{"course":{"slug":"ai-careers","title":"Working in AI","url":"https://addaly.com/learn/ai-careers","level":"beginner","track":"work"},"lesson":{"slug":"what-is-actually-in-an-offer","title":"The headline number is the least useful one","url":"https://addaly.com/learn/ai-careers/what-is-actually-in-an-offer","position":61,"of":85,"minutes":9,"answer":"Compare guaranteed annual cash against guaranteed annual cash; a bundled total figure mixes employer contributions and target variable pay into a number nobody receives.","keyIdea":"Compare guaranteed annual cash against guaranteed annual cash; a bundled total figure mixes employer contributions and target variable pay into a number nobody receives."},"body":{"format":"markdown","text":"## Six components, and only one gets discussed\n\n1. **Base salary**: the guaranteed cash.\n2. **Variable pay**: bonus or commission, which may or may not arrive.\n3. **Employer contributions**: pension, provident fund, gratuity accrual, social insurance.\n4. **Benefits**: health cover, leave, allowances, equipment, learning budget.\n5. **Equity**, which has its own lesson.\n6. **Terms**: notice, probation, severance, working pattern.\n\nPeople compare offers on the first item, or worse, on a total figure that bundles all six and is not cash.\n\n## Cost to company, and why it is not your salary\n\nIn India and several other markets an offer is quoted as **CTC**: cost to company. It includes things you will never see in your bank account: the employer's provident fund contribution, gratuity accrual, the premium on your insurance, sometimes a notional \"flexible benefit\" pool, and a variable component quoted at target.\n\nThe shape of a ₹18,00,000 CTC offer is often something like:\n\n- Base and allowances: ₹14,40,000\n- Employer provident fund: ₹86,400\n- Gratuity accrual: ₹69,300\n- Insurance premium: ₹24,000\n- Variable at target: ₹1,80,000\n\nTwo things follow. The **guaranteed cash before tax is ₹14,40,000**, not eighteen lakh: twenty per cent less than the number on the letter. And the variable is quoted at target, so if the team has paid out 60% for two years running, the realistic figure is another lakh short.\n\n> Figure: An eighteen-lakh offer, taken apart. Bars (lakh rupees a year): Base and allowances 14.4; Variable, at target 1.8; Employer provident fund 0.864; Gratuity accrual 0.693; Insurance premium 0.24. Guaranteed cash before tax is 14.4 lakh, twenty per cent under the number on the letter. The variable is quoted at target; if the team has paid sixty per cent for two years, the realistic figure is another lakh short.\n\nNone of this is dishonest; it is a convention. But comparing a CTC figure against a base salary figure from another country or another company compares two different quantities, and people accept worse offers doing exactly that every day.\n\nThe equivalent traps elsewhere: American offers quoting \"total compensation\" with a four-year equity grant divided by four; European offers where a 13th or 14th month salary is customary and may or may not be included; commission-heavy roles where the \"on-target earnings\" figure has never been hit by anybody on the team.\n\n## The questions that resolve it\n\nAsk these before accepting. All of them are ordinary and none is rude.\n\n- **\"Can I have the full breakdown: fixed, variable, employer contributions, and benefits?\"** Most companies will send it; a refusal is informative.\n- **\"Is the bonus contractual or discretionary, and what did it actually pay out for this team in the last two years?\"** A discretionary bonus is a hope. A 20% target that paid 40% twice is a 8% bonus with extra paperwork.\n- **\"What is the employer pension or provident fund contribution?\"** In some countries this is 3% and in others 15%, and it is real money.\n- **\"Does the health cover include family, and what is the sum insured?\"** In markets without public healthcare this is one of the largest non-cash items in the package, easily worth more than a 5% salary difference to somebody with dependants or a parent to insure.\n- **\"What is the notice period, in probation and after?