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Updated NRI Handbook

Indian IT Companies hires more, but on Lesser Pay Scales

Despite a 15 per cent increase in the number of employees hired, the Indian IT majors have managed to reduce the average growth rate of their wage cost to half during the third quarter ending December 2007 as compared to the previous year, revealed the ASSOCHAM Eco Pulse (AEP) study.

As per the AEP analysis based on the 3rd quarter results of top IT players including Infosys, Satyam, TCS and Wipro (including subsidiaries), the average hike in wage cost of these companies fell to about 22 per cent during Oct-Dec 2007, as against a whopping q-on-q rise of 45 per cent during third quarter of the financial year 2006-07. These players recruited about 25,000 employees during third Q3 of FY08, as against 21,640 employees in Oct-Dec 2007.

Thinning margins due to appreciating rupee is putting pressure on the software companies to put a check on its employees’ pay packages.

The software giant, Infosys along with its subsidiaries, almost doubled its intake of personnel to 11,683 over the quarter this year. The staff strength of the company and subsidiaries was 88,601 as on December 31, 2007. Nonetheless, the wage bill increased by only 21 per cent in Q3 FY08 vis-à-vis a jump of 43 per cent in Q3 of FY07. It is noteworthy that it had added only 6,062 employees last year in the same quarter.

TCS, the largest IT employer in India, reported a decline in its personnel cost by 4 per cent. The amount was Rs. 2,000.19 crore in Q3 of the current financial year as against Rs. 2,089.34 crore in the corresponding period of the financial year 2007. However, the recruitment plans of the company have largely remained unaltered. It employed 7,522 and 7,835 persons in third quarter of fiscal 2008 and 2007 respectively.

Wipro too recorded a slowdown in the increment of its employee compensation cost to 29 per cent in Q3 of 2007-08 from about 46 per cent in 2006-07 over the equivalent period. The corporate paid Rs. 1,865.50 crore on this account during Oct-Dec 2007, where it had a payout of Rs. 1,448.50 crore in Oct-Dec 2006.

The wage bill of Satyam & subsidiaries on the other hand registered a leap of 43 per cent, the highest among the four players. The staff cost of the IT major had seen a rise of about 31 per cent during the third quarter of 2006-07 over the same duration of 2005-06. The parent company engaged 3,424 new associates to its staff strength.

The analysis of the ASSOCHAM Research Bureau suggests that while few players revised their prices upwards to ward off the pressure from firming rupee, others are expected to follow suit in near future. At the same time, high emphasis would be placed on productivity efficiencies and cost controls. The trend has already begun with TCS cutting the variable pay of its employees.

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