Traditionally, the following have been the characteristics of the compensation structure of a white-collar, non-unionized Indian: high “basic” pay, variable pay restricted to senior management in a few private sector companies, government pay scales often used as the benchmark, an almost guaranteed annual increase irrespective of the organization’s performance, and promotion in the hierarchy based on number of years of service completed in the organization.
During the last two decades, the compensation philosophy and, indeed, the compensation structure of Indian organizations, have undergone radical change. It is not surprising that the reason for this change is the growth in information technology-enabled services (ITES) and, more recently, in the business process outsourcing (BPO) industry.
The talent war in both of these areas, and the consequent globalization of the workforce across organizations in India, is compelling the finance, human resource (HR), and tax experts to constantly study, benchmark, and redefine the compensation imperatives.