\"**\n- **\"Is there a joining bonus, and is it repayable if I leave within a year?\"** Usually yes, and usually pro-rated. Read that clause.\n\n## The number to write down\n\nFor each offer, compute one figure and one list.\n\n**Guaranteed annual cash**: base plus any contractual fixed allowances, before tax. Then, separately: expected variable using the historic payout rate rather than target, employer contributions, and the monetary value of benefits you would otherwise buy.\n\nKeeping guaranteed cash separate from everything else is the discipline that matters, because guaranteed cash is what pays rent in a bad quarter.\n\n## Get it in writing before you resign\n\nVerbal offers are withdrawn: after a hiring freeze, a reorganisation, a failed background check, or a manager changing their mind. It happens often enough that the rule is absolute: written offer, signed, with the start date, before you hand in your notice.\n\nIf you are asked to resign first \"to show commitment\", decline. No legitimate employer requires it.\n\n## The limitation\n\nTax turns gross into net and it does so differently in every country, in every regime within a country, and with every deduction you personally qualify for. This course cannot compute your net pay and neither can a model, confidently as it will try.\n\nWhat you can do is find your own country's official tax calculator (most revenue authorities publish one, free) and run both offers through it before deciding. Two offers with the same gross can differ by a month's salary once allowances, regimes and deductions are applied, and it takes ten minutes to find out."},"check":{"question":"A candidate holds two offers: ₹18,00,000 CTC at Company A, and a base salary of ₹15,60,000 plus a contractual 5% bonus at Company B. What is the first thing to establish?","options":[{"text":"Which company has the better long-term reputation, since the figures are close enough to be a tie.","correct":false,"tempting":"Treats the numbers as comparable when one is a bundled total and the other is a base, so the comparison has not been made yet."},{"text":"Whether Company B will match the ₹18,00,000, since it is the higher figure.","correct":false,"tempting":"Negotiates against a number that is not a salary, which can end with the candidate arguing themselves into the worse offer."},{"text":"The breakdown of A's CTC (how much is fixed cash, how much is employer contributions, and what the variable component has actually paid out) because A's guaranteed cash may be below B's.","correct":true},{"text":"The equity component at each company, since that is where the real upside sits.","correct":false,"tempting":"Jumps to the most uncertain part of the package before establishing the guaranteed part that pays rent."}]},"prev":{"slug":"rejection-and-the-log","title":"What a rejection tells you, and what it does not","url":"https://addaly.com/learn/ai-careers/rejection-and-the-log"},"next":{"slug":"equity-without-the-hype","title":"Options, RSUs, and why most equity is worth nothing","url":"https://addaly.com/learn/ai-careers/equity-without-the-hype"},"authorship":"Founder and series editor: Dr Mustafa Mun. Written by AI models to a written standard. Exam keys checked blind by a second model: 3,665 of 3,666 agreed. Academic review invited.","review":{"status":"Draft, open for academic review"},"cite":"Addaly (2026) 'The headline number is the least useful one', in Working in AI. Edited by M. Mun. Addaly. Available at: https://addaly.com/learn/ai-careers/what-is-actually-in-an-offer (Accessed: 13 October 2026).","licence":{"name":"CC BY-NC-SA 4.0","url":"https://creativecommons.org/licenses/by-nc-sa/4.0/"},"reader":{"schema":1,"title":"The headline number is the least useful one","courseTitle":"Working in AI","module":{"index":7,"slug":"the-money-and-the-paperwork","title":"The money, and the paperwork underneath it"},"answer":null,"keyIdea":"Compare guaranteed annual cash against guaranteed annual cash; a bundled total figure mixes employer contributions and target variable pay into a number nobody receives.","hero":{"kind":"figure","figure":{"t":"figure","label":"Figure 7.1","figure":{"type":"bars","unit":"lakh rupees a year","title":"An eighteen-lakh offer, taken apart","series":[{"label":"Base and allowances","value":14.4,"highlight":true},{"label":"Variable, at target","value":1.8},{"label":"Employer provident fund","value":0.864},{"label":"Gratuity accrual","value":0.693},{"label":"Insurance premium","value":0.24}],"caption":"Guaranteed cash before tax is 14.4 lakh, twenty per cent under the number on the letter. The variable is quoted at target; if the team has paid sixty per cent for two years, the realistic figure is another lakh short."