India Inc?s hiring activity is now back to levels seen before the crisis. The improvement, across-the-board in nature, is most prominent in telecommunications, electronics, pharmaceuticals and food processing companies. A study of the staff spend of 1,993 major companies with sales figures above Rs 1 crore, shows more than 75% of the companies increased their staff costs in 2009-10, compared to the same period in the previous year.
The aggregate staff costs of the companies has increased during the period and the rate of increase is higher than that of their total sales and total expenditure. The total staff cost of these companies grew by 8.5% during 2009-10, compared to the same period last year, against 4.9% and 2.2% increase in aggregate sales and total expenditure, respectively. This has resulted in an increase in the share of staff costs in total sales and in the share of staff costs in total expenditures.
The share of staff costs in total sales increased from 5.96% in 2008-09 to 6.16% in 2009-10 and the share of staff costs in total expenditure increased from 6.80% to 7.21% during the same period last year. The total sales of the 1,993 companies together increased from Rs 25.97 lakh crore in 2008-09 to Rs 27.25 lakh crore in 2009-10 while the total expenditure of the sample companies increased from Rs 22.78 lakh crore to Rs 23.29 lakh crore. Staff costs rose from Rs 1.54 lakh crore to Rs 1.68 lakh crore. Thus, staff costs to total expenditure ratio and staff cost to sales ratio increased during 2009-10 from 2008-09 levels. However, the overall picture does conceal a lot of variations. The top 5 companies according to staff costs during 2009-10 are Infosys Techno, Wipro, TCS, IOCL and SAIL.
Of the 1,993 companies included in the study, 779 fared better, with a decline in staff cost to total expenditure ratio, while 1,204 experienced a rise in the same period. Ten companies showed no change. Many of the companies, particularly those in labour-intensive IT, tea and telecommunications showed a high staff cost to total expenditure ratio in both the time periods. For example, for every Rs 100 spent during 2009-10, MTNL spent Rs 70 on staff.
Companies which have reduced their share of staff costs in total expenditure significantly during 2009-10 from 2008-09 levels are 3i Infotech, Gammon Infra, GMR Infra and ITI. On the other hand, companies, which saw a sharp increase in their ratio from 2008-09 to 2009-10 were Neyveli Lignite, Mindtree and Rolta India.
In the industry-wise analysis, the ratio of staff costs to total expenditure for 33 industries was studied and a significant decline was noticed in the case of aluminium, automobiles, construction, retailing, steel, sugar, trading and tea.