Staff costs have now started eating into margins as well, as their share of the revenue is now 6.22% in FY08 compared with 5.94% in the previous fiscal. However, traditionally staff cost-heavy sectors like IT and telecom have seen a drop in the share such overheads in their total expenditure.
An appreciating rupee and the US slowdown were clear threats for the IT industry and with a view to manage margins, most IT companies were managing staff costs proactively. And the result shows, says an analyst with a leading brokerage.
The share of staff costs in total expenses for the IT industry has dropped from 52% to 49% in FY08. Here, Indias leading software solutions company TCS is on the forefront. It has reduced the share of employee expenditure from 60.59% of the total expenditure in FY07 to 44.51% in FY08.
On the other hand, traditionally conservative companies have seen a rise in staff costs. And this is because they have to catch up with other sectors garner the right talent, reckon experts. Sectors like aluminium, cement, electric equipment and construction sector were the ones to witness stiff rise in costs. The share of employee expenditure for the construction sector was 65.8%, steel 52.1 % and electricity 42.5%.
Here, state-owned SAIL saw staff costs account for 27.43% of the total expenditure in FY08, up from 20.42% in the previous year. Another state-owned company, NMDC, too features among the companies which saw staff costs burgeon.