Category Archives: Compensation

Does The Hiring Growth Impact Software Product Managers?

Looks like hiring in the Indian economy is growing again. E-commerce biggies such as Flipkart and Amazon are also making big bets on India. And with intense competition for top quality engineering talent, salaries in a few marquee firms are again shooting up. [ Note: the last is mainly based on anecdotal evidence] Lastly, there is a consensus that salaries in the IT industry will rise this year for most employees.

So does the software product manager also win by changing jobs or asking for a big hike in his firm?

If you are working in this field, you may already know the answer. There are multiple factors at play here which may prevent you from the list of people getting double-digit pay-hikes. These include

  • The company’s performance
  • The salary levels and job levels at the company you are targeting
  • The internal salary grade you are at
  • Your compa-ratio
  • The annual performance review
  • Performance of your business unit/group

Based on the factors listed above, you can peg your expected compensation growth as a product manager, even if the market for technical talent is heating up.

At the high end, I have heard of product managers earning 40 lakhs (total compensation), who got no pay hike for 4+ years, after changing multiple jobs to reach this level. I also know of product managers who have seen a compensation growth from 16 lakhs to 42 lakhs in 6 years in the same firm.

It is not difficult to then make a case for either staying in your current firm, or for moving to another job, based on a 3-4 year income projection from the current job or the target job in a new firm. Of course, such a skilled person also has international mobility, and can always move to an economy where he would earn more, but that is a different story.

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A Word on Salary and CTC in India

I have seen many people having doubts on whether they are adequately paid for their role and work experience. They are often confused about comparable offers, and how their CTC (compensation on Cost-To-Company basis) compares with the CTC in another firm.

Well, there are ample resources on the web for research on current salaries, salaries for similar roles in comparable firms and salaries in product management roles within the corporate hierarchy. Some of the more useful ones for product managers include:

You should thoroughly investigate these to find out where you stand (in case you are interested in such data).

Additionally, you should also be aware of the different components of the compensation offered. For offshore R&D centers in India, the total compensation could include base salary, variable pay, performance bonus, RSU/Stock/ESOP, joining bonus, relocation allowance, retiral benefits and other smaller components. If you are joining a local market Indian firm, you can potentially expect even more components in your appointment letter to pad up your offered compensation on a CTC (Cost to company) basis.

More points to ponder

  • Some firms add non-cash component to CTC, which could include education/training reimbursement, payment for industry certifications etc. Exclude them when comparing CTC from different jobs.
  • Some firms include retirals (PF and gratuity) within their CTC, while others exclude it.
  • Some firms will consider the performance bonus mentioned in the offer letter as the upper limit. So you can only receive up to 100% of the bonus. Others use the mentioned bonus as a median, and you can receive more than that under favorable circumstances.
  • Product management roles should not have variable pay, I have written about it here. You can still see as a part of total compensation in some firms.
  • RSU/Stock Grant/ESOPS etc are usually offered only if negotiated for during the hiring process (to sweeten the deal), or at the annual performance appraisal. They are normally excluded from CTC calculations for a variety of reasons.
  • Signing bonus and relocation amount (if offered) are part of a standard deal in most firms. There is little room to negotiate on this.
  • Many firms are open to increasing their offer by up to 10% for the right candidate. But this only happens if there is a perfect fit between candidate, position and hiring manager.
  • Startups can offer stock or stock options or future stock options. In most cases, these are worthless, as there have been very few IPOs (a rare exception is Makemytrip.com) and this is likely to continue. So consider only the cash component when evaluating the CTC at startups.

The “Big 5” of Offshore R&D Centers in India

Based on some basic internet searches, it seems that India has over 1000 offshore R&D centers of various MNCs. And while these are not restricted only to IT, it is the IT R&D centers that of interest to us. So which offshore R&D centers have the most Product Managers in India and which ones offer the highest compensation? Well, these are not easy questions to answer, mainly due to the wide variety of work done by these centers. And very few of them are offering product management in India. But here are my indicative lists.

