tanaypratap's letters

...until every student in India understands the reality

publishedabout 1 month ago
2 min read

The frenzy for ridiculously high fresher salaries does not seem to be dying anytime soon. IITs have been attracting students and parents with this bait for years. Now companies and content creators have jumped on the bandwagon.

But what is the reality? Do companies offer such salaries?

Yes, and No.

The salary figures pertain to foreign countries.

Firstly, I have never seen a fresher get a Rs. 1 crore salary in India in the 10 years of my career. The jobs that offer such figures come from mostly Europe and USA. You just don't get these numbers as a fresher to stay and work in India.

Since the offer requires you to move to a different country, you can't judge its worth in the Indian currency. The purchasing power parity of India vs the USA is one-third. This means that if you need Re. 1 to purchase a specific item in India, you need Rs. 3 to purchase the same item in the USA.

In definite numbers, an offer worth Rs. 1 crore in the USA is equivalent to an offer worth Rs. 33 lakhs in India.

In India, freshers in the top product companies do get paid such numbers. But again, it does not mean they get Rs. 33 lakhs in cash.

Understanding the breakdown

The annual package or figure you see on thumbnails involves 3 components: the basic in-hand component, the retention bonus, and the joining bonus.

For an annual package of Rs. 33 lakhs, the joining bonus is usually around Rs. 4 to 6 lakhs. An employee gets this bonus when they work for the company for at least one full year. If they leave anytime before the year is complete, they do not get anything. Note that the joining bonus is a one-time thing, and you don't get it from the second year onwards.

Let's consider a joining bonus of Rs. 5 lakhs. From the remaining Rs. 28 lakhs, the amount of Rs. 16 lakhs is in the form of stock grants.

You may not know this but one does not even get these grants at the time of joining. The stocks are staggered over 4 years. This means that you receive stocks worth Rs. 4 lakhs at the end of the first year, stocks worth another Rs. 4 lakhs at the end of the second year, and so on.

In fact, the subsequent stock grants get smaller. One gets such high amounts of stock grants only while joining the company. Later on, the retention bonus is termed as a performance bonus and may be around stocks worth Rs. 2 lakhs per year only.

We are left with a final in-hand, cash component of Rs. 12 lakhs per annum. I don't want to go deep into taxes here, but the actual amount debited to your bank account ends up being less than Rs. 1 lakh per month.

Your earnings in the first year will finally be:

  • Rs. 12 lakh from the basic component of your salary
  • Rs. 5 lakhs as the joining bonus (at the end of the first year)
  • Rs. 4 lakh from the stock grants

This calculation amounts to a total annual fresher salary of Rs. 21 lakhs. This is the truth. This is the reality, not the figures on thumbnails.

I know what you are thinking now.

Tanay just created a YouTube video on the same topic. Why is he talking about it again in his newsletter?

That's because this lie needs to be undone on every platform possible. I will explain it, and keep explaining the truth behind Rs. 1 crore salaries until every student in India understands the reality.

If you read the newsletter till this point, I am grateful to you. I hope you are now more informed on the breakup of salaries. Please guide freshers and students or anyone who you see making this mistake of running after salaries.

Bookmark this issue, and share it every time someone sends you another course or YouTube video that claims to get you high-salary fresher jobs.