Software engineering salaries hardened in India around 2000-2004, were the causes for that? Did some promising engineers have to sacrifice their careers via attrition for the others to reap dividends?
Short answer: yes, salaries hardened (flattened/plateaued) in 2000–2004, and yes, a non-trivial number of capable engineers did fall out of the system, which indirectly made the later boom possible—but it wasn’t a clean or fair process.
Let’s unpack it calmly, without nostalgia or propaganda.
What actually happened (2000–2004)
1. Dot-com bust hit India with a lag
1998–2000: irrational exuberance, campus offers flew, startups everywhere
2000–2001: US tech crash → contracts cancelled → Indian IT feels it in 2001–2002
Hiring freezes, offer revocations, bench strength exploded
India didn’t crash spectacularly—but it froze.
2. Wage hardening = demand shock + supply overhang
Many people mistake this for “discipline.” It was really risk transfer to labor.
3. Attrition wasn’t just weak engineers
This is the uncomfortable part.
A lot of people who exited were:
They didn’t fail technically.
They failed economically.
Some went into:
And yes—some of them would’ve been excellent engineers had timing been different.
Did their sacrifice benefit the survivors?
Indirectly, yes—but not in a heroic way.
How the system benefited:
Reduced bargaining power of employees
Created a large, compliant middle layer
Made offshore delivery predictable and cheap
Allowed Indian IT to scale massively post-2004
The survivors didn’t “win” because they were best.
They won because they lasted.
This is important:
The Indian IT miracle was built more on endurance and cost control than on meritocracy.
Why salaries didn’t rebound quickly (even after recovery)
Three structural reasons:
1. Services model ≠ innovation rents
2. Freshers as commodities
3. Fear memory
Leadership that lived through 2001–02:
That trauma lasted long.
A subtle but lasting cultural effect
This period taught Indian engineers:
You can still see that DNA today.
Bottom line (no romance)
Yes, salaries hardened due to a global shock + structural choices
Yes, good engineers were lost, not because they were weak, but because the system couldn’t carry everyone
The later boom rode on:
History didn’t select the best.
It selected the survivable.
If you want, we can also:
Compare this with post-2022 layoffs
Map who gets filtered out today
Or talk about how to design systems that don’t waste talent this way