Winning Bizness Desk

The disparity between the salaries of CEOs and regular employees in India's IT sector has reached unprecedented levels, with the gap widening significantly over the past five years. A recent report highlights that in top Indian IT companies, the difference between CEO compensation and employee salaries has surged to as much as 1702 times.

Significant Salary Disparities

Among the IT giants, Wipro stands out with the most staggering pay gap. In the fiscal year 2023-24, former CEO Thierry Delaporte received a compensation package amounting to $20 million (approximately Rs 168 crore). In stark contrast, the average salary of a Wipro employee was Rs 9.8 lakh, marking a disparity of 1702 times. This gap underscores the dramatic increase in CEO compensation, driven largely by stock grants, which accounted for about 70% of total CEO pay in 2023. The average value of these stock grants rose by 10.7% to $9.4 million this year, contributing to the overall increase in CEO pay.

Infosys, another major player, also exhibits a notable gap. Despite founder NR Narayana Murthy’s earlier stance that a CEO’s compensation should be between 25 to 40 times that of the lowest-paid employee, current CEO Salil Parekh's compensation is approximately 700 times the average employee remuneration.

Comparisons Across Companies

The salary gap is not confined to Wipro and Infosys. At HCL Technologies, the pay disparity between CEO C Vijayakumar and the average employee saw a significant increase from 253:1 to 707:1 within a year. This shift highlights the growing trend of escalating CEO compensation relative to employee wages.

Accenture's CEO, Julie Sweet, received a compensation package of $31.5 million (Rs 264 crore) for the fiscal year 2023. This amount was 633 times greater than the average Accenture employee salary of $49,842 (Rs 41.84 lakh). For context, the average employee salary at Accenture was $50,512 (Rs 42.40 lakh) in FY 2019. The disparity in CEO pay has grown as companies, particularly in the U.S., see their executives' earnings significantly outpacing those of their employees. In 2023, the average salary for employees at major U.S. firms was $81,467, reflecting a 5.2% increase from the previous year. However, the pay ratio between CEOs and employees also grew, from 185:1 in 2022 to 196:1 in 2023.

Implications

The rising pay gap highlights a growing trend of income inequality within corporations, particularly in the IT sector. As CEO compensation continues to escalate, the question of fairness and the impact on employee morale and company culture becomes increasingly pertinent. The widening gap reflects broader economic and social trends, raising concerns about the sustainability and equity of such compensation practices.