Market competitive pay might be the strategy for some industries but is absolute myth for the other few... Its more about which company ... what brand name... also it might defer within the company itself... whats the job description ... some Jd's may require company to go with competitive market strategies some might not...

Just to be more clear companies which are the leaders in the industry might not have to go with the startegy as people percieve them as places with tremendous growth oppurtunity whereas startups might need it to attract the intial talent..

Also its more to do with the level.... after a certain point... and reaching a certain level in the career people really do not care about a hike of 50K they would be more interested in what kind of oppurtunities is on the offer..... whereas as ritwik said entry level BPO guys might jump for a mearge hike of 1-2K.... also its industry dependent... someone getting an oppurtunity at entry level in a consulting firm might not look at the pay package offered by the BPO's or other industry while considering this...

Finally I guess its always people dependent.... their thought process... their aspirations.... their needs..... I took a pay cut to join another firm in the same industry for the enlarged horizon and brand name....so guess for me it really didnt matter.....