Hello Friends,

I know a number of you have significant work experience in India. Since I have not worked in India and am considering the possibility of moving there, could some of you please clarify the concept of CTC based compensation in India. I am aware that they can vary significantly from company to company. However, I would appreciate a basic idea of what such a structure includes.

For example, what would a CTC of INR 10 lacs per annum imply. What proportion would be the basic salary (before tax) and what would be some of the other elements?

I also have a question for some of you who are aware of the recent cost of living in the larger centres of India and who have held senior positions in various companies. What would your comment be on CTC packages in the following cities?

Bangalore - CTC 18-20 lacs per annum
Hyderabad - CTC 15-18 lacs per annum
Mumbai - CTC 27-30 lacs per annum

My questions include:
What would such a structure include and what would the take home be (in terms of cash salary) - a range would certainly do?
These are generally senior positions - so what benefits would they typically include considering that all of them would be large Indian companies, financial institutions, MNCs or foreign subsidiaries.
How do these salaries compare with their cost of living - I know that Mumbai is extremely expensive in terms of real estate (I still do visit Mumbai) but I am not sure about the others, I have heard that Bangalore is also expensive.
For those of you who have lived and worked on both sides (Canada & India), how does this compare to a very good salary in Canada?
I have estimated monthly living expenses for a family of four to be around INR 60,000 a month (excluding cost of mortgage) in India to live very comfortably (this includes 2 cars and so on) - please correct me if I am wrong
I have quoted salaries in 3 cities but I am not sure how they compare to each other - I believe this is a difficult one but if any of you can provide some insight, it would be great.

I thank all of you in advance for your response. Feel free to ask for clarifications.

Wonderful News !. Good For You and Your family. I had just hung up over a telecon with my friend who is a Country Head for a head hunting company in the field of Financial Services and Stock Market. He was very upbeat and he mentioned India today is not what it was 3 years ago and it would be very different in the next 5 to 10 years. He mentioned for profiles very similar middle to upper middle management in MNC's the salary is Rs.50 Lakhs plus CTC.

The concept of CTC is Cost To The Company.This is involves your salary to all your perks. This could include things as clear as your company car, chauffeur to the newspaper you'll be buying every morning. The way the salary structure works is that you have a basic salary and then every thing else is proportional to the basic salary. A company would have a range of basic salaries for a particular job slot. Let us assume you would be a Senior Manager-New Business Development (Mumbai). Eventhough you might have a guy just like you in Bangalore his salary structure will be very different than you. The reason is that he has negotiated it that way. When you go on to the next job your new employer will ask for the basic salary. Many times people think that they will keep the basic low but increase the non-taxable(if any) perks higher this way they will beat the taxman. But when you are ready for the next move and you ask for a 50% jump your new employer will try to negotiate based on your basic and you loose out.


The best way to start the negotiation is to find out the general CTC's for your job profile in the city of your destination. You could do a naukri search and find advertisement of similar nature and then you should shoot off your e-mail to the advertisement agency and find out a ball park figure for that position. Next thing you should ask the HR guy from the company whose job is to literally bargain with you(more he saves from you he can show it on his performance appraisal report and get a raise for himself) to find out the typical range of the CTC's if not atleast the basic pay for that the slot within the company for various functions. Then you start with the highest basic and start working on the perks. This where you need to try to get all the perks which might include washing allowance, newspaper allowance, periodical allowance, soft furnishing for the home, allowed car type, chauffeurs salary, petrol allowed per month, entertaining of customers/clients(!) on official account(basically your eat out with your family in a 5 star hotel every week end) and the list is endless. You will get all this out by sitting with the HR guy of the hiring company face to face and digging through the papers he is going to throw out with you. This is a day to 2 day process. Now you have a basic idea about the salary structure for your slot. But you have not negotiated yet eventhough the HR guy has informed the CTC they will offer to you.

Herewith I'm giving a typical MONTHLY salary break up for a middle rung manager in a MNC in the year 2004. Note this is for information and the current levels are double to triple of the same.

