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T.E. Raja Simhan

Chennai, Nov. 7 The slowdown in the US financial service dampened the hiring of employees by top Indian software companies. But employee cost, which contributes the most to expenditure, rose in the second quarter of this fiscal year.

The combined employee cost for the top four companies increased by nearly 30 per cent to Rs 9,576 crore in the second quarter of the current fiscal compared with Rs 7,388 crore in the corresponding quarter last year. The industry sources attributed the increase to the annual salary hike — ranging between 8 per cent and 12 per cent — that happens during the second quarter.

On the contrary, net employee addition declined by 35 per cent to 14,946 in the second quarter of this year compared with 22,931 in the corresponding period last year.

Among the top four, Infosys alone increased its employee intake and also its employee cost during the second quarter of the current fiscal when compared with the corresponding quarter a year ago. Others saw their net addition to headcount go down, but witnessed an increase in employee cost.

Infosys added 5,927 employees in the second quarter of this fiscal, a 31 per cent increase over the second quarter of last year. Its employee cost increased by 26 per cent to Rs 2,769 crore (Rs 2,199 crore).

While Tata Consultancy Services reduced its employee intake by 43 per cent, its employee cost increased by 28 per cent. It was a similar pattern with Wipro and Satyam.

Mr Srinivas Vadlamani, Chief Financial Officer, Satyam Computer Services Ltd, says there is cautiousness in hiring and increase in non-voluntary attrition.

Wage hikes this year have been lower compared to last year, indicative of the lower growth of the companies in the current year. On the reason for increase in employee cost for Satyam, Mr Vadlamani said wage hike has been effected in the second quarter in the range of 12 per cent for offshore and 3 per cent for onsite effective July. Impact of this on margin was around 300 basis points. In addition, in the last one year the company’s consolidated headcount increased to 52,865 from 45,767 employees.

More importantly, employee cost as a percentage of revenue has declined to 61 per cent from 64 per cent “reflecting some of the efficiencies that Satyam has been able to bring into the system coupled with depreciation of the rupee,” Mr Vadlamani said. During this period, operating margins increased from 19.8 per cent to 23 per cent, he added.

More Stories on : Software | Human Resources | Tata Consultancy Services Ltd

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