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Compensation & Benefits Study 2012
 

Compensation & Benefits Study 2012

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    Compensation & Benefits Study 2012 Compensation & Benefits Study 2012 Presentation Transcript

    • This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside theclient organization without prior written approval from Zinnov
    • Agenda 1 The Indian R&D Landscape 2 C&B Survey 2012 3 The Way Ahead
    • Post the financial downtime, R&D investments worldwide are starting to pick up once again Top 1,000 R&D Spenders Growth Trend, • After witnessing a decline in the 2009- 2007-11 (USD Billion) 10, global R&D spending has increased 600 significantly in 2010-11 582 • More than one-third of the global 1,000 550 R&D spenders already have centers in 549 India 538 500 511 • Companies outside of the US HQs are starting to look at setting R&D centers in India. About 28 per cent companies with HQ in Japan, EU and APAC have a center 450 in India 400 • China continues to give tough Jul 07 to Jul 08 to Jul 09 to Jul 10 to competition to India in many Jun 08 Jun 09 Jun 10 Jun 11 benchmarks on various R&D desirability parametersNote:Source: Zinnov analysis of top 1,000 R&D spenders in the world
    • MNC R&D landscape in India has rapidly grown in the last decade Total Number of MNC R&D India Penetration of World’s Top 1,000 Centers in India 1,000 R&D Spenders 871 780 India 800 699 600 517 418 700 400 297 191 200 0 300 Before 01-02 03-04 05-06 07-08 09-11 Number of MNCs: 718 00 Total Centers: 871 • The MNC R&D landscape in India is rapidly growing with a current base of 718 MNCs with their R&D centers in India • India currently boasts an installed R&D talent pool base of over 200,000 engineers growing at an average of 9% a year for the last 5 years • R&D talent pool supply comprises of varied components like migrations from industries, software professional returnees and the fresh engineering graduatesNote:Source: Zinnov analysis of MNC R&D ecosystem in India
    • A multi-city R&D ecosystem is fast evolving in India MNC R&D Centers Distribution in India by Fresh Talent Pool Availability by Key Locations in Locations India 4% 13% 10% 35% 11% 43% 17% 13% 13% 10% 19% 12% Bangalore Pune/ Mumbai Hyderabad Bangalore NCR Chennai NCR Chennai Others Hyderabad Pune Others • Till about mid 2000s, MNCs were concentrating at tier-1 cities in India primarily due to availability of rich talent, investment friendly policies, and high quality of life • MNCs started expanding to tier-2 cities post 2005 as they offered advantages such as higher catchment area, lower attrition, and cost arbitrageNote:Source: Zinnov analysis of MNC R&D ecosystem in India
    • Agenda 1 The Indian R&D Landscape 2 C&B Survey 2012 3 The Way Ahead
    • Zinnov followed a multi-step methodology to collect and validate insightsaround the compensation & benefits scenario of MNC R&D centers Analysis & Job Mapping Data Collection Reporting Questionnaire to collect Zinnov proprietary tool for Job evaluation process to quantitative information collating and analyzing data determine the equivalence pertaining to demographic gathered among participating details, payroll data, attrition & organizations hiring information etc. Robust internal quality checks at various levels and final analysis Validate job matches with Qualitative Data collected presented for both qualitative comparator organization through telephonic interview and quantitative dataFinal Report is an in-depth study of compensation and benefits data, qualitative insights, attrition & hiring trends, expected salary increase along with future outlook of the R&D landscape
    • An in-depth analysis of the current compensation structure of 82 MNC R&D centers was conducted towards the scope of the engagement Location Split of R&D Centres Headcount Split of R&D Centres Industry Split of R&D Centres 2% 3.7% 2% 6% 17.1% 17.1% 11.0% 8% 2% 14.6% 37.8% 13.4% 10% 17.1% 42.7% 69% 6.1% 19.5% NCR Bangalore 0 to 250 250 to 500 Software product development Chennai Hyderabad 500 to 1000 1000 to 2000 Embedded systems/ Semiconductor/ EDA Pune Others Engineering Services 2000+ Software pdt development & Engg services Software pdt development & Embedded systems Engg Services & Embedded systems/Semiconductor All 3 Segments 82 R&D Centres Analyzed a sample of approximately 62,000 R&D employees across different geographic locations • Latest compensation data ending January 2012 has been taken into consideration for the yearly analysis • Outliers/ incumbents