India Inc’s staff cost rises 30% in Q1

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Mumbai, Aug 24: India Inc has been paying 30% more as salaries this year; still the share of staff cost in total expenditure has been coming down.

Despite pressure on their bottom lines, the staff cost of companies rose by 30.1% in April-June 2008 to Rs 35,971 crore, from Rs 27,644 crore in April-June 2007. But the increase in net profits was a modest 5%.

Paradoxically, the share of staff cost in total expenditure fell marginally to 6.30% from 6.92%. This happened because the total expenditure of 1,684 companies rose by 42.9%—to Rs 5.71 lakh crore from Rs 3.99 lakh crore. Their staff cost to sales ratio also declined to 5.46% in April-June 2008 from 5.84% in April-June 2007.

A study, based on a sample of 1,684 companies, finds that 87% of these companies have increased their staff costs during April-June 2008 compared to the same period in the previous year. The total staff cost of the sample companies grew by 30.1% against a 39.1% increase in aggregate sales and 42.9% rise in total expenditure.

The top five companies by staff cost were SAIL (Rs 2,215 crore),Wipro (Rs 2,199 crore), TCS (Rs 1,747 crore), Indian Oil (Rs 1,560 crore) and Satyam Computer (Rs 1,469 crore). Among these, the highest increase in staff cost was registered by Indian Oil (128.2%).

Of the 1,684 companies, 894 did better with a decline in staff cost to total expenditure ratio, while 790 saw a rise. Many of them, particularly those in human resource intensive sectors like IT, tea, telecommunications, power and construction, showed a high staff cost to total expenditure ratio, meaning they spent more on staff per unit of total expenditure. For example, Sonata Software spent Rs 61 on staff for every Rs 100 spent on total expenditure during April-June 2008.