},"alt":"Figure: An eighteen-lakh offer, taken apart. Bars (lakh rupees a year): Base and allowances 14.4; Variable, at target 1.8; Employer provident fund 0.864; Gratuity accrual 0.693; Insurance premium 0.24. Guaranteed cash before tax is 14.4 lakh, twenty per cent under the number on the letter. The variable is quoted at target; if the team has paid sixty per cent for two years, the realistic figure is another lakh short."}},"blocks":[{"t":"h2","id":"six-components-and-only-one-gets-discussed","runs":[{"text":"Six components, and only one gets discussed"}]},{"t":"ol","start":1,"items":[[{"text":"Base salary","b":true},{"text":": the guaranteed cash."}],[{"text":"Variable pay","b":true},{"text":": bonus or commission, which may or may not arrive."}],[{"text":"Employer contributions","b":true},{"text":": pension, provident fund, gratuity accrual, social insurance."}],[{"text":"Benefits","b":true},{"text":": health cover, leave, allowances, equipment, learning budget."}],[{"text":"Equity","b":true},{"text":", which has its own lesson."}],[{"text":"Terms","b":true},{"text":": notice, probation, severance, working pattern."}]]},{"t":"p","runs":[{"text":"People compare offers on the first item, or worse, on a total figure that bundles all six and is not cash."}]},{"t":"h2","id":"cost-to-company-and-why-it-is-not-your-salary","runs":[{"text":"Cost to company, and why it is not your salary"}]},{"t":"p","runs":[{"text":"In India and several other markets an offer is quoted as "},{"text":"CTC","b":true},{"text":": cost to company. It includes things you will never see in your bank account: the employer’s provident fund contribution, gratuity accrual, the premium on your insurance, sometimes a notional “flexible benefit” pool, and a variable component quoted at target."}]},{"t":"p","runs":[{"text":"The shape of a ₹18,00,000 CTC offer is often something like:"}]},{"t":"ul","items":[[{"text":"Base and allowances: ₹14,40,000"}],[{"text":"Employer provident fund: ₹86,400"}],[{"text":"Gratuity accrual: ₹69,300"}],[{"text":"Insurance premium: ₹24,000"}],[{"text":"Variable at target: ₹1,80,000"}]]},{"t":"p","runs":[{"text":"Two things follow. The "},{"text":"guaranteed cash before tax is ₹14,40,000","b":true},{"text":", not eighteen lakh: twenty per cent less than the number on the letter. And the variable is quoted at target, so if the team has paid out 60% for two years running, the realistic figure is another lakh short."}]},{"t":"p","runs":[{"text":"None of this is dishonest; it is a convention. But comparing a CTC figure against a base salary figure from another country or another company compares two different quantities, and people accept worse offers doing exactly that every day."}]},{"t":"p","runs":[{"text":"The equivalent traps elsewhere: American offers quoting “total compensation” with a four-year equity grant divided by four; European offers where a 13th or 14th month salary is customary and may or may not be included; commission-heavy roles where the “on-target earnings” figure has never been hit by anybody on the team."}]},{"t":"h2","id":"the-questions-that-resolve-it","runs":[{"text":"The questions that resolve it"}]},{"t":"p","runs":[{"text":"Ask these before accepting. All of them are ordinary and none is rude."}]},{"t":"ul","items":[[{"text":"”Can I have the full breakdown: fixed, variable, employer contributions, and benefits?”","b":true},{"text":" Most companies will send it; a refusal is informative."}],[{"text":"”Is the bonus contractual or discretionary, and what did it actually pay out for this team in the last two years?”","b":true},{"text":" A discretionary bonus is a hope. A 20% target that paid 40% twice is a 8% bonus with extra paperwork."