Top 5 R&D Centers by compensation offered to PMs

Top 5 R&D Centers by Product/Program Manager headcount

Top 5 Enterprise Software R&D Centers

Now the fine print:

  1. The list is completely subjective and based on personal research. I make no guarantees about its accuracy.
  2. These lists cover all product management roles ranging from P&L owners with experience of 10-15 years to business analysts fresh out of engineering/business schools.
  3. Most of these are Bangalore based with a few based out of Pune/Hyderabad/Chennai/NCR
  4. A few organizations have some product management functions in India, focused on the Indian market. I have not included them here.
  5. Microsoft has program managers in India, who do similar work as inbound product managers.
  6. Quite a few IT services firms have product management roles, however, they offer less compensation and are not included here.

Will update this post, based on the feedback I receive

Offshore Product Manager Recruitment Ad – 5

Druva Software has a job posting for a product manager on LinkedIn. This was created today, and it looks like one of the least informative job ads you can come across. However, Druva is one of the rare technology product startups in India, which also has good traction in the market, so it makes sense to understand the job requirements.

Here is some more information:

Location: Pune, India

Designation: Product Manager

Job Description: Drive product development – from conception to launch – at the #1 Endpoint backup company

The ad vaguely describes the role and responsibilities and ends with a description of Druva. However, you can consider the following points while applying for the role.

  • This is an offshore enterprise product management role, with some exposure to the Indian market.
  • The total work experience expected is not more than 5 years. So the salary offered would not be more than Rs. 6-8 lakhs (considering that Pune is a Tier 2 city), and Rs. 10 lakhs at the high end.
  • Only 1-2 years of actual product management experience is expected from candidates. As the company operates in a niche segment, you can apply with any enterprise product management background. Domain expertise is probably not important.
  • This is a very junior role and the work will be equivalent to that done by IT Business Analysts. Use case development and visual design will be useful skills here.
  • Druva had their 2nd round of funding in the middle of 2011, and they have launched few products since then. Do not expect to lead any product launches there initially.
  • The work could be mainly about enhancements to existing products and might include competitive analysis and market research.
  • Fresh MBAs and Senior software engineers can consider this position favorably. A top college MBA will probably be overkill, someone from Tier 2 MBA colleges or an engineering degree and a background in storage technologies will fit better here.
  • Since it’s a startup do not expect much career growth unless the firm grows substantially or is acquired. You can leverage this to join a larger technology firm later. However, you will have to spend a minimum of 3 years in this firm to get a good salary and a track record in product management. Otherwise you could move to a client facing or a solution sales role within the firm.

Disclaimer: I have a lot of respect for druva.com. This post is only provided to prospective PMs to help them to interpret job ads for product managers

True Story: Compensation Negotiation at an MNC R&D Center

negotiations

The Candidate

My friend has a strong technical background. He complete his B.Tech. from an NIT, worked for 7 years in different IT services firms, spent 3 years in the US, and then returned to do his MBA at an IIM. Being a savvy person, he opted for the 1 year PGP program for senior executives, where he got in because of his engineering undergrad, his overseas experience and good GMAT scores. Post MBA, he joined a firm in Hyderabad as a product manager.

The Interview and Subsequent Discussion

In 2008, he was working in an offshore enterprise product management role in a large R&D center focusing on enterprise IT. Around 2008, he was approached by another enterprise software firm, that was looking to hire senior product managers for their center in Bangalore. [They are big on telecom, and he has a strong background in that domain.] He went through multiple rounds of interviews (one of them was an overseas phone interview) and the HR indicated that they were ready to roll out an offer.

The HR manager asked about his current compensation and breakup. At that time, he used to get 18 fixed + 2.5 variable + 1.5 signing bonus + 1.5 worth of stock every year for a total package of Rs. 23.5 lakhs per annum. They asked about his salary expectation, he indicated that he was expecting a cash package of Rs. 30 lakhs and other benefits on top.

Obviously, the HR team did not wish to give a 30% increment to him, so they offered 25 cash + 2 lakhs signing bonus. Now, this happened during the last IT boom in Bangalore, and a sign-on bonus was commonplace. He refused to budge from his demand. After 2 conversations, they finally offered him 27 lakhs and a 2 lakhs signing bonus (apparently, stocks were only offered on performance after joining). He refused and continued with his current firm.

In early 2009, he was again approached by the same firm for another product management role. By this time, he had completed a year in his current firm, and gotten a 15% salary increment due to his strong performance. He went through 2 rounds of interviews and was then offered a salary of 35 lakhs but no signing bonus. He accepted the offer and happily joined the firm.

