India Inc staff spend growth dips to 10.7%

While Indian companies spent more in salaries and wages in the quarter ended March this year as compared with the same quarter last year, the growth in the staff spend was lower as compared with 2010.

A FE study of 1,204 companies (excluding banks and NBFCs) show that the growth of their staff cost decreased from 22.7% during January to March 2009 to 10.7% during the January to March 2011 period. In absolute numbers, the staff cost of the same sample rose from R23,097 crore during January to March 2009 to R28,340 crore during the same period last year and further increased to R31,385 crore during January to March 2011.

The study found that 74% of the selected companies have increased their staff costs during January to March 2011, as compared with the same period to the previous year. Significant increase in staff cost was seen in the case of UltraTech Cement, Nagarjuna Fertilisers and Chemicals, Godrej Consumer, Surana Industries and Sesa Goa. The staff cost of Sesa Goa increased by 111% to R 60 crore during January to March 2011 from the level of R28.55 crore during January to March 2010. Among these highest increase in manpower cost was reported from TCS, which saw its employee costs rise 38.4% to R2,772 during the January to March 2011 quarter as compared with R2,003 crore during January to March 2010. With the rise in staff costs, total expenditure of the sample increased from R2.46 lakh crore during January to March 2009 to R3.24 lakh crore during the same period last year and subsequently to R3.90 lakh crore during the January to March quarter this year.

Of the 1,204 companies in this study, 621 did better with a decline in staff cost to total expenditure ratio, while 575 experienced a rise in the period under consideration. The remaining eight companies showed equal ratio during both the period.

The analysis shows that companies, particularly those in labour intensive like hotels, IT, tea, telecommunications, entertainment and construction, showed a high staff cost to total expenditure ratio in the three month period.