Salaries in India: what do you need to think about?

Wondering how much you can really save on your personnel costs if you out-source to India? Or have you started recruiting staff for your Indian branch and are you wondering what a realistic salary proposal is? These are the average salaries in India: From university graduates to telemarketers and skilled tradespeople. Please note that these are averages regardless of the experience, education, sector and location of the candidate.

Despite the fact that the average wages in India are still a lot lower than in Europe, the average monthly salary has risen rapidly in recent years. While the average salary was ₹19,492 (€221) in 2016, it has now almost doubled to ₹31,900 (€362). This sounds very advantageous, but this average also includes the very low salaries of the many Indian farm workers. As a foreign company, you cannot rely on this average. Depending on the region where you are located, the average salary will be higher or lower. Foreign companies are often looking for staff around the big cities and those salaries are a lot higher. For instance, in Mumbai, the average salary is ₹66,900 (€760), while in Chandigargh, a much smaller city, it is only ₹43,900 (€499).

Average salary in India based on experience, education and function

A candidate's level of education and experience obviously affect salary. In general, Indian workers with two to five years of experience earn on average 32% more than freshers and juniors across all sectors. Professionals with more than five years of experience earn on average 36% more than those with five years or less of work experience. When reaching ten years within a sector, salaries increase by 21% and by a further 14% when reaching 15 years or more of experience. Not only the years of experience count, but also changing jobs has an influence. Every time a person changes jobs, the salary increases by 30-35%. An important point to consider in the recruitment process. 

Of course, several aspects play a role in determining salary, such as education, position and location. In India, employees with a basic education earn on average 17% more than colleagues who have only completed secondary school. A Bachelor's degree increases the salary by an average of 24% and a Master's degree by another 29%. There is also a big difference between the different regions. In the big cities, the cost of living is much higher than in more rural areas. Salaries are, of course, adjusted accordingly. 

To get an idea of average salaries of different jobs and sectors, we have put together some examples. Please note that these are only examples and the experience, education, sector and location of the suitable candidate are not included in the examples below. Would you like more insight into the possible salary costs for your Indian entity? Please contact our experts, they can advise you on realistic salary proposals based on the sector you are active in, your location and your specific requirements.

Fight turnover with a competitive salary offer

In India, many companies suffer from high staff turnover. To attract and retain talented employees, it is very important that your salary is equal to or higher than the average salary for that position in India. In addition, you must comply with the rules of the Indian employment arena. Legal assistance in drafting employment contracts and conditions is therefore no luxury. It is also advisable to seek practical advice on best practices, so that the policy is not only legally compliant, but also HR-friendly. IndiaConnected is happy to support you in this process, including the recruitment and selection process and contract negotiations. 

What to watch out for when working with Indian professionals

The frustration of Europeans in India is well known: why doesn't my Indian business partner just clearly tell me how things stand? On the other hand, Indians struggle with Europeans' matter-of-factness and directness, which they usually perceive as blunt. Culture and communication trainer Nandini Bedi of IndiaConnected, explains where the mutual discomfort comes from today.

Communication in Europe vs. India

A few years ago, I asked an Indian woman who worked at Tata Corus what for her is the biggest difference between Europe and India. "It took me a long time to get used to the professionalism and directness of the people there," she replied. I think that directness is an expression of transparency. Simple, efficient, clear. What you see is what you get. A transparent, clear and honest message in which nothing is hidden.

This reasoning that focuses on transparency and efficiency contrasts sharply with what Indians care about: the underlying explanation. This is why Indians take their listeners through their sometimes wordy story, so their final answer does not come as a surprise, let alone a slap in the face. Their answer is usually nuanced - and their story takes you past their considerations. This is how Indians usually communicate: indirectly.

As a European boss, partner or client, it is therefore smart to scrutinize your own way of communicating and teach yourself ways to deliver your message in a softer manner with the necessary underpinning. This will prevent you from putting off a potential business partner or colleague because they perceive your way of communicating as rude.

In India, 'no' will not be easily said

In Europe, in almost all cases you will get an honest understanding of how feasible your plans or ideas are, how long it will take to realize a project and how much it will cost. Things are different in India, where they will tend to give you the answer they expect you want to hear. Therefore, a "no" is not found in the vocabulary of an Indian.

Because of this, it is important that you learn to read between the lines and ask the right questions in order to get the fairest possible understanding of the situation. In addition, India requires a more flexible attitude from Europeans in terms of deadlines and budgets, which is simply one aspect of doing business in India that you need to consider.

Of course, there are ways to learn how to set up a working environment where, by European standards, there is open communication by all parties. In our workshop "Working Efficiently with India," we train your teams in Europe and India, separately or better yet, together. The result of the workshop is more mutual understanding, more efficient communication, more job satisfaction, increase in efficiency and better results.

We answer questions such as:

• Which communication strategy works?

• How do I get good feedback from my employees in India?

• How do I manage my team efficiently in India?

• How do I develop proactivity in my Indian team?

Wondering how we can support your organization?

4 tips from Germany's top company Würth: 'If you are not active in India, you will become redundant in the long run'.

For more than 70 years, Germany's Würth has been the world's best-known supplier of assembly technology and, with an annual turnover of some EUR 14.5 billion, one of Germany's 100 most influential companies. "A large company like ours could therefore not ignore India," says Norman Dentel, CEO of Wuerth Industrial Services India Pvt. Ltd. "India is one of the largest growth markets in the world, perhaps even the largest growth market in the world. Every self-respecting company should take advantage of the opportunities this market offers". Norman Dentel shares his four tips for companies who want to become successful in India.

