India’s Salary Silence is Costing Companies Their Best Hires

News

1. Global AI Use Rose in Early 2026 as Asia Led Adoption Growth

2. AI Dispatch | 1–7 May 2026

3. OpenAI Pushes Beyond Chatbots With Real-Time Conversational AI Models

4. IndiaAI, ICMR Partner to Build AI Healthcare Ecosystem

5. India’s IT Spending to Outpace Global Growth in 2026: Report

6. Meta to Scan Photos for Height and Bone Structure to Spot Underage Users

In 2024, a mid-level software engineer in Bengaluru cleared four interview rounds at a fast-scaling fintech firm, technical screen, system design, cultural fit, and a final panel, only to discover on day three of employment that his total compensation sat 32% below the internal band for equivalent roles. He had not been underpaid relative to his offer. He had been structurally misinformed relative to the market. Within six months, he resigned.

The firm’s hiring team considered the departure an attrition statistic. A more accurate description is a governance failure, one that cost the organization approximately three times the engineer’s annual salary in replacement costs, onboarding, and lost productivity, according to standard industry attrition models. The root cause was not performance or fit. It was the deliberate withholding of pay band information that would have allowed both parties to make a rational decision in round one.

This is not an isolated case. Industry estimates place intra-role salary disparities in India’s IT sector at 20–40% for equivalent positions—a spread wide enough to generate chronic misalignment between candidate expectations and employer offers. Yet the dominant hiring norm remains: reveal compensation late, if at all, and let the negotiation dynamics of the final stage determine the outcome. The assumption embedded in this approach is that opacity benefits the employer. The evidence suggests the opposite.

 

THE COST OF OPACITY IS CARRIED BY BOTH SIDES

The business case for pay opacity rests on a familiar logic: withholding the salary range preserves negotiating leverage and prevents candidates from anchoring to the top of the band. This logic holds in a labor market where candidates have no information and employers have complete information. India’s IT sector is no longer that market.

Candidates now routinely benchmark compensation before engaging with a hiring process. Social platforms, peer networks, and aggregated salary databases have compressed the information asymmetry that pay secrecy once created. When a candidate walks into a first interview already knowing the approximate market rate for the role, an employer’s reticence to disclose a salary band does not restore the power imbalance—it signals one. The message received is not “we are being prudent” but “we have something to hide.”

Abhishek Shah, CEO of Testlify, an AI-powered talent assessment platform, quantifies the operational cost directly: “Deals fail when no one discusses the budget for four rounds, then the offer is 30% below what was expected. It kills good hires more than anything else.” His firm attributes approximately 35% of offer rejections to compensation gaps that an early conversation would have resolved. Each rejected offer represents not only a failed hire but the sunk cost of multiple rounds of interviews, panel time, and assessment resources.

The structural problem is compounding. As candidates become more informed, the population most harmed by pay opacity shifts. Experienced senior hires—who have networks, market data, and leverage—can navigate opaque processes or walk away from them. Early-career and mid-level candidates, who have less information and less negotiating confidence, cannot. Pay opacity therefore does not suppress wages uniformly; it suppresses wages selectively, concentrating compensation disadvantage among the candidates organizations most need to attract and retain at scale.

“Pay equity and transparency are best served through a system-driven approach rather than one that rewards negotiation skill over performance.”

— Vinu Varghese, Senior Director, People & Culture, Bread Financial

Vinu Varghese, Senior Director, People & Culture at Bread Financial, frames the structural implication precisely: organizations that allow compensation outcomes to be determined by negotiation skill rather than role value are not managing pay—they are creating pay inequity by design. The candidates who negotiate hardest are not always the candidates who perform best. Conflating negotiation skill with market value is a governance error that, over time, accumulates into pay gaps that are legally and reputationally costly to unwind.

 

INFORMATION ASYMMETRY IS A PSYCHOLOGICAL MECHANISM

Pay opacity in India’s IT hiring market is not simply a matter of organizational caution. In many cases, it is a deliberate application of behavioral pressure. Joel Blackstock, Clinical Director of Taproot Therapy Collective, identifies the mechanism directly: keeping the salary range undisclosed forces candidates into a state of anxiety in which they self-censor, underbid, or accept offers below their market value to avoid the perceived risk of losing the role.

Blackstock describes the dynamic as “a psychological trap built entirely on anxiety.” The trap operates on a simple principle: a candidate who does not know the budget cannot anchor to a defensible number, and a candidate operating under uncertainty is more likely to accept an offer without adequately testing it. In competitive technology markets with high candidate-to-role ratios, this mechanism can systematically depress the compensation of mid-tier candidates who perceive scarcity and adjust their expectations accordingly.

The behavioral consequence for organizations is less often examined. Candidates who accept offers under conditions of information asymmetry are more likely to discover the gap after joining—through internal comparisons, peer conversations, or accidental disclosures that are increasingly common in open-office and distributed-team environments. The psychological response to discovering that one has been underpaid is not neutral. Research in organizational justice consistently shows that perceived pay inequity is among the strongest predictors of disengagement and voluntary attrition, operating independently of absolute pay level.

Tishayla Williams, workplace psychologist and Founder of The TW Collective, distinguishes between two organizational postures in India’s technology sector: those with global exposure that publish salary ranges as a talent-attraction mechanism, and those that maintain flexible, undisclosed pay bands to manage internal pay compression. The second group faces a structural contradiction: the internal pay differences they are protecting by withholding information are precisely the differences that generate attrition once candidates discover them.

Dana Zellers, an executive and leadership coach who works across both Indian and international organizations, draws the operational conclusion: “Asking directly about a role’s budget is less about negotiation tactics and more about reducing misalignment early.” For organizations, the cost of that misalignment is not abstract. It is measured by withdrawn acceptances, short-tenure attrition, and the reputational effect on the employer brand, as rejected candidates share their experiences on the same social platforms that now provide salary benchmarks organizations refuse to match.

 

RESEARCH CONTEXT This analysis draws on expert interviews with organizational psychologists, executive coaches, and senior HR practitioners across India’s technology and business management sectors, supplemented by practitioner data on offer rejection rates and attrition patterns. Industry salary disparity estimates are drawn from aggregated IT sector data for India, 2023–2024. Specific case data has been anonymized at source to preserve confidentiality.

 

WHAT TRANSPARENT ORGANIZATIONS DO DIFFERENTLY

The organizations in India’s IT sector that have moved to proactive salary-band disclosure share a common structural feature: they have formalized their pay architecture before initiating hiring conversations. This is not a cultural posture—it is a governance decision that precedes recruitment. When pay bands are defined, approved, and attached to role specifications, disclosure becomes a process rather than negotiation. There is nothing to protect because the range is a policy outcome rather than a bargaining position.

Shah’s observation that organizations with fixed pay bands have “more transparent and straightforward discussions” reflects this dynamic. Transparency is not the cause of simplicity—the underlying governance structure is. A hiring manager who discloses a band set through a formal compensation review process is not giving anything away. A hiring manager who is withholding an ad hoc budget that may or may not reflect internal equity is defending a structurally indefensible position.

Matthew Crook, General Manager at The Access Group, identifies what the transition requires operationally: forward-thinking HR leaders must formalize pay bands and train hiring managers before recruitment drives, not during them. The training dimension is significant. In organizations where compensation discussions have historically been managed by HR alone, hiring managers lack the fluency to have calibrated early conversations. They withhold information not because of policy but because they do not have it, or have not been authorized to share it. This is a process gap, not a cultural one, and it is addressable within a defined governance framework.

Williams’ observation that candidates should prioritize the higher end of their salary range, given their experience level, points to a parallel obligation for organizations: if the internal band cannot accommodate a well-qualified candidate at a market-competitive rate, that is a compensation architecture problem that no amount of negotiation management will solve. The solution is not to manage candidate expectations downward—it is to address the band.

MANAGEMENT IMPLICATIONS

The shift from opaque to transparent compensation processes requires distinct actions at each level of the organization. The following implications apply within a 12-month implementation horizon.

ROLE	IMPLICATION
C-Suite & Board	Commission a pay equity audit to quantify the intra-role disparity within the current workforce before the next hiring cycle. Treat unresolved internal pay gaps as a legal and retention liability, not a compensation-management discretion. Set a board-level policy position on pay band disclosure.
CHROs & HR Leaders	Formalize salary band architecture for all open roles before posting. Define a disclosure protocol: which band information is shared at which interview stage, by whom, and under what authority. Train hiring managers to initiate compensation conversations in round two—not in response to candidate pressure, but as part of the standard process. Measure offer acceptance rate and time-to-fill as indicators of disclosure policy effectiveness.
Hiring Managers	Treat the salary range as process information, not negotiating capital. If you do not know the band for the role you are hiring for, escalate to HR before the first interview—not after. Candidates who ask about compensation in early rounds are demonstrating the market awareness you want in an employee. Respond accordingly.

 

India’s IT hiring market is not becoming more transparent, even as candidates are becoming bolder. It is becoming more transparent because information asymmetry collapses. The salary data that organizations once held as proprietary now circulates freely on LinkedIn posts, anonymous forums, and peer networks before a first-round interview is scheduled. The question is no longer whether candidates know the market rate—they do. The question is whether the organization can be trusted to confirm it.

Organizations that formalize pay band governance and disclose compensation ranges early will not lose negotiating leverage—they have already lost it. What they will gain is a hiring process that attracts candidates based on role value and organizational quality rather than on information control. In a talent market where the best candidates have the most options, that is the only basis for a sustainable competitive position.

Pay opacity is not a negotiating strategy. It is a governance failure with a predictable cost: the candidates with the most options leave, and the candidates with the fewest options stay, underpaid and aware of it. The attrition that follows is not a talent market problem. It is a management choice.

Editor’s Note: MIT Sloan Management Review’s AI Research Forum will make its India debut in Bengaluru on 23 July, bringing together enterprise leaders, researchers, and practitioners to examine how autonomous AI is moving from experimentation to governed deployment at scale. To speak, partner or attend register here