Wage bill down as a percentage of total revenue
At a time when companies are looking to bring down their wage bill by cutting jobs to reduce cost, a look into the wage bill of 100 companies in the list of benchmark BSE 100 index shows that majority of the companies have witnessed a decline in their wage bill as a per cent of revenue over the past three years.
It has come down from 5.5 per cent in March 2005 to 5.1 per cent in March 2008.
In such a scenario, the question comes up — is the job cut really required to bring down costs?
Of the 93 companies for which the data is available, 55 companies have witnessed a drop in the salary and wage component as a percentage of revenue.
Between March 2005 and March 2008, the aggregate wages and salaries for the list of companies grew by 74 per cent while in the same period, the revenues of the group of companies grew by 86 per cent and the profits rose by 97 per cent.
Even in the nine-month period ending December 2008, the revenues for the list of companies have grown by 29 per cent over the same period last year.
As a result of the significant rise in revenues the impact of the rise in wages and salary component is not very hard.
Of the group, wages and salaries as a percentage of revenue is highest for the companies in the information Technology sector.
Within the list, Indiabulls Financial Services has witnessed the maximum jump in its wage bill. Wages as a percentage of revenues has grown from 29 per cent in FY 2005 to 47 per cent in FY 2008.
However, even as the wages rose in absolute numbers, Financial Technologies, Educomp Solutions, Punjab National Bank, Bank of Baroda and Tata Tea have witnessed a fall in their wage component as a percentage of revenue.