Attrition, Hiring and Salary Increase Study

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1 Attrition, Hiring and Salary Increase Study Zinnov Management Consulting Pvt. Ltd. Nov 2013

2 Content Indian MNC R&D Landscape Attrition Hiring Salary increases Salary Levels (Location analysis) 2

3 Of the 2,44,000 strong MNC R&D talent pool present in India, 73% is concentrated in the southern part Total R&D Centers: 1031 ( 3-4 % YoY growth Total R&D Talent Pool: 2,44,000 (~ 11 % YoY growth) 13% % 23,990 NCR 5% 2% 60 4,540 Other Locations 19% 14% ,070 12% 12% ,460 Mumbai-Pune Hyderabad Bangalore 39% 55% 401 1,35,380 Chennai 11% 6% ,560 Source: Zinnov Analysis & Talent Neuron R&D Centers R&D Headcount 3

4 Currently, ~59% of MNC R&D engineers are employed in Software, Telecommunication and Semiconductor verticals Vertical Wise Distribution of MNC R&D Talent Pool in India, ,44,000 Total R&D Talent Pool 85,190 Software/Internet 31,880 Telecom 26,090 21,400 Semiconductor Industrial Automation Software~ companies employ approximately 35% of the total R&D talent present in India 19,490 17,250 Automotive Consumer Electronics Telecommunication, Semiconductor & Industrial Automation firms employ approximately 13%, 11% and 9% of the India R&D talent pool respectively. 13,610 9,410 Computer Peripherals Medical Devices 8,070 7,340 4,270 Networking Storage Aerospace R&D Talent Pool by Vertical 4 Source: Zinnov Analysis & Talent Neuron

5 The average experience level across the MNC R&D industry has increased from 5.7 years to 7.2 years 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Location wise experience levels at R&D centres 4% 2% 2% 3% 4% 9% 15% 24% 21% 23% 22% 30% 39% 52% 52% 55% 50% 47% 43% 21% 20% 24% 24% 14% Bangalore Chennai Hyderabad NCR Pune Oeverall 0 to 4 4 to 8 8 to % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Experience level of R&D resources over last 4 years 22% 18% 20% 17% 50% 24% 4% 6% 4% 4% 42% 40% 47% 34% 35% 32% CY12 CY11 CY10 CY09 0 to 4 years 4 to 8 years 8 to 14 years 14+ years 5 Source: Zinnov C&B survey Oct 2013

6 Content Indian MNC R&D Landscape Attrition Hiring Salary increases Salary levels (Location analysis) 6

7 An overall view of the Attrition and Hiring trends shows that the industry is growing at approximately % YoY 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Yearly View of Attrition & Hiring 32.7% 31.5% 24.0% 19.7% 20.1% 21.0% 17.4% 12.7% 10.7% 9.4% * Difference in Average Hiring to Average Attrition is 10 to 11 % Average Hiring for the Year Average Attrition for the Year Attrition Hiring Backfill : New position Hiring Software/ Internet 10.0% % 55:45 Engineering 7.73% % 35:65 Note : * data is till September 2013 but has been annualized for calculation 7

8 Contents Economic indicators Indian MNC R&D Landscape Attrition Hiring Salary increases Salary levels (Location analysis) 8

9 In 2013 salary increases were at an average of 12 %. The salary increases for 2014 are expected to be marginally lower at around 11 %. 9.0% Top 17.82% Top Senior Middle 9.5% 10.5% 12.4% 10.0% 12.2% 12.4% Senior Middle Junior Top performers % Junior 13.9% 11% Promotion cases % 13 % * All figures mentioned are averages Forecast 9

10 The expected salary increases at Engineering ( e.g. automotive, industrial etc.) R&D centres and Software/Internet R&D centres are almost at par Average Salary increase at Software/ Internet R&D centres : 2013 Actual : ~12.2 % 2014 Expected: ~11 % Average Salary increase for Engineering R&D centres: 2013 Actual : ~12 % 2014 Expected: ~11% 2013 Overall Increase: 12 % Merit Increase Inflationary increase Promotion increase 6-7 % 3-4 % 1-2 % % of Promotion cases across levels at R&D centres Average Senior Level 5.30% Middle Level 11.38% Junior Level 15.61% * All figures mentioned are averages 10

11 The depreciation in value of the Indian rupee, has led to significant cost advantages for MNC R&D companies The Present Rupee value is /USD The Rupee is expected to strengthen to INR 60 against the USD in The average % drop in rupee value 2012 was ~12.5 %. Source: Tradingeconomics.com Few companies are leveraging this change in currency value against salary increases for 2014 ( No increase in the dollar value of budget) 11

12 MNC R&D centers at NCR are attracting senior technical talent with higher salaries Product development roles Individual Contributors Location cut (Salaries) Managerial Roles Location cut (salaries) Fi ed Pa in INR 000s Fi ed Pa in INR 000s Asso. Engineer Engineer Sr Engineer Tech lead Senior Lead Architect Principle Architect Chief Architect Bangalore Pune Hyderabad Chennai NCR Team Lead Manager Senior Manager Director Senior Director Executive Bangalore Pune Hyderabad Chennai NCR

13 When compared, the salary differential between HQ and India significantly decreases as one moves up the organizational hierarchy Salary compared across various locations X CTC ( TR ) In INR Bay Area New York Boston Shangai Germany India X 0 Entry/ Intermediate(1-4) Lead(5-8) Middle Management(9-13) Sr/ Top management(15+) Levels Source: Zinnov Analysis and Talent Neuron 13

14 Summary I dia s re e t e o o i i sta ility has ee o tai ed as a result of aggressive poli y refor s y the gover e t.fit h also revised I dia s outlook fro Negative to Sta le The depreciation in value in Indian rupee, has led to significant cost advantages for MNC R&D companies MNC R&D centres growing at 3 to 4 % YoY. talent pool growing at roughly 10 to 11 % YoY The average experience level across the MNC R&D industry has increased from 5.7 years to 7.2 years MNC R&D Centres have voluntary attrition of 9.4 % which is a 1.3 % drop from 2012 Hiring at MNC R&D centres is range bound and is currently at % (Avg.). The year 2013 saw salary increases at 12 % (Avg.). The salary increases for 2014 are expected to be slightly lower at around 11 %. 14

15 Storyline Zinnov Management Consulting Zinnov Management Consulting 69 "Prathiba Complex", 4th 'A' Cross, Koramangala Ind. Layout 5th Block, Koramangala Bangalore Phone: /6 Thank You 11, First Floor, Paras Downtown Center, Golf Course Road, Sector 53, Gurgaon Phone: Patrick Henry Dr. Building 7 Santa Clara CA Phone: , Waterway Ave, Suite 300 The Woodlands TX Phone: Sandeep Moorthy Sr. Consultant- Comp & Benefits E mail - [email protected] O: /7; M: Nitika Goel Program Manager G.A.P. E mail - [email protected] O: /7 ; M: [email protected] 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 the client organization without prior written approval from Zinnov 15

Global Data Center Location Insights March 2013

Global Data Center Location Insights March 2013 This report is solely for the use of Talent Neuron clients and Talent Neuron Subscribers. No part of it may be circulated, quoted, or reproduced for distribution