Earning more per employee

Written by Diksha Dutta | Diksha Dutta | Updated: Feb 13 2012, 06:31am hrs
It will definitely come as a shock to most that the $69 billion Indian IT industry employs only close to 20% of the total 9 lakh graduates that pass out every year, but is definitely now earning more revenue per each of them. Though 1,00,000 job offers have already been made in the tech sector for FY 2012 and another lakh for the BPO segment IT companies are busy controlling its cost and expenses which have reduced from close to 80% of the total revenues to 78% in the last two years. Surprisingly, the good news is that the revenue per employee has increased from $42,100 to $44,800 in the same period, courtesy non linearity and hiring of smart talent and not just coding engineersreveals the recent strategic review by Indian IT industry forum Nasscom.

Analysts feel that the recent profiles that are novel in the IT industry necessarily do not need engineers and thus the matrix is changing, increasing the revenues per employee. Today, the industry directly employs 2.77 million professionals of whom safely 60% are hard core engineering graduates. If one were to relate revenue and employees of these IT companieslast year 9% employee growth corresponded to 16% revenue growth signifying growing non-linearity. The contribution of net addition of employees to revenue is significantly declining. This means lesser employees adding more revenues to the company.

Ganesh Natarajan, vice-chairman & CEO, Zensar Technologies says, Earlier IT companies hired close to 100% of their staff as engineers, now it has reached 90% and soon it will be 70%. As the BPO sector is emerging and there are new processes like testing and infrastructure managementthese necessarily do not need engineers. He further adds that most of these engineers, roughly around 4-4.5 lakh of the 9 lakh are not employable by the IT industry as well. And 20% odd the engineers graduated every year also go for higher education. Thus, IT-ITes sector has to chose from the residual.

Nasscom president Som Mittal agrees, It is a misconception that the IT industry employs most of the engineers that graduate each year. A significant number goes to sectors like manufacturing and automotive as well. It would be safe to say that close to 20% of the engineering graduates are absorbed by the industry. And 75-90% of the talent in the IT industry would have an engineering degree.

Apart from this, a lot in the employee matrix changed last year. Nasscom data reveals that due to various employee engagement activities the attrition of the top five IT companies declined from 19% in 2010 to 16% in2011.Overall, the country employs 4.77 million professionals, of which 30% are engineering graduates. Thus as the tech industry is seen as a great employer, let us hope the employability increases too and not just the number of engineers produced.