In 2000, a fresher with a BTech degree could get a job in one of the four or five top IT companies in India for about Rs 20,000-25,000 per month. Some got more, some got less, but their salary was mostly in that range.
Twenty five years later, they are still being paid more or less the same, by the same IT giants.
If you adjust for inflation, Rs 20,000 in 2000 is the same as about Rs 90,000 to 1 lakh today. That means, real income of an IT fresher has dropped by a whopping 70 percent.
Why is this so significant?
It is because India’s IT sector has been one of our biggest white-collar employers. For nearly three decades now, it has been the gateway to prosperity for the upwardly mobile middle class in this country. Today, that door to affluence is being shut, right on their faces.
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An IT Fresher in the 90s
IT jobs have been the single biggest doorway to prosperity for India's middle class for some 30 years now. Imagine what it was like for a fresh computer science graduate at the beginning of the millennium. Back then, in your Rs 20,000-25,000 salary, you could rent a decent place in an IT hub like Hyderabad or Bengaluru; buy clothes and shoes of the latest fashion; and you could take cabs to work or even buy a car on EMI.
You could also regularly go out for meals at high-end restaurants and even take your friends out for a treat once in a while.
If you came from a smaller town, you were able to buy air tickets for your parents to come and visit you and then show them around town. It is possible that you saved up and even bought a microwave oven for your mum, so that she didn't have to heat dinner on the gas stove every night.
In short, a job in an IT major was your golden ticket to improving not just your lifestyle, but also that of your family back home.
Beyond That Paycheck
But it wasn't only about a good salary, an affluent lifestyle, or financial stability. An IT job was also—what a close friend had termed—a ‘mother-in-law job’ or the kind of job that a future mother-in-law approves of.
That's because IT jobs not only paid very well; they were also very respectable. A techie was not only financially secure and successful, but was also seen as someone who was smart and had a high IQ. That's how it was, and to a large extent, it still is.
Also, another important thing—getting a job in a top IT firm often opened the door to going abroad, even moving to America later on. That was often a dream of India's middle class.
First, the Indian IT company you worked for sent you to the US—and to a lesser extent, to Europe—for on-site projects. This meant that instead of handling the backoffice work sitting in Bengaluru or Hyderabad, you went to the actual offices of the client, that is, the US company which had outsourced its IT work to the Indian tech firm you worked for.
If you proved your worth and were decent at networking, there was a chance that you would get hired by an American company to work with them in the US. Then an entire series of steps kicked off. First, an H-1B visa—your value in the marriage market just shot up. Even more if you managed to get a green card.
Even those who had a short stint abroad ended up with a lot of monetary savings. They also sent money back home, and their parents and younger siblings saw their living standards go up. They became the neighbours' envy.
2000 to Now
Fast forward to now. Rs 20,000 in hand in an IT hub like Hyderabad or Bengaluru is barely enough to sustain a middle class lifestyle for a single person living alone. And that's what most young employees in these IT firms are: single, living alone, or sharing their house with colleagues.
Take out rent, electricity, mobile bill, broadband bill, the cost of daily commute to work, basic meal costs—and there's very little left after that. And I'm not even counting other expenses that are part of a regular middle class lifestyle nowadays: medical bills, a couple of subscriptions here and there—Prime Video, Netflix, and maybe even ChatGPT Pro.
Then come expenses that we don't usually calculate as regular expenses.
The average cost of using gadgets and appliances—for instance, a smartphone, laptop, things young people change every every years nowadays—adds up quickly. If a phone and laptop together cost even Rs 1 lakh, most likely, it’s higher, and you use them for, say, three years, that works out to nearly Rs 2,800 a month.
Add some basic appliances—a gas stove, a small refrigerator, maybe a cheap microwave oven. These will last much longer, maybe five to eight years. But again, the average cost per month will work out to about Rs 300 to Rs 500.
So, your gadget and appliance bill per month, which you don’t usually calculate, is not less than Rs 3,000. Add that to your basic expenses.
As I just said, just a basic, no-frills middle class lifestyle for a single young person working and living in an IT hub would eat up their entire take-home pay. Mind you, when we compare a 22-year-old today with a 22-year-old from the year 2000, the living standards they are used to are vastly different now. Air conditioners and washing machines were rare back then. Today, they are present in most middle class homes.
So, this sharp drop in real income for freshers in IT firms is even more stark for a young person today. It is clear that a regular IT job, unless you're an AI whiz-kid, no longer puts you on the path to prosperity.
There are various reasons for this:
Far too many computer science degree holders of varying quality
A general global economic slowdown
And most importantly, artificial intelligence, or AI, eating up routine tech jobs everywhere.
Watch the full video of the second episode in The Quint's new series 'Caught in the Middle'.
(The author was Senior Managing Editor, NDTV India & NDTV Profit. He tweets @Aunindyo2023. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)