Fixed CTC 945,000
Variable CTC 105,000
Total CTC Per annum 1,050,000


Sl Components Monthly Remarks
1 Basic pay 23,600 Paid every month, direct
2* Flexible pay 47,643 Paid every month
3 Variable CTC 8,750 Paid at the end of the year, as bonus
4** Retirals 7,507 Paid at the end of 5 years ( only SA & Gratuity)PF goes in the PF trust
5 Total CTC 87,500


2* - Flexible Block Components: 1. House Rent allowance ( max. 100% of monthly basic Pay ) ie; Rs. 23600/=, need to produce bills & agreement stamp paper
2. Other allowance ( education, conveyance etc…)
3. Leave Travel allowance ( 5% of annual CTC or a max. of Rs. 75,000/= which ever is lower, need to produce bills 4. Medical reimbursement ( Max. Rs. 15,000/=), need to produce bills.

Retirals components
1. PF @12% of the basic pay
2. Gratuity @ 4.81% of the basic pay
3. Super annuation @ 15% of the basic pay

1. Insurance is covered only for the employee
2. No bus or car for commutation between home and office ( Self transportation)
3. 5 days working ( 8:30 AM- 6:00PM)
4. Just 6 KMS from home( 20 Minutes)
5. Lunch is at a subsidy of Rs. 4 per meal, cut from the salary.
6.Designation- Manager- . ( No grades in manager)

7. Reporting to Senior Vice President ( Plant manager cum location Head)


Negotiation:

You then meet up with the Payroll accountant and start with him on the taxation of your typical salary if you say I need 1.25 of the CTC offered by them. The accountant will make the break up like above and give you 2 or 3 scenarios and you should make a balance between the higher basic and also lesser of Income Tax. It is very easy to get bills to justify your expense.

MOST IMPORTANT YOU SHOULD ASK THE COMPANY TO PAY FOR YOUR RELOCATION FROM CANADA TO INDIA EVEN IF YOU ARE NOT GOING TO MOVE ALL YOUR STUFF. GET A COMPETITIVE QUOTE AND SUBMIT IT TO THE COMPANY AND TAKE THE MONEY IT WILL BE QUITE A HANDFULL.

Disclaimer:

Note that the country is not clean, crowded no orderliness and you smell of urine at most of the places. You'll need to use influence at many positions and you will be identified by the place of origin, language, religion and class. The schooling system will be very different and very tough for your children.There will be absolutely no law and order in driving on the street and you can cross any red light and claim that the DCP is your uncle.

Good Luck & God Bless.

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Speech by Thomas Friedman of The New York Times....

"When we were young kids growing up in America, we were told to eat our
vegetables at dinner and not leave them. Mothers said, 'think of the
starving children in India and finish the dinner.' And now I tell my
children: 'Finish your maths homework. Think of the children in India
who would make you starve, if you don't.'"

I really appreciate your input - seems a lot more complicated (concept of CTC)than I had imagined. Looks like something that requires face-to-face negotiation.

I am intrigued about your comment on relocation costs. Do companies pay for relocation costs for positions with titles like: Manager, Senior Manager, Director or Head? I have not heard this from any of the placement consultants but I believe that this is something that you have to negotiate.

I have got a couple of offers but have never considered them seriously for the simple reason that I am hesitant of taking such a big decision so quickly.

Would have appreciated some input on the cost of living (referred in my e-mail) and comparisons between the three cities (Mumbai, B'lore and H'bad).

I did smile reading your disclaimer - but note that I was born in India and have been living here for only 14 years. Nevertheless, having not worked there, I believe I am in for a shock However, I have heard from some that a number of companies are on par to international standards in terms of management, benefits and facilities.

Hi,

I recently moved to Canada from India & have fairly recent experience with living and working in India.

>>For those of you who have lived and worked on both sides (Canada & India), >>how does this compare to a very good salary in Canada?

What industry you are looking to get into & at what level ?

These salary figures are pretty good compared to what rest of our fellow citizens are earning. Also, It really depends on the sector where you are working. If you are working in IT (for example) and your company has clients in the US/Europe, then you can expect really good salaries like the ones you have quoted above.