CEO Norman Dentel at the opening ceremony of one of Würth's offices in Pune

1. Choose the right legal form for your market entry

Würth opened its first private limited company in Mumbai in 1994. "That was a Würth-Line company," explains Norman Dentel. "That's what we call the companies that carry out our core business under the red W logo: selling assembly materials, including screws, screw accessories, anchors, tools, chemical-technical products, personal protective equipment and providing complete supply chain solutions with various types of vending machines and Kanban systems." In the following years, Würth's German headquarters received more and more requests from large, international customers looking for professional supply chain solutions for their various entities worldwide, including in India. "In 2005, we therefore decided to establish a new company, Wuerth Industrial Services India Pvt. Ltd. in Pune, to be able to meet those requests and to offer our multinational customers fast service and local support. Because we brought a solid customer base of international, existing customers with us from Germany, we never had any start-up problems in India and there was room to grow immediately."

Read more about the different legal forms you can choose from and the benefits they offer if you want to set up a business in India:

Wuerth Industrial Services India is therefore much more than just a supplier of fasteners and assembly materials. "The company in India consists of four segments. A team that focuses on the core business of the company, a business unit that provides international customers with outsourcing support from India, a department that develops Customer Relation Management software and an innovation centre called "iHUB", where experts work on e-learning, augmented reality, virtual reality and graphic design applications. They recently built a virtual reality tool that allows our customers to virtually visit our company and our warehouses. In these corona times, social distancing solutions are a hot topic and we are working hard to implement them at different levels."

"In order to grow successfully in a country like India, it is very important to carefully consider the best legal form for the company prior to market entry," is the advice of Würth's top executive in India. "For us, the private limited company is a tried and tested business model. It was therefore logical to choose this in India as well. The big advantage is that companies own the shares of the subsidiaries. As the owner, you have the possibility to run the company yourself, or to appoint directors without having to take into account other shareholders. In addition, the credit rating of a private limited is higher and it is easier to raise funds from venture capitalists, members and even the foreign companies."

2. Take plenty of time to recruit good staff

Wuerth Industrial Services India employs over 330 people, many of whom have been with the German wholesaler for around ten years. "That is very unusual in India, but we try to separate the wheat from the chaff during the recruitment process so that we only have the people left who really fit in with us," explains the managing director in India. "Often the candidates look good on paper but we find the real talents by asking detailed questions during the interviews. So dare to take the time for the selection process and to really get to know the candidates before you make a final decision."

European companies are popular employers in India, according to the CEO. "European companies have a high status in the country, are well organised, reliable and support the personal development of employees. So there are always enough candidates available for an open position, but of course you want to find the employees with the right mindset and who won't hop to the next company after a year because they can earn more there. We are therefore very open about what we are looking for, a talent that is open to long-term employment with a job performance-related income that is always paid on time. We see that this openness, about what a candidate can expect, is very much appreciated."

Some employees of Wuerth Industrial Services India Pvt. Ltd. in front of their office in Pune

3. Find the right balance between private and business life in the workplace

"Leadership mainly requires emotional intelligence and a certain instinct to avoid fluctuations. This is no different in India than in other countries," says the Wuerth Industrial Services CEO. "Nevertheless, I have also learnt a lot in recent years about cultural differences and how to position myself to better reach my Indian team. In Germany we are very focused on facts and other reliable factors, but in India emotions are much more important. For example, I can't give an introduction speech in India where I only tell about my +20 years at Würth and the different countries I have visited over the years, I would bore my audience to death. If, on the other hand, I share my personal experiences in India or talk about my family, it is very welcome. India is a country where emotions really bring people together." Yet Norman Dentel also sees that German business acumen is appreciated by his employees. "Giving appreciation and feedback on the work done is just as important as discussions about family and other private matters. You shouldn't bend too far and let individual sensitivities and interpretations take over in the workplace, that could lead to unnecessary discussions. A good balance between private and business life is key in India."

"India is the most exciting place I have had the opportunity to work in 20 years at Würth."

- Norman Dentel - CEO Wuerth Industrial Services India

4. Go step by step

According to Norman Dentel, companies often think they can apply the same business strategy in India that they use in China. "But make no mistake, India is not one big country. It is 28 smaller states with their own languages, cultures and customs. Each state has its own government agencies and therefore its own rules. You cannot make one business plan for the entire country and ignore these state differences entirely. Doing business in India is therefore not a sprint but a marathon, you have to conquer the country step by step."

"It is therefore important to build into your business goals also the space to grow quietly," explains the top executive. "A simple example; in India we see a high consumption of raw materials and a lot of environmental pollution, which goes against the value of our company. We try to counter this by offering green solutions to our customers, but in India, sustainable awareness is still very low. It will probably take years before real changes become visible in the country. At the same time, you can also find very positive examples, such as the clean cities of Mysore or Kochi. So, continued investment will yield results in the long run, but you have to be persistent. I have given half of my heart to India, the other half remains in Germany. Despite the fact that sometimes you really have to show a lot of patience, privately and professionally, India remains the most exciting place where I have had the opportunity to work in 20 years at Würth."

Safely entering the Indian market

There are several ways to enter the Indian market. IndiaConnected offers you the opportunity to set up your office in India quickly, easily and cost-effectively without having to register your own entity. We call this the business incubator. 

With the Business Incubator, you set up your own organization without incurring the costs of having your own office. You can hire your own staff, who will be on our payroll. This gives you flexibility to grow and easily saves 1,000 to 2,000 euros per month in compliance, administration and registration costs.

Discover all the benefits of the Business Incubator here: