Tuesday, December 26, 2006


It's always a fashion to quote our remuneration packages in 'CTC' i.e the Mighty Cost to Company , gone are the days when people use to tell thier salary what they use to get . Now we tell our salaries as " CTC" , which is no way close to what we get , at times it's not even real cost to the company .

Indian Government is coming up with a law for builders so that they quote thier apartment's area as real carpet , not as builtup or super built up , don't you think our organisations should also learn from this .

Recent article in the ET , endorses my views.

LIFE may not be all that rosy for you as promised by an impressive "CTC" of the new company you would have joined after passing out of B-school . Well, the "cost to company" on offer for you is actually a way too high than the actual salary that you may take home, or for that matter, in some cases, even the gross package , on offer.

ET got an access to pay-slips of some young executives working in blue chip multinationals and domestic corporates and tried to demystify the jargons that go on in defining the cost to the company. Our conclusion: CTCs are misleading more often than not.

For instance, meet Saurav (name changed), who passed out of MDI Gurgaon to take up a lucrative job in a well-known Gurgaon-based FMCG multinational. Saurav was then promised an annual CTC of Rs 12 lakh. "It's been more than six months that I have been working here, but there's hardly been a month when I have pocketed more than Rs 60,000," he says.

While making salary offers, companies are increasingly harping on components that may not be of any use to an individual in the short run. Infact, some of these components, such as the super annuity scheme, are virtually impossible to leverage. Under this scheme, a professional is entitled to a one-time bulk amount, but only after he has completed 10 full years of service with the company. A slightly easier version is gratuity, that can be leveraged after a service of five years.

"Insurance policies like mediclaim are other vague terms that's counted a part of the CTC," an executive in a MNC financial institution says.

Interestingly, some companies are even counting EMIs for laptops given to executives as part of the CTC. "I happily felt that laptop was a goodwill gesture from my employer welcoming me into the company's workforce. But when I saw my first salary slip, it came as a shock of a lifetime. There was a head saying deduction as EMI for laptop," says Saurav. Add to it, club memberships offered to new recruits may appear attractive incentives, but at the end of the day, you are the one who pay every penny of it, via, of course the CTC promised to you.

Of late, deferred salary plan has also been forming part of CTC. Though companies say it's just another retention tool, according to this practice, incentives are not cleared along with monthly salaries and rather accumulate and are paid on half-yearly or annual basis.

At times, even the house rent allowance component can get a way too misleading. Some young engineers passing out of IIT Delhi were hired by a leading infrastructure company and posted in a small town in western UP. They were promised an HRA of Rs 10,000 at the time of recruitment, which was only reimbursable against actual costs incurred. However, during their posting in UP, they were provided company accommodation, where four young engineers were made to stay in one apartment, which obviously meant they had no claim to their HRA.

Experts say students expecting placement need to read between the lines. According to Sanjay Jog, VP(HR), Pantaloons, there are two things students should look out for in their CTC. Firstly, they should look out for discounts that companies can include in the package. These may not necessarily be used by the students. Secondly, at times companies may include a loan amount to the total salary stating that this loan can be availed at a lower rate of interest compared to the market.
Source - The Economic Times - Dec 20 , 2006