The Hindu Business Line : Staff cost for IT companies on the rise

THERE has been an increase in staff cost for information technology companies in fiscal 2003-04. Figures collated by Business Line showed that this varied between 35 per cent and 45 per cent for top IT firms and between 15 per cent and 25 per cent for smaller firms.

Staff cost for Infosys Technologies for the year ended March 31, 2004, increased to Rs 2,366 crore (Rs 1,677 crore), while for Satyam Computers it was Rs 1,336 crore (Rs 980 crore). Smaller firms like Infotech Enterprises reported an increased staff cost of Rs 59 crore (Rs 50 crore), while Geometric Software's was Rs 32 crore (Rs 27 crore).

In the last couple of years, recruitment by Indian IT firms - both from the market by poaching from other firms and through campus recruitment - has shown a significant increase. There is now buoyancy in the IT market, after the dotcom bubble burst and IT downturn in 2000-2001, said an industry source. The IT industry, however, is faced with a shortage of talented software professionals in the market. Companies are willing to spend more for the talent, the source said.

An analyst tracking the IT industry says that the increase in staff cost is interesting given the fact that business is moving offshore from onsite. Most firms have brought home employees from onsite and have also recruited a large number of employees to work in India.

This trend should have brought down staff cost for companies, he said.

An official of a software firm said last fiscal year the average salary hike across industry was about 15 per cent, which in turn led to increase in staff cost for IT firms.

The staff cost for Polaris Software Lab went up to Rs 374 crore in 2003-04 compared to Rs 221 crore the previous year.

The fiscal 2003-04 numbers were of the merged entity of Polaris (with OrbiTech), while the previous year's numbers represented 12 months of Polaris financial performance and five months of OrbiTech.

During 2003-04, Polaris also did appraisals of its employees.

Also, salary levels of OrbiTech and Polaris employees were brought on par during 2003-04, said an official. Meanwhile, Polaris has started a salary hike for its employees from April 1.

The hike is to happen at different levels and will go on till October 1.