Pentalog is now working in 5 countries, which have different levels of practices and types of wage scales. Thus, in addition to the question of salaries, there is a genuine “large difference” between the gross annual salary in France and the salary in Vietnam which is very complex, incorporating a premium (bonus) of the New Year, which can change the monthly salary, from 1 to 3 or 4 times because of the additional earnings.
In Romania and Moldova, with patience, we succeeded, like most businesses, to impose a contractual gross wage scale. The constant changes of taxes and social charges have condemned our ability to establish fixed net wage scales.
The average remuneration scale in these 5 countries are very different, we should not hide this fact. A German company will pay a higher gross salary than that of a French company… but the net earnings are very similar, because of the impressive tax system in Germany. The Romanian wage scale varies greatly from what is established in the capital, to the different parts of the country, also if the employee has a specialty occupation or exceptional training using a specialty tool or program, if he is a junior or senior, and or if he acts as a consultant or is an “in house” employee. Thus, a BO developer in Bucharest, familiar with a leading business sector and after 7 to 8 years of experience will have a gross salary which would astonish a recruiter in Paris. I think I can say, in this case, the senior employee, working in direct interaction with customers, will reach a high pay scale equivalent to those of a provincial French city and often, could even reach the equivalent salary of Paris. In contrast, an unexperienced tester in a provincial town in Romania will make 10 to 15 times less. In Romania, in terms of what is happening in most other offshore countries there is this amazing difference between junior and senior employees, who are not in France, land of the minimum wages which have been contractually established. Thus, a German novice will often be paid less than his French counterpart, but his earnings will grow faster.
Furthermore, depending on the maturity of the IT market of each country, inflation operates differently. The offshore business may be defined as the science of differences, the companies most confident of their production model and project management are going to target these countries where new companies are coming into this sector and who will try to make rapid productivity gains. After an investment period of one or two years, they will seek to achieve the highest profitability. The consequence is obviously that the growth earning rate, will reach higher levels of profitability much faster than in countries with a high degree of maturity and where productivity gains are lower. For example, Pentalog knew very well, when it established itself in Vietnam that the wages would grow a little quicker than in Romania and even in Moldova. In contrast, as Vietnam “grew” very quickly, the interest in this country became more important in the minds of IT decision makers. The risk appears when, for marketing reasons (Romania during 2005-2007), or demographic (Ukraine-Moldova at the present time – emigration of the workforce), wages increase without being compensated with an increase in productivity.
This article is meant to reflect on the complex strategy phases of our company and in determining its fiscal policy. The crisis has shown us in 2009, with our 50% organic growth and our profitability in double digits, that Pentalog has made the right decisions. A profitable business is able to invest in its growth, in productivity gains and market share, when most others are in recession… which, in a service industry, often results in large economic losses and therefore, in productivity.
Pentalog can not build a unique wage budget model. However, we should seek to get closer to it, to facilitate the movement and adjustments in a group of soon to be 500 people. The concept of remuneration based on productivity and employee satisfaction should be the same everywhere. It remains to better integrate the issue of the Tet (New Year) in Vietnam, not to disqualify it but to integrate it into the Pentalog production card. Indeed, if we apply the same rules in other countries, by adding this supplementary payment this may force us out of a hyper competitive market.
So when my production management in preparing the Business Model for this year, asks me how much the salaries can evolve, I am particularly embarrassed. The future remains very uncertain. Recovery or no recovery? I have always believed in a quick recovery. But where are we in this first step to recovery? I feel the need to improve wages in countries where we are already established. But we must also continue to make good profits in order to invest in our business model, continuing to conduct more training, to seek better productivity gains above the average. Thus we can be more aggressive and continue to win more projects than the competition. The group’s growth has been the engine for everyone, in generating job opportunities. How many Pentalog employees have become executives within the group? How many, in offshore countries, are earning more than 1000 € (over $ 1450)? How many, in these same countries, earn over 2000 €? What does it matter to see wages rise by 20% when it comes to achieving a strong financial personal growth? To increase the salary of an employee when he confirms by his work and his intentions are to become an important element in our company?
I am going to answer the question that was asked of me. With several figures depending on the country. But more than ever, I believe in the remuneration by the effort of everyone who works for the survival and stability of the group and international social community that we comprise. This is the fairest way and most beneficial to everyone and this is ultimately the only common rule that we should adopt.
