India Inc has no choice, but to pay better
The Indian companies were forced to increase salaries by as much as 31 per cent in the quarter ended March 31.india Updated: May 05, 2006 16:18 IST
Employers in India have no choice but to pay high salaries to their staff, with industrial growth demanding more manpower, which in turn, comes at sky-hit prices.
India Inc was forced to increase salaries by as much as 31 per cent in the quarter ended March 31 and by almost 17 per cent in 2005-06, a study conducted by industry body Assocham said.
Led by financial services, which increased its wage bill by 212 per cent, IT and banks also hiked the salaries in the quarter.
IT increased its personnel expense by 52.6 per cent while banks increased the expense by 26 per cent, the study said.
"The cost of hiring and retaining the staff in the last quarter was significantly higher than the whole of 2005-06," the study said.
The personnel expense for financial services were up 136 per cent in last fiscal, for IT firms the increase was 42 per cent and for banks the cost on this count went up by 16 per cent.
"Thanks to buoyancy in the industrial growth and services, the companies are hiring aggressively and the human resource is asking for better price," said Assocham President Anil K Agarwal said.
There is an increased demand for manpower in the expanding retail business. The staff cost in this sector has shown a tremendous increase.
"The magnitude of increase in staff cost could be judged by the figures of Indiabulls Financial Services and India Infoline Ltd, which exhibited 398.91 per cent and 364.35 per cent, increase in their staff cost respectively," the study asserted.
IT, being one of the largest employment hubs, saw a considerable expansion in its employee base last year. The industry is also providing high compensation packages to its employees.
Tata Consultancy Services Ltd Registered a striking staff cost growth of 153.93 per cent, among the sample of IT companies analysed in the study, chamber said.
Amongst banks, ICICI incurred an increase of 64.10 per cent in the salaries followed by Union Bank of India by 51.51 per cent and Corporation Bank by 48.98 per cent in the last quarter of 2005-06.
On the annualised basis, Yes Bank topped the chart with a growth rate of over 137 per cent in the staff cost followed by ICICI Bank with 46.76 per cent.
"PSUs were the exception in the pack, recording an alarming decline rate of 18.57 per cent. The similar trend was noticed in the staff cost calculated on the yearly basis, there was a decline of over two per cent," the study said.