Shocking 160% Pay Gap In Indian IT: CEOs Vs Freshers
160% CEO salary hikes vs. 4% fresher raises—how inequality impacts India's IT industry and economy.
Indian IT has reflected this nation’s substantial economic growth and success for years. One shocking reality lies beneath that glitzy surface—the pay gap between top execs and freshers keeps swelling. Data reveals how, over the last five years, CEO salaries at India’s five leading IT companies saw an average growth of 160%, while the pay of a fresh recruit increased by a paltry 4% during the same period.
Growth in inequality raises questions about the sustainability of the current economic model, its impact on the Indian GDP, and the morale of new workforce entrants.
The Numbers Tell the Story
The median annual pay for CEOs in fiscal year 2024 stood at a jaw-dropping ₹84 crore, while fresher salaries crawled from ₹3.6 lakh to ₹4 lakh. The data comes from some of the industry’s most prominent names-TCS, Infosys, HCLTech, Wipro, and Tech Mahindra.
Pay ratios within the same companies underscore such disparities. For example, Wipro’s pay ratio stood at 1,702:1, underlining extreme imbalance. The other company considered a relatively conservative employer is TCS, with a ratio of 192:1.
While the increase in CEOs’ wage bills is made more palatable by citing the global benchmark and multinational companies’ increasing intricacy, the slow growth of fresher salaries speaks to the opposite side.
A Nation Grappling with Inequality
Slow growth in India’s GDP has widened the pay gap. The economy expanded only 5.4% in the second quarter of FY25. Critics point to income inequality partly as the cause. Mohandas Pai, former CFO of Infosys and one of the industry voices has been vocal about the issue. He highlights how disproportionate salary growth demoralizes young workers and affects economic consumption—a key driver of GDP growth.
The disparity does not stop here. Wage growth in other sectors, such as engineering and manufacturing, has been similarly slow. Between 2019 and 2023, salaries for these sectors grew only at an average annual rate of 0.8%. What makes the issue of inequality in IT so particularly newsworthy is its massive scale.
The Pyramid Model: A Double-Edged Sword
One of the leading causes of stagnant salaries for company freshers is that they follow a pyramid model. Under this model, freshers receive the brunt of the workforce, making the pyramid’s base. The high costs companies can often justify such low pay are required to make them job ready.
An analyst at NelsonHall, explains,
“The High supply of freshers along with low job readiness enables the companies to have an entry-level salary at a relatively low level. It takes lots of investment to train them so that companies recover at the initial phase by offering minimum hikes.”
It has also helped Indian IT firms remain cost-competitive globally but led to systemic undervaluation of fresh talent.
Challenges Facing the IT Sector
The Indian IT sector is presently dealing with a whole set of problems. Attrition has been an endemic problem, but it has increasingly been pay and job roles dissatisfaction. More and more freshers are leaving to move abroad or to alternate industries offering higher pay and work-life balance.
Also, this company has no on-the-job opportunities, which was a significant incentive to work in the past. The attractiveness of high-value postings abroad has eroded because of rising telecommuting habits and political instability in most regions.
These have pushed IT companies to rethink their compensation packages. They still give exorbitant remunerations to their top management, but a newly hired employee receives much less.
A Call for Equitable Pay
However, critics emphasize that the given model is unsustainable for the industry, furthering decay instead of survival. Mohandas Pai is one of them who called for a hike in the fresher’s salary to at least ₹5 lakh annually.
Given the profits of India’s top IT companies, this seems well within reach. TCS clocked a net profit of ₹45,800 crore in FY24, while Infosys and Wipro made ₹23,400 crore and ₹11,100 crore, respectively. A sliver of such profits toward refreshing fresher salaries could help to chip away at that inequality.
Further, the economy will feel the positive effects of the higher salaries paid to freshers. Higher disposable income among young workers would increase consumption and demand across all sectors, increasing GDP growth.
Balancing Profitability with Fairness
One needs to acknowledge that there is nothing intrinsically wrong with CEO compensation. Running global multinationals in such an unstable world requires excellent skills and abilities. However, when the disparity undercuts the workforce’s morale and widens societal inequality, it becomes a problem.
Global benchmarks help in the pursuit of balanced profitability with fairness. For instance, companies located in Scandinavian countries have a pretty just pay structure, which further dictates greater employee satisfaction and productivity levels.
Indian IT companies could follow the same path and even start doing similar things, like capping executive pay ratios or launching profit-sharing plans for the lowest ranks.
Conclusion
One such example of the Indian IT sector risks undoing its gains because of the present pay structure. First-year students are the backbone of this sector, whose pay remains stagnant, while CEOs are paid much more than a living cost index.
This is also a business need rather than a simple question of justice. By investing in their youngest workers, IT businesses may increase their employees’ motivation and productivity, stimulate spending, and support the growth of the national economy.
The IT industry has been doing a fabulous job to date, but now it faces an opportunity to become a great example. At the same time, India tackles the problems of a slowing GDP and increasing inequality. Can it do that?
