Top five private Indian firms add fewest employees in three years
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Mumbai: The top-five private companies by market capitalization added 578,804 employees in the year ended 31 March, the fewest in 3 years, as companies focused on improving productivity of its existing employees amid a slowdown in the economy.
Tata Consultancy Services Ltd (TCS), Reliance Industries Ltd (RIL), ITC Ltd, HDFC Bank Ltd and Infosys Ltd, saw their combