3.2 LPA vs 25 LPA: Why the Huge IT Salary Gap Exists?

Picture this: Two engineers graduate from the same college, hold the same degree, and enter the same IT industry in the same country. Yet, one lands a package of 3.6 Lakhs Per Annum (LPA), while the other secures a staggering 25 LPA. Is it a lack of talent? Is it luck? Or is there a fundamental structural difference in the industry that most freshers miss until it is too late?

Based on insights from industry experts like Technical Suneja, the answer lies not just in your coding ability, but in understanding the business models of the companies you apply to. If you are currently sitting in the 3 LPA, 6 LPA, or even 10 LPA bracket, understanding this "Growth Mindset" is the first step to breaking the glass ceiling.

In this deep dive, we will decode why this massive salary disparity exists, the difference between Service-Based and Product-Based companies, and the roadmap to landing that high-paying dream job.

To understand the paycheck, you must understand where the money comes from.

1. Service-Based Companies (The Time Sellers) Companies like TCS, Wipro, Cognizant, and Infosys are the backbone of the Indian IT sector. Their business model is straightforward: they provide services to other clients. For example, if a bank needs a mobile app, they hire a service-based company to build it.

The engineers hired here are essentially resources working on a client’s need. The company bills the client for your time and effort, but the salary you receive is a fraction of that billing. Because the work is often based on client requirements—maintenance, support, or legacy projects—there is limited room for innovation. You are paid to execute a specific task within fixed hours.

2. Product-Based Companies (The Value Creators) On the flip side, we have companies like Microsoft, Google, Facebook (Meta), and Adobe. These companies build their own software products and sell them directly to consumers or businesses. Their revenue comes from product sales, subscriptions (like Azure or Adobe Creative Cloud), and advertisements.

Because these products generate massive, scalable revenue, the companies can afford to pay their engineers significantly more. In this environment, an engineer isn't just "support"; they are the creators of the value being sold. Consequently, the expectation is high—they need problem solvers who can innovate, not just follow instructions.

The difference in compensation is stark and structural.

• Service-Based Reality: For a fresher, the standard package usually hovers between 3 to 6 LPA. Even with 5 years of experience, it might only reach 10 to 15 LPA unless you switch companies aggressively. The annual hikes are often conservative, ranging from 5% to 10%, or sometimes negligible amounts.

• Product-Based Reality: A fresher in a product-based company often starts at a base of 15 to 25 LPA. For experienced professionals (10+ years), packages often exceed 1 Crore when stock options are included. The hikes here are performance-driven, often ranging from 10% to 30%.

The core reason for this gap is that service companies sell Time and Efforts, while product companies sell Innovation and Value. When a company sells innovation, they are willing to pay a premium for the best minds who can optimize their products and drive revenue.

Money isn't the only differentiator; the lifestyle changes dramatically between these two worlds.

In service-based organizations, the culture is driven by client deadlines. You are often expected to work fixed hours (e.g., 9 to 6), and billing is strictly monitored. The work can become repetitive as it focuses on maintaining existing systems or meeting specific, rigid client requirements. Innovation is often limited to Proof of Concepts (POCs) that the client may or may not approve.

In contrast, product-based companies generally offer flexible working hours. The focus shifts from "how many hours you sat at your desk" to "what impact did you create?". If you deliver your work and attend necessary meetings, your physical presence is secondary. However, during product releases, the pressure can be intense, requiring extra effort. The biggest perk is the sense of ownership; you aren't just working for a client, you are building the product that defines the company.

If you feel stuck in a low-paying job, the good news is that the transition is possible. It requires a strategic shift in skills and preparation. Here is the roadmap recommended by industry veterans:

There is no escaping this. Product companies use DSA as a filter to gauge your problem-solving ability.

• Action Plan: Start with easy problems on platforms like LeetCode, CodeChef, or GeeksforGeeks, then move to medium and hard.

• Pro Tip: Don't just copy-paste solutions. Stick to one roadmap or sheet and practice consistently.

While DSA gets you through the door, your development skills keep you there. You need to master modern stacks:

• Frontend: React.js, Next.js, TypeScript.

• Backend: Node.js, Java Spring Boot, Python Django.

• Trends: Cloud (AWS/Azure), DevOps, and AI. Differentiation is key. Knowing the basics isn't enough; you need to understand how to optimize and scale these technologies.

Tutorial hell is a trap. To stand out, you must build projects that solve real-world problems. A simple To-Do list won't cut it anymore. Build a portfolio website to showcase your work. Treat yourself as a product—the better you present your skills, the higher your value.

Your resume should highlight your DSA rankings (if good) and the impact of your projects. When applying, research the company. Do they focus heavily on DSA? Or are they more focused on System Design? For senior roles, System Design becomes the primary differentiator over simple coding tasks.

The gap between 3.2 LPA and 25 LPA is not just about the company; it’s about the "Growth Mindset". Many engineers settle for comfort, staying in service-based roles because it feels safe. However, comfort zones rarely pay well.

As Technical Suneja advises, "Hard work beats talent if talent does not do hard work". If you are currently at a lower package, do not be discouraged. Use it as fuel. The path requires consistency—solving one DSA problem a day, building one feature a week, and constantly upskilling. The industry rewards those who can create value, not just those who can clock hours.

Are you ready to make the switch?

Service-based companies sell "time and effort" to clients and have lower margins per employee. Product-based companies sell "innovation and value" (software/subscriptions) which scales massively, allowing them to pay higher salaries.

Yes, for most product-based companies, DSA is the primary screening criteria to test problem-solving skills. It is the gateway to the interview process.

Yes. Product companies focus on skills and problem-solving ability rather than just career continuity. If your portfolio and coding skills are strong, you can make the switch.

Focus on high-demand stacks like MERN (React, Node), Java Spring Boot, and emerging fields like Cloud Computing (AWS/Azure), DevOps, and AI integration.

While service companies often give 5-10% hikes, product-based companies typically offer 10-20% annual hikes. When switching jobs or roles, hikes can range from 30% to over 100% depending on skills.