lacking data in terms of certain pay components have been excluded for the analysisNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • 2011 was marked a variety of changes on the compensation & benefits regime in India Key C&B Related Observations for 2011 a b c Salary Increase in 2011 Strategic Areas Defined Geo Spread of R&D A number of companies Year 2011 saw salary increase of Locations other than Bangalore increased focus on core strategy, 13.0% at an average are catching up in C&B people and process d e f Attrition Under Control Increasing Experience Pool Functional Leverage After a steep increase in in 2010, The overall experience pool The functional leverage of QA & attrition was somewhat continues to increase for the product engineering continues to controlled in 2011 R&D centers in India increase g h Focus on Variable Pay Employee Centric Benefits Ever increasing employee Continued focus on variable centricity at the MNC R&D incentives based on performance centers in IndiaNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • a Salary Increase in 2011 As the world economy recovered from the downtime, year 2011 witnessed salary increments at an average of 13.0% at MNC R&D centers in India Key Themes for 2011 Actual Salary Increments, CY11 Cautious Approach towards Salary Increase Average 13.0% Focused Hiring to Balance the90th Percentile 15.0% Pyramid75th Percentile 14.3% Focused on Sustained Career Growth for Employees50th Percentile 12.0% Increased Maturity of the Centers25th Percentile 11.8%10th Percentile 10.1% Multi City Strategy 0% 5% 10% 15% 20%Note:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • a Salary Increase in 2011 While salary calibrations did happen across levels, the direction is still not very clear Tech Associate Engineering Associate QA QA Tech Support Technical Business Engineer Lead QA Engineer Lead Manager Support (L1) Manager Architect Analyst 25% 20% 15% 10% 5% 0% -5% -10% -15% 08 VS 09 09 VS 10 10 VS 11 -20% Stretching Goals at Disparity Cost Technical & Business Junior Level Management Optimization FocusNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • a Salary Increase in 2011 The difference between the HQ salary and the India salary tends to reduce as one moves up the hierarchy Comparison Between US and India on Total Cash , CY 2011 250,000 US India 196,181 200,000 152,000 1.3x 141,389 150,000 112,771 146,400 2.0x 100,000 2.1x 71,369 3.2x 50,000 74,674 2.8x 68,000 35,457 25,871 0 Software Senior Software Engineering Architect Engineering Engineer Engineer manager DirectorNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • b Strategic Areas Defined MNC R&D centers saw a revived focus on center level strategy, people centricity and process efficiency Talent development & Focus on innovation and new Focus on quality and time to retention product development delivery Focus on employee Complete product/ business Focus on operational stability engagement ownership Better collaboration with Technical career path Brand Visibility Global teams definition Top Priorities of R&D CentresNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • b Strategic Areas Defined Effective matrix management, reporting structure for increasing efficiencies and executive visits to increase transparency has been a prime focus Central Reporting Structure at the R&D Centres Global Stakeholder’s Visit to India 42% Global Reporting • CEO/President – Typically once or twice a duration of stay ranges from 2 to 3 days 58% Local Reporting • CXOs/Senior VPs – Ranging from once/twice a year to once a quarter; duration of stay is 2 days to a week • Directors/Sr. Mgrs – Ranges from once a quarter to once in 2 months; Longer duration to support product requirements - Increased transparency - Increased ownership Pros - Communication gaps; More time to - Cross leverage of expertise trickle down information (Co-development) - Lack of personal touch Cons - Global Managers not aware of Indian policiesNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • c Geo Spread of R&D Locations outside of Bangalore are also starting to evolve in terms of total cash across levels Median Total Cash (INR Lacs) Across Select Positions(Max-Min)/Max 26% 18% 18% 29% 19% 23% 15% 30 25 20 15 10 5 0 Associate Engineering Engineering Solution Associate QA QA Lead QA Manager Engineer Lead Manager Architect Engineer Bangalore Pune Chennai NCRNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • d Attrition Under Control Overall dip in attrition is a reflection of increased focus by companies on career development, communication and competitive pay to retain talent Yearly View of Attrition & Hiring40.0% 32.7% 31.5% 19.7%20.0% 21.0% 12.7% 17.4% • Best in class companies were 0.0% able to keep their attrition rate 2009 2010 2011 below the industry average Average Hiring for the Year Average Attrition for the Year • Increased focus on career Percentile Positioning of Attrition, CY11 enhancement by ensuring increased ownership 90th %ile 24.5% • Increased investment in new 75th %ile 19.4% products and improvement of 66th %ile 18.3% existing processes to focus on technical career path, faster time 50th %ile 15.5% to market and quality enhancements 33rd %ile 13.7% 25th %ile 12.8% 10th %ile 8.