An unprecedented demand for technology professionals with in-demand skills is not just driving up their salaries sky-high, but also causing a spike in offer dropout — candidates rejecting an offer from one company and taking up another — to as high as 55-57% for certain roles, compared with an average of 10-12% in pre-Covid days, say recruiters.
The offer dropout ratio is the highest among full-stack and front-end engineers, where it was a maximum of 27% last year, according to data from specialist staffing firm Xpheno. Companies, on their part, are making counter offers or retention hikes of 60-120% to hold on to in-demand skills, in contrast with a maximum of 30-35% last year.
While the rush for digitisation triggered further by the pandemic is pushing up demand for tech talent, the work-from-home model is allowing techies in India to take up offers from firms in the US and Europe which are willing to pay salaries at par with their home markets. Startups that have raised billions of dollars in the recent past are also luring niche tech talent, offering not just astronomical hikes, but also perks such as bikes and Apple gadgets. For techies, especially full-stack engineers, data engineers, data analysts, front-end engineers, data scientists and backend engineers, this leaves plenty to choose from.
“They have the power to negotiate; ask for the best and get the best,” said Harshil Mathur, chief executive at fintech startup Razorpay.
While there have been tech talent booms in the past as well, the demand this time has grown exponentially as Covid has accelerated digital transformation, said Sangeeta Gupta, senior vice-president at Nasscom.
Lateral Hiring a Challenge
“It’s not just IT and technology organisations, banks, product companies and startups are all vying for the same pool of talent. People are holding out for the best offer they can get,” she said. Razorpay’s Mathur said lateral hiring had become a challenge, with some candidates sitting on three-four job offers and dropping out at the last minute.
The dropout ratios are the highest at IT services firms, exceeding 50% in some of the skills, while global in-house centres have a dropout ratio of 30-40%. Among others, product companies have a drop-off ratio of 20%, while at startups, it is 30-50%, depending on the ESOP pools and joining bonus components of the package. In terms of compensation, tech startups lead the pack with some of the highest packages, followed by IT product companies, finds Xpheno data.
“The wage war triggered by more jobs chasing lesser and lesser niche and experienced talent is evident. Despite high packages being negotiated and offered, the post-offer dropout rates have been climbing and this is not a desirable trend to sustain,” Xpheno cofounder Kamal Karanth said.