Fatter paypackets to retain talent

Written by Pradip Kumar Dey | Mumbai, Dec 8 | Updated: Dec 9 2007, 07:03am hrs
In a bid to retain talent, corporate India has been shelling out more than what it spent for paypackets in the recent past. A sample study of 500 major companies, with sales figures above Rs 100 crore, has shown that 93% of them have increased their staff costs during April-September 2007, compared with the same period previous year.

The aggregate staff cost of these companies has risen during the period and the rate of increase was significantly higher when compared to their total sales and expenditure. The staff cost of these companies grew 22% during April-September over the same period previous year, against 11.9% and 10.2% increase in aggregate sales and total expenditure, respectively. This has resulted in an increase in the share of staff costs in total sales and expenditure.

The share of staff cost in sales has gone up from 5.38% in April-September 2006, to 5.87% in April-September this year. And the share of staff cost in total expenditure also rose from 6.36% to 7.04%.

The total sales of 500 companies taken together increased from Rs 7,45,168 crore in April-September 2006, to Rs 8,33,587 crore in April-September 2007. Total expenditure of the sample companies also risen from Rs 6,31,101 crore, to Rs 6,95,437 crore and staff costs from Rs 40,141 crore to Rs 48,961 crore. So, the staff cost to sales ratio and staff cost to total expenditure ratio increased during April-September 2007 from the level of April-September 2006.

The overall picture, however, does conceal a lot of variations. Top 10 companies, according to staff cost during April-September 2007, are Infosys, Wipro, TCS, SAIL, Satyam Computer, Indian Oil, BHEL, NTPC, Reliance Industries and Tata Steel.

Of the 500 companies in this study, 176 did better with a decline in staff cost to total expenditure ratio, while 324 experienced a rise in the period under consideration. Many of them, particularly those in labour-intensive sectors such as IT, tea, telecommunications, showed a high staff cost to total expenditure ratio in both the time periods. For example, Infosys spent Rs 73 on staff for every Rs 100 spent during April-September 2007.

Companies, which have reduced their staff cost share in total expenditure significantly were TCS, Sun TV Network, Dredging Corporation and NMDC.