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%Note:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • d Attrition Under Control Overall dip in attrition is a reflection of increased focus by companies on career development, communication and competitive pay to retain talent 12.0% Quarterly View of Attrition & Hiring 10.2% 10.0% 9.4% 8.8% 8.0% 7.4% 7.9% 8.0% 7.1% 6.0% 5.9% 6.0% 5.2% 4.1% 5.3% 5.7% 4.0% 4.6% 4.5% 4.6% 4.0% 5.6% 3.8% 4.0% 4.5% 2.0% 2.4% 2.3% 0.0% Jan to Apr to Jun Jul to Sept Oct to Dec Jan to Apr to Jun Jul to Sept Oct to Dec Jan to Apr to Jun Jul to Sept Oct to Dec Mar 2009 2009 2009 2009 Mar 2010 2010 2010 2010 Mar 2011 2011 2011 2011 Percentage of New Hires During the Month Percentage Terminations During the Month • Companies generally do their man power planning (MPP) and budgeting at the start of the new financial year. This leads to fresh hiring based on the annual MPP around these quarters • Employees generally tend to look for better opportunities post their appraisal in March/ July (majority appraisal cycles fall in this range) and companies are able to get the best talent either to back fill or for new positionsNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • d Attrition Under Control The aspiration of a typical R&D engineer has evolved over the last 2 decades Factors Considered When Joining a Company 60.3% 57.5% 43.1% 40.6% 36.3% 24.7% 8.1% 6.3% Job content Compensation Brand Image Workplace Future Career Designation Job security International & Benefits Environment Opportunities assignments Exposure to new technologies, frameworks and forumsNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • e Increasing Experience Pool The overall experience level of the industry stands at about 5.7 years; Best in class companies have been able to strengthen their experience pool further Experience Level of R&D Resources Over Employee Experience (No. of Years) for CY11 Past 3 Years12 10.9 4% 4% 6%10 17% 20% 18% 7.8 8 47% 40% 5.7 42% 6 5.2 4 3.2 2 32% 35% 34% 0 CY 09 CY 10 CY 11 Average 25th %ile 50th %ile 75th %ile 90th %ile 12+ Years 8 to 12 Years 4 to 8 Years 0 to 4 Years • Over 25% of the talent pool has more than 8 years of experience compared to 6 years in CY2010 • Most companies have also struck a balance by hiring fresh talent at junior levels to optimize cost • CY 2011 continued to witness an increased focus on hiring key technical as well as business skillsNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • e Increasing Experience Pool While Bangalore is maturing in terms of experienced talent pool availability, other locations are fast picking up Location Wise Experience Level of R&D Resources, CY11 100% 3% 6% 9% 5% 6% 6% 9% 90% 10% 14% 8% 18% 23% 24% 80% 25% 70% 42% 35% 60% 40% 42% 50% 37% 47% 40% 66% 30% 45% 48% 20% 41% 34% 29% 10% 23% 0% 5% Overall Bangalore Hyderabad Pune NCR Chennai Others Industry 12+ Years 8 to 12 Years 4 to 8 Years 0 to 4 YearsNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • e Increasing Experience Pool With less than 1% people in the age above 45 years, number of PhDs stand close to 0.3% in the R&D industry Age Analysis of the R&D Employees, Education Qualification of R&D Employees, CY11 CY11 0.3% 0.6% 0.1% 0.3% 0.1% 12.0% less than 25 18.7% Graduate 25 to 35 Masters 29.1% 35 to 45 Diploma 45 to 55 PhDs 70.2% Others* 68.6% greater than 55 * Includes 12th pass and Certificate courses • India has a rich talent pool of scientists and engineers thus, adding to the talent pool year on year; Over 45,000 engineers suitable for MNC R&D Centres graduate every year • There has been increased trend towards encouraging employees to opt for technical as well as soft skills courses • Few organizations consider PhD as one of the parameters during performance evaluation and very few have ties with the universities to encourage the sameNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • e