With the economy turning around, India Inc's staff spend is steadily increasing. The trend has been reflected in the manpower cost of corporates during October-December 2009. A study of 1900 companies carried out by FE reveals that their staff cost increased by 6.2% to Rs 42,757 crore during the period under review compared with Rs 40,253 crore in the year-ago period.
The total expenditure of these companies increased by 10.1% to Rs 6.06 lakh crore from Rs 5.51 lakh crore.
But the share of staff cost in total expenditure steadily decreased from 7.31% in October-December 2008 to 7.05% in the period under consideration. The staff cost-to-sales ratio also decreased sharply -- from 6.56% to 6.05% -- during the above period. The study also finds that 74% of the selected companies have increased their staff costs during October-December 2009.
The total staff cost of the sample companies grew by 6.2% during October-December 2009 over the corresponding period of the previous year as against a 15.1% increase in aggregate sales and a 10.1% hike in total expenditure. This has resulted in a decrease in the share of staff costs in total expenditure and sales.
The top five companies in terms of manpower cost during October-December 2009 are Infosys (INFOSYS.BO : 2674 +14.15) Techno, Wipro (WIPRO.NS : 705.05 +8.75), TCS, IOCL and SAIL (SAIL.NS : 234.4 +0.5). Among these, the highest increase in manpower cost has been registered in the case of IOCL.
Of the 1900 companies reviewed, 892 did better with a decline in staff cost to total expenditure ratio, while 1,008 experienced a rise. The remaining six companies showed equal ratio during both the period.
Many of the companies, particularly those in labour-intensive industries like hotels, IT, tea, telecommunications, entertainment and construction, showed a high staff cost-to-total expenditure ratio in the three-month period, which means they spent more on staff per unit of total expenditure. For example, Warren Tea spent Rs 60 on staff for every Rs 100 spent on total expenditure during October-December 2009.
Among the industries studied, a significant increase in staff cost was seen in cases of automobile & ancillaries, electric equipment, food-processing, pharmaceuticals, telecommunications and tyres companies. The aggregate staff cost of telecommunications companies increased by 45% to Rs 2,379 crore.
A notable increase in the ratio of staff cost-to-total expenditure was witnessed in cases of diversified, electric equipment, engineering, entertainment, fertilizers, food processing, paper, personal care, petrochemicals, pharmaceuticals, electricity, telecommunications, textiles and tyres companies.
An opposite trend was witnessed in cases of aluminium, automobile & ancillaries, cement & products, cigarettes, IT, construction, electronics, shipping, sugar, tea, transport and steel companies. The aggregate staff cost of IT companies decreased by 2.8% to Rs 10,169 crore during October-December 2009.