}],[{"text":"”What is the employer pension or provident fund contribution?”","b":true},{"text":" In some countries this is 3% and in others 15%, and it is real money."}],[{"text":"”Does the health cover include family, and what is the sum insured?”","b":true},{"text":" In markets without public healthcare this is one of the largest non-cash items in the package, easily worth more than a 5% salary difference to somebody with dependants or a parent to insure."}],[{"text":"”What is the notice period, in probation and after?”","b":true}],[{"text":"”Is there a joining bonus, and is it repayable if I leave within a year?”","b":true},{"text":" Usually yes, and usually pro-rated. Read that clause."}]]},{"t":"h2","id":"the-number-to-write-down","runs":[{"text":"The number to write down"}]},{"t":"p","runs":[{"text":"For each offer, compute one figure and one list."}]},{"t":"p","runs":[{"text":"Guaranteed annual cash","b":true},{"text":": base plus any contractual fixed allowances, before tax. Then, separately: expected variable using the historic payout rate rather than target, employer contributions, and the monetary value of benefits you would otherwise buy."}]},{"t":"p","runs":[{"text":"Keeping guaranteed cash separate from everything else is the discipline that matters, because guaranteed cash is what pays rent in a bad quarter."}]},{"t":"h2","id":"get-it-in-writing-before-you-resign","runs":[{"text":"Get it in writing before you resign"}]},{"t":"p","runs":[{"text":"Verbal offers are withdrawn: after a hiring freeze, a reorganisation, a failed background check, or a manager changing their mind. It happens often enough that the rule is absolute: written offer, signed, with the start date, before you hand in your notice."}]},{"t":"p","runs":[{"text":"If you are asked to resign first “to show commitment”, decline. No legitimate employer requires it."}]},{"t":"h2","id":"the-limitation","runs":[{"text":"The limitation"}],"role":"limit"},{"t":"p","runs":[{"text":"Tax turns gross into net and it does so differently in every country, in every regime within a country, and with every deduction you personally qualify for. This course cannot compute your net pay and neither can a model, confidently as it will try."}]},{"t":"p","runs":[{"text":"What you can do is find your own country’s official tax calculator (most revenue authorities publish one, free) and run both offers through it before deciding. Two offers with the same gross can differ by a month’s salary once allowances, regimes and deductions are applied, and it takes ten minutes to find out."}]}],"check":{"question":[{"text":"A candidate holds two offers: ₹18,00,000 CTC at Company A, and a base salary of ₹15,60,000 plus a contractual 5% bonus at Company B. What is the first thing to establish?"}],"options":[{"text":[{"text":"Which company has the better long-term reputation, since the figures are close enough to be a tie."}],"correct":false,"tempting":[{"text":"Treats the numbers as comparable when one is a bundled total and the other is a base, so the comparison has not been made yet."}]},{"text":[{"text":"Whether Company B will match the ₹18,00,000, since it is the higher figure."}],"correct":false,"tempting":[{"text":"Negotiates against a number that is not a salary, which can end with the candidate arguing themselves into the worse offer."}]},{"text":[{"text":"The breakdown of A’s CTC (how much is fixed cash, how much is employer contributions, and what the variable component has actually paid out) because A’s guaranteed cash may be below B’s."}],"correct":true,"tempting":null},{"text":[{"text":"The equity component at each company, since that is where the real upside sits."}],"correct":false,"tempting":[{"text":"Jumps to the most uncertain part of the package before establishing the guaranteed part that pays rent."}]}],"order":[0,2,3,1],"why":null},"prev":{"slug":"rejection-and-the-log","title":"What a rejection tells you, and what it does not","minutes":8},"next":{"slug":"equity-without-the-hype","title":"Options, RSUs, and why most equity is worth nothing","minutes":10}}}