Increasing Experience Pool The R&D talent pool in India comprises of mostly young employees in the age bracket of 25-35 years Location Wise Age Analysis for CY11 0.3% Others 7.1% 69.3% 23.4% 0.0% Chennai 8.6% 66.7% 22.0% 2.7% 1.0% NCR 7.6% 68.4% 22.9% 0.0% 0.5% Pune 18.0% 71.1% 10.3% 0.0% 0.4% Hyderabad 23.9% 67.9% 7.8% 0.0% 0.9% Bangalore 14.4% 68.5% 16.2% 0.6% Overall Industry 18.7% 68.6% 12.0% 0.1% 0% 20% 40% 60% 80% 100% less than 25 25 to 35 35 to 45 45 to 55 greater than 55Note:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • f Functional Leverage While volume increase is visible in the quality function, engineering functions appear to be focusing on domain & experience 60.0% Headcount Split by Functions (CY 2011) 52.8% • Most of the product engineering work in India is 50.0% centered around product development/ sustenance, though the overall headcount for the 39.9% same has dipped in the last 3 years 40.0% • As companies better utilize & optimize the “relatively expensive” resources, this trend might 30.0% continue in the future • Product management function has yet not 20.0% matured in India and only a handful of product managers are currently available in India 10.0% 2.7% 0.4% 0.0% Product Development/ Product Verification/ Technical Product Management Sustenance Testing SupportNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • f Functional Leverage Pune and Chennai lead in terms of product management focus; Hyderabad has more focus on quality function 0.3% 0.3% 0.8% 0.3% 2.6%100% 1.3% 1.3% 9.5% 90% 15.6% 31.1% 80% 39.3% 46.8% 19.3% 70% 36.7% 60% 50% 40% 65.2% 61.4% 30% 59.5% 46.5% 20% 39.8% 10% 0% Bangalore Pune Hyderabad NCR Chennai Engineering Quality Technical Support Product ManagementNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • g Focus on Variable Pay The focus on variable pay continues to increase across levels in the MNC R&D ecosystem in India Variable Pay as %age of Total Variable Pay as %age of Total Cash (Across Levels) - CY2009 Cash (Across Levels) - CY2011 20% 20% 20% 16% 15% 15% 15% 12% 11% 12% 12% 10% 9% 10% 10% 7% 5% 6% 5% 5% 0% 0% Junior Level Middle Level Senior Level Junior Level Middle Level Senior Level Minimum Maximum Minimum MaximumNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • h Employee Centric Benefits There has been an increased focus on employee benefits as a tool for employee retention Prevalence of Benefit Schemes 90% 82% 80% 72% 70% 70% 63% 60% 56% 57% 50% 40% 30% 19% 20% 13% 10% 0% Joining Bonus Professional Development Plan Long Term Incentives Housing/Leased Accomodation CY 2010 CY2011 Career Path Better Global Stakeholder Flexible Work Definition/ Focus Communication Visits EnvironmentNote:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • Agenda 1 The Changing R&D Landscape 2 C&B Survey 2012 3 The Way Ahead
    • While expected salary increments for 2012 are in the same range of the salary increments in 2011.. Actual Salary Increments, CY11 Expected Salary Increase, CY12 Average 13.0% Average 12.6%90th Percentile 15.0% 90th Percentile 15.3%75th Percentile 14.3% 75th Percentile 13.5%50th Percentile 12.0% 50th Percentile 12.0%25th Percentile 11.8% 25th Percentile 11.6%10th Percentile 10.1% 10th Percentile 10.6% 0% 5% 10% 15% 20% 0.0% 5.0% 10.0% 15.0% 20.0%Note:Source: Zinnov analysis of data collected during Jan to March 2012 towards the compensation & benefits survey 2012
    • ..MNC R&D centers in India are expected to continue to focus on various keyenablers for higher value generation Adobe, Ericsson, Texas Fresh Talent Acquisition InstrumentsTalent Pyramid Management Talent Development and Retention Cisco, NetApp, BMC Expat Programs Google, Microsoft Senior Leadership Technical Events EMC, Cisco Incubation Lab EMC, Yahoo, BMCMarket Impact Product Management Mcafee, Yahoo, Adobe Startup Connect Microsoft, Honeywell Ecosystem Vendor Connect Symantec, Cisco, Alcatel Connect Academia and Government relations IBM, Intel, Alcatel
    • Zinnov Management Consulting 69 "Prathiba Complex", 4th A Cross, Koramangala Ind. Layout 5th Block, Koramangala Thank You Bangalore – 560095 Phone: +91-80-41127925/6 11, First Floor, Paras Downtown Center, Golf Course Road, Sector 53, Gurgaon – 122002 Phone: +91-124- 4028888 3701 Patrick Henry Dr. Building 7 Santa Clara CA – 95054 Phone: +1-408-716-8432 21, Waterway Ave, Suite 300 The Woodlands TX – 77380 info@zinnov.com Phone: +1-281-362-2773 www.zinnov.com @zinnovThis report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client 2organization without prior written approval from Zinnov 9