies, in turn using this type of employment as astop-gap and earn some money in the process• Another trend observed in this sector, especially withfemale employees, is that the shift timings become ahurdle to their personal lives and hence they attrite fromthese organizations123Developing potential leaders
  91. 91. Advertising & Media
  92. 92. © 2013 Deloitte Touche Tohmatsu India Private Limited. All rights reserved.Advertising & MediaExecutive Summary The median annual increment in this sector is10.2% which indicates a slight decrease from11% in 2012 – 13 Analysis indicates that the variable paypercent in this sector is 14.4% at the medianlevel - a significant rise over last year (10.5%) Attrition is a major concern at the JuniorManagement level (23%) and the overallattrition rate for this sector (16%) is thesecond highest across all industries Key reasons for attrition are better careeropportunities and a need for a better work-lifebalance Some of the key challenges faced by HR inthis sector are better career opportunities,better pay elsewhere, etc.92

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