What this means for PM candidates

Several things become very obvious after learning about this. First, if you are a strong candidate, have a good background and a stable job, it is easy to demand your own salary. Second, if you are not fully satisfied with the compensation offered, then you can always say no without any risk. Third, he never told his existing firm about the first offer he got, thereby ensuring that he was not sidelined during performance evaluation. So the complete discussion could be held again without putting his existing job at risk.

One last thing to note, the new firm had asked for a reference from his earlier managers. He offered a fellow manager as a contact and not his direct supervisor to avoid any problems in the reference check after he had resigned and before the offer was finalized.

Note: salary figures are accurate, as are the technology domains

5 Reasons Why Product Managers Should Get An MBA

Product Manager with an MBALong story short, you should definitely do an MBA if you wish to grow your career in the field of product management in India. Here are 5 reasons why:

  1. The Network: If you get into a good, full-time MBA program at any of the top 10 colleges in India, you will become part of a ready network of alumni. Pretty much every large tech. firm in India has one or more IIM/ISB alumni working in a senior role today.
  2. The Knowledge and Skills: I have previously written about the challenges of becoming a one-dimensional product manager. Obtaining first-class training on marketing, strategy, finance and organizational design will have a huge impact on your ability to contribute effectively in many more dimensions. Additionally, strategy formulation, project management, statistical analysis, linear programming and soft skills such as negotiations, effective presentations  etc. are not necessarily learnt in IITs/NITs or on the job. Doing a full-time MBA forces you to practice these skills.
  3. The Job Interview: End of the day, everyone wants to be a part of a top notch product management team at a top organization such as Microsoft, Google, Amazon, Yahoo, IBM or others. An MBA from a top college will make it easier to get your resume shortlisted, when you are starting your career. It will also open doors when you want to change jobs and you have the relevant work experience.
  4. The Safety Net during Recession: Ignoring the contempt about GOMBAs (Grossly Overpaid MBAs) and their lack of skills, the MBA is the preferred degree when you are laid off, in a recession or likely to face salary cuts. They have the most mobility within the organization and across companies and roles if facing involuntary movement from product management.
  5. The Confidence: Let’s face it, wearing the hat of a product manager every day while dealing with every department in the company can be daunting for most of us. Gaining admission to a top MBA program and surviving it will give you the edge when you are dealing with anyone in the workplace.

If you are not able to get into a top MBA program, it does not matter. There are still plenty of organizations where you can hone your skills and gain practical experience while looking for career growth opportunities.

A part-time MBA can also be useful, but I would be extremely cautious while evaluating the B-school, the maturity of the program and the subjects and quality of course work it offers. Do not join the program just because it’s cheap or because it allows you to work while you study.

Finally, if you graduated from an IIT, NIT or another top college, you can probably continue in your career without an MBA. But even then, you should consider a part-time MBA or a Masters in Technology for the skills and advanced knowledge they provide.

Web Product Manager Recruitment Ad – 2

Times of India has the requirement of a product manager. However, the hiring firm is actually called Times Internet Limited.

Online Product Manager
Location: Delhi
Desired Qualification: Graduate/ B.E./ B.Tech
Desired experience: 2 – 5 years

The full details of the advertisement are given here.
So what should a prospective candidate analyze from this information? Here a peek:

  • It’s about the subscription pay wall design and how it is implemented around the world, so it’s a very specific role
  • Competitive research is very important, the depth of research will depend on the type of report generated and the audience
  • Website launch is another key requirement, so this role will probably be less important after 6-9 months

Here are some insights on the role based on the advertisement:

  • Its more about business analysis and launch and not product design. MBA from any good college will be useful
  • A very junior level role, compensation will probably be between 4-8 lpa
  • It is possible to grow from this role in to more customer facing roles, such as business development or partner management
  • The role requires little to no technical knowledge, basic smartness and research skills are important
  • The role does not report into engineering leadership, so a software engineer may not fit this role
  • You can expect good opportunities in the job market after this, in online advertising and media
  • Monetization and content management will be other product management roles that are part of the same team
  • Times of India is a great brand in any résumé, and will be a strong plus for career growth
  • Marketing skills are important, but cross functional co-ordination or project management is not.

Disclaimer: I have a lot of respect for Times Internet and their website, timesofindia.com. This post is only provided to prospective PMs to show how to interpret job ads for product managers

If you have applied/joined somewhere for a web PM role similar to this, then drop me a comment, and we can discuss the same.