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Strategy #1: Spend Time Developing and Benchmarking Incentives

Whenever the demand for a professional in a particular field heats up, the perks associated with the job start to pile up. Standard perks for an India-based "fresher" (a new entrant in the IT services industry with little work experience) typically include free transportation, educational assistance, healthcare benefits, performance-based bonuses, onsite cafeteria, stock options, and interest-free loans to absorb the cost of relocation or maybe to finance the purchase of a two-wheeler. According to Wipro's web site, its employees even have access to an agency that will handle such "domestic chores" as paying bills, thereby giving IT workers more free time.

An important part of designing incentives is aligning them with market benchmarks. As far as salaries, HR firm Hewitt Associates reports that India showed the largest overall salary increase in the Asia-Pacific region in 2004. Salaries in India grew by 11.6% overall, while China trailed with a 6.4%–8.4% hike, the Philippines showed a 7.4%–7.7% increase, and Korea saw wages jump by 6.4%–6.8%. Salary increases for middle managers in India were even more dramatic: Nasscom, India's software association, found that salaries for middle managers rose by as much as 30% in the last two years. These salaries are often paired with expansive benefit packages that include standard entry-level benefits as well as special services such as help finding and buying a home or enrolling children in school.

Captive centers and IT service providers have to offer innovative compensation and benefits—or risk losing valued employees to competitors. Nonstop evaluation and benchmarking are "need to do" activities for IT managers.

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