Assume your salary in India is 12L CTC, monthly = 1L CTC
Take home would be around 60-70K (after PF deduction & tax deduction around 30%)

Rents:
In a big city like Bangalore, rents can be as high as 20K - 25K for a decent 2 bedroom apartment. Mumbai commands much more. No idea about Hyd. Usually rents tend to be higher near IT parks, office areas etc. The tossup is between living closer to work (higher rents) or live away from work (lesser rents, but more time commuting, more transit costs)

House:
Bangalore and Mumbai are comparable and very expensive. Hyd might not be far behind. Assume spending around 50L for a decent 2-3 BR apartment in a good locality. Mortgage rates around 9-10%.

for a 30L loan, monthly payment will be around 28K.

Grocery:
Grocery is not very expensive as long as you stick to normal Indian fare. Breakfast cereals (Rs. 250 for Cherios), orange juice(Small Tropicana box for Rs.80) etc can be quite expensive and these expenses can really ADD up.

Eatout:
Still relatively inexpensive at the multitude of small restaurants in any of the cities. 3 star, 5 star restaurants and exotic cuisine (Italian etc) can be on par with any similar Canadian / US place. Also, note that many of these places charge a VAT @ 12.5% on top of the bill.

Electricity:
Bills can run upto 3K-5K if you have airconditioning & use it extensively, else about 1K per month is average. This is in Mumbai. I don't have any idea about other places.

Cars:
You can get a Corolla/Accord/Civic easily. But, its not easy to drive them on many inner city roads as the roads & crowds are not meant for big (??) cars. The cost of cars is generally higher than similar models in Canada also. Insurance can be very expensive considering the IRDA opened up the sector & allowed companies to set their own prices. Insurance = 5K - 6K per month (depends on the car). Car loans easily available Interest @ 10-12%.
Civic = Rs. 12 - 14L

Public Transport:
If in Mumbai, thats the best way to get around. Other cities don't have an established system. So, you might want to get a car OR use autorickshaws / taxis (which is expensive) which would add up to the monthly bill.

Health:
You normally get hospitalization insurance through the company. But, that only covers major issues where you have to be admitted. Pregnancy is not covered.
For all other health problems, you have to pay out of your pocket.

Schools:
State schools should be decently priced. International schools are expensive. Anywhere between 5000 - 25000 per month.

I guess I have covered most of the major expenses. I guess you would be in a better position to compare your expenses in Canada and expected expenses in India based on the above information.

Let me know if you need any more information.

Ash.

Having worked in Bangalore for the past few years in some of the bigger IT (software) firms, these are my thoughts....

The salary you mentioned for Blr and Hyd sounds good for a mgr/architect with around 9-12 yrs of experience. This is again on average - very skilled/lucky techies may earn that with less experience. If you're in hardware (TI, Cisco etc), the pay scales are a lot more. If you're in ERP, again the pay scales are higher.

Shankaracharya gave a very detailed breakup of CTC; far more details than I would have thought of. It is more complex than the compensation system in North America. You should ask them - what is your 'take home' pay every month? This is your fixed component. Keep in mind that the variable pay is exactly that...variable. It will probably be paid quarterly, and is based on the company's (mostly) and your performance. If you are working in a big orgrnization, you will most likely be ranked on a bell curve. So you might end up getting a B grade if your project/business unit members were strong performers but another person might pull of an A in spite of the fact that he/she actually is a lower performer than you.

Most multinationals nowadays just give you a fixed and variable component. At the pay range you mention (mid to just senior), you might not get car, driver allowance etc...which would actually make it easier to compare offers. This depends on the firm of course. The different allowances were more predominant 5-10 yrs back as a way to allow employees to escape paying tax. Recently the govt. has begun taxing most perks so I have seen most companies removing these and just giving a salary.

From a work perspecitve, mgmt in global firms like Accenture, Infy, Wipro etc in general is top notch...far better in terms of process than the small time firms here in Canada. You'll also find idiosyncrasies in companies which show that Indians find it difficult to let go of the babu mentality. For e.g., in Wipro, you are required to swipe in and you should have clocked at least 8 hours daily. This, even if you are on the bench, and not actively involed in any work! But these annoyances are minor. I found the breadth of exposure one got in India FAR supoerior to that offered by an average firm here.

With the opportunities out there, the growth path is fantastic. Be prepared to work 10+ hour work days. Quality of life, however, is very subjective, and something you'll have to decide for yourself.