Balancing Developer and BPO Salaries: How Should a Small Company in Delhi Approach It?

Hi all, I have a company of 60 employees in India for the last 7 years, where we have various departments: Software Development, Testing, Support, Sys Admin, and BPO. We wanted to maintain a common salary structure in the company, and the confusion started when the developers felt they deserved to be paid more than the BPO department.

Current Salary Structure:

Table 1: Hike Percentage After One Year

Grade Hike Percentage

Below Expectations 0%

Meets Expectations 10% - 20%

Exceeds Expectations 21% - 30%

Outstanding Performance 31% - 40%

Table 2: Hike Percentage After Year Two and Onwards

Grade Hike Percentage Additional Components

Below Expectations 0% 0

Meets Expectations 10% - 20% 0

Exceeds Expectations 21% - 25% Bonus Amount - 30,000

Outstanding Performance 26% - 30% Bonus Amount - 50,000

*Bonus – Employees will be eligible for a bonus after confirmation or in the second year of their service.

In case we hire an experienced person, then that person will fall under the "Year 2 and onwards" slab of appraisals.

Considering our company is based in Delhi (where the cost of living is high), and the BPO team consists of 20 employees, what salary structure can you all suggest? I have looked at various websites trying to understand BPO salary hikes; however, it will not be fair to compare to those standards as my company is very small in size.

Regards

First thing is you need to be a good people manager :) And yes, there is always this compensation comparison between employees in any company. Basically, I feel that people join BPOs because they believe there is good pay in that sector, and it all depends. There are companies that provide excellent salaries to development personnel, and there are also companies that offer salaries less than the market rate to their employees.

You haven't mentioned what technologies your development team works on and what kind of BPO you operate. If that is mentioned, maybe it would be easier to get more appropriate answers. Managing people was never easy :) I hope you will get the exact figures for your questions from our fellow users. All the best!

I believe you are a part of the management team. I just want to take a quick look at the HR department of your company and how strong the team is in terms of headcount and experience. Hopefully, you will not have a team of more than three people.

If you have a strong team, then you should plan for Compensation Benchmarking, as the percentage you set is far more than the regular appraisal percentage. I understand that startups/SMEs have more flexibility than a CMMI level organization. However, the percentage you set is above the compensation wavelength. If the HR team is not very strong in terms of experience, there are agencies that do this Compensation Benchmarking for different levels. Still, I am not very sure about the costing as that might be a little expensive.

According to reports, the increase across sectors is a maximum of 12% for fixed and 16% for variable. Exclusively for the IT sector, it is between 8.9% and 13.3%. This is an overall report and not specific to the category of the organization.

You should also include Fringe Benefits rather than direct salary. That would always help in terms of periodicity. However, wish you good luck!

Without analyzing your operational costs, including all expenditures and expected profits to be generated, you cannot derive a salary structure. Keep in mind that there will be a performance-based hike every year, in addition to paying a bonus for outstanding employees (optional).

Define Your Own Salary Structure

My suggestion is that you kindly do not follow any organization's salary structure. You need to define your own based on financial aspects. You could end up paying more than what you have earned. Due to the cost of living, many companies have started shifting to tier 2 or tier 3 cities. Operation standards remain the same, but expenditures have reduced. There are millions of unemployed individuals in India. Look out for those who are truly in need of a job and are willing to commit for a number of years.

Recruitment Strategy for BPO

When recruiting employees for your BPO, do not hire postgraduates as their expectations are high. Be very specific during the hiring process. Look out for recruiting talented undergraduate applicants. Develop their skills and try to retain them for a minimum of 2-3 years.

With profound regards,