08/22/2026
The CTC Con: How India's IT Majors Underpay a Generation of Engineers
A Bangalore cab driver takes home nearly double what a new engineering graduate does
An Indian Computer Science student, scheduled to graduate in 2027, told me he had received a campus offer from TCS, the Indian IT behemoth that last year reported nearly USD $30 billion (INR 2.85 lakh crore) in global revenue.
The family was delighted with his Cost to Company (CTC) package of INR 3.5 lakh a year. A take-home pay of INR 29,000 per month, his dad said, is superb, noting wryly that his compensation at retirement from his state government job was less. The mom marveled at the way the Indian IT industry had transformed the lives of ordinary middle-class families.
It is a message that the IT majors, represented by the National Association of Software and Services Companies, India’s premier non-profit trade association, would like families to believe. Since NASSCOM’s founding in 1988, the industry has developed and nurtured a narrative that employment at its numerous companies is a sure ticket to wealth and financial freedom.
Except that the CTC number is woefully misleading.
CTC is the total amount a company spends on an employee annually, and it is not the same as the salary the employee actually takes home. For many Indian recruits, the shock hits them when they receive the first paycheck.
Tucked into the CTC number, of course, is the basic salary. Added to it is a list of allowances, such as house rent, conveyance/transport, and dearness. Everything in Bangalore is much more expensive than Mangalore, a coastal city, and companies somewhat offset the cost-of-living burden.
Government regulations require companies to make retirement contributions on the employee’s behalf to a Provident Fund or ESI account. This amount is part of the CTC package. The employee doesn’t get to see this money, sizeable at 12% of basic pay, until he retires or encounters a family emergency.
CTC includes perks, such as health insurance premiums, life insurance, meal coupons, stock options (ESOPs), and club memberships.
Bonuses, such as performance, joining, and retention bonuses are also part of the CTC. Because these items are variable, they are not guaranteed.
Yes, CTC line items benefit the employee in one way or another. But that doesn’t mean CTC represents someone’s take-home salary, cash in their bank account, which the employee can spend at his discretion. In fact, what an employee keeps each month can drop to as low as 50% of CTC.
For the student I profiled above, that could mean a take-home pay of about INR 15,000 per month. Morally, this amounts to corporate fraud.
Inflation, of course, has dramatically risen during the last 15 years. Government statistics, which some accuse of reporting hyped-up inflation and growth numbers, don’t tell the full story.
A good way to measure inflation is to examine the USD-INR rate in 2011, about INR 44 to one USD. Today, that rate is about INR 95 to one USD, a 115% inflation rate over 15 years.
For big-ticket items like housing, a 2-wheeler, or even a car - all on a young employee’s mind - most Indians would agree that prices have gone up far more than 115%. For consumables like food and fuel, prices have risen even faster.
Yet, a fresher’s CTC package is the same as it was 15 years ago.
How can the big IT majors squeeze the first-time employee market so badly? Because they can. The IT majors are clearly exploiting the first-time employee market. For every student who says no to an offer, ten others are waiting to take the spot. This lopsided supply-and-demand equation has allowed companies to keep the starting CTC offer essentially the same.
Three points matter, and all prove that IT companies are indeed exploiting India’s youth.
In the gig economy ecosystem that Indians live in, an Uber taxi driver or a Swiggy motorcycle rider often makes more in take-home pay than a first-time IT employee at TCS. I spoke to a driver from Shoffr, a cab company that operates an all-electric fleet primarily serving customers traveling in and out of Bangalore International Airport. These drivers earn a fixed salary, with bonuses for working more hours; a Shoffr driver makes nearly INR 30,000 a month with tips, almost double our IT fresher.
A reasonable explanation is that CTC line items protect the college graduate long-term, with perks like paid leave, Provident Fund, healthcare, and other benefits. The taxi driver has no such protections in the gig economy.
Still, should the take-home pay be so much lower than a gig worker’s? How does this make sense?
The skill sets and training required are far more demanding for a Computer Science college graduate. The pressures to perform are intense as the IT majors staff these entry-level employees on outsourcing projects serving Western clients. An outstanding performance evaluation could mean a coveted H-1B “on-site” placement offer a few years down the road.
The math proves how the exploitation works. Even if an IT company can sell entry-level labor at USD 30/hr (INR 2,850/hr) for only 80% of the year (assuming bench time or training for the remainder), the company could bill nearly USD 50,000 annually (INR 47.5 lakh) for this employee’s time.
That figure is revenue which feeds the costs of bench time for employees between projects, delivery management, sales, infrastructure, attrition, and training. But even accounting for all of that overhead, the IT majors routinely report operating margins of 20-25% to shareholders, year after year. Little of that margin is finding its way back to the entry-level employee actually doing the billable work. Couldn’t the IT majors cut the employees in on a larger share?
Indian IT companies rely on Western customers and attempt to emulate Western practices from the boardroom down to a team leader’s office. The IT industry contributes nearly USD 300 billion (INR 28.5 lakh crore) in export revenue to the Indian economy.
Yet, not a single Western company engages in the devious practice of CTC compensation, and NASSCOM companies conveniently ignore this truth.
In the United States, NASSCOM’s biggest market, employers’ contributions to F**A (Social Security and Medicare) are not counted as part of employee compensation. Employer costs to fund healthcare costs are excluded too. Many finance and technology companies routinely offer free lunches and stocked snack machines to retain talent. These costs are not added to the employee’s salary as a benefit line item. The company absorbs them.
India is fond of gloating that the world’s IT backbone would collapse without its ambitious employees toiling away night and day. Maybe, but at what exploitative cost?
NASSCOM should do better.
