Saturday, May 05, 2012

Decoding Starting Salary Myth

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Other day a final year student came to my cabin and this is the conversation we had
Me: Good Morning
Student: Good Morning, Sir; Sir, I came to tell you a happy news. I got 2 jobs; one in IT company XXX with a pay package of 3.4 lakhs per annum and another in a mechanical engineering company with a starting salary of 1.44 lakhs per annum.
Me: Great, Congratulations
Student: Thank You Sir
Me: So which job you are taking?
Student: Of course the software job
Me: But you were doing mechanical engineering all these years and isn’t this job suit your profile better than the software job?
Student: Sir, it is not that I don’t like the job profile of mechanical job profile. Sir, these days who will work for a paltry pay of 1.44 lakhs per year in any company? Company XXX is paying me more than double and I am going to take that.
Me: So do you like the job of the software engineer more than mechanical engineer?
Student: Nothing like that; Both jobs are OK but 1.44 lakhs per annum is too low a salary, sir. 
If you interact a lot with final year engineering students you will come across so many situations like this. I always believe that starting salary should never be the ONLY criteria to take up your first job. I am seeing lot of students who study different branches of engineering going to software jobs just because the salary is higher to start with.
I happened to read an article that came in New York Times in 2010 titled “AHigh-Tech Titan Plagued by Potholes” that narrates the lack of “qualified” civil engineers to execute various infrastructure projects in India. The article written by Vikas Bajaj says
The problem is a dearth of engineers — or at least the civil engineers with the skill and expertise to make sure those ambitious projects are done on time and up to specifications.
In the same article Dr Ravi Sinha, Professor in Civil Engineering at Indian Institute of Technology, Bombay says
Ravi Sinha, a civil engineering professor at the Indian Institute of Technology, Bombay, says professionals in his field with five years of experience make about as much as their counterparts at information technology companies. But those starting can make as little as half the pay of their technology peers.
I was convinced by this statement by Dr Sinha as most of my class mates who joined in Civil Engineering companies after engineering who started their career with very low salary are now in a position to demand salary with their 15 year experience in this field.
I want to test this theory that “civil engineering professionals in his field with five years of experience make about as much as their counterparts at information technology companies. But those starting can make as little as half the pay of their technology peers."
So I called up two of my undergraduate classmates (Let us call them K and P) – both did their bachelors in civil engineering with me and we all graduated in 1997. K got placed in one of the best software companies in India through campus placement while P joined a construction company as Field Engineer. I asked them to send me the salary they got from 1998 to 2011. They were courteous to send me the salary and this is what they send me (see graph below). This graph shows the annual salary of my friends for the last 13 years.
My friend P joined construction company for a salary of Rs 4500 per month that never got increased for the first four years. By that time salary of the friend  K working in software company was close to Rs 60,000 per month. Now see the sharp rise after 10 years for P (P changed company after 11 year while K remained in the same company till now). Now in 2012 P is drawing more salary than K.
Let this analysis be an eye-opener for all those students who consider starting salary is most important thing to select your first job.
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Anonymous Rahul Kalbalia said...

an eye opener. I am sure it applies to other streams as well. Interesting article sir.

May 05, 2012 6:20 PM  
Anonymous Deepak said...

Interesting article. I agree to your view that starting salary must not be the sole criteria for choosing the first job. However, it is also important to ask why non-IT jobs are unable to attract/retain top talent. There is a huge demand/supply gap in IT sector even at the entry level compared to other sectors. IT companies do a pretty good job at grooming entry-level candidates with almost zero skill sets to fully employable "resources" within an year or two. For, other sectors to compete and atract top talent, they must adopt similar best practices from the IT industry. Afterall, its a free market (in the truly capitalistic sense :)) and non-IT and IT jobs will compete for the best talent out there :)

May 07, 2012 3:20 AM  
Anonymous Anonymous said...

Now use your engineering skills to integrate those two curves and see who earned more money... The conclusion will still be the same: Take the IT job.

May 07, 2012 5:06 PM  
Anonymous Anonymous said...

In finance there is a concept of cumulative effect. By the time civil engr catches up with the software engr in terms of salary, the software engr dont need to work at all if he invested wisely.

May 07, 2012 10:32 PM  
Blogger rhea said...

Its a good article Sir. Its sad its happening so rampantly. Hope the society also supports this idea slowly.

May 09, 2012 7:53 AM  
Blogger Brijesh Nair said...

Anonymous @ 5:06 PM/10:32 PM

Data I presented may look like that. You must understand that it is the data from 1997 when IT sector was booming and infrastructure development was yet to pick up. With the 12th Five Plan ('12-17) emphasis on infrastructure development and power sector the steep rise that I shown in my graph is going to happen in less than 5 years as IIT professor was narrating in that article in New York Times. But the initial salary will still remain low and cannot be compared to IT jobs.

May 11, 2012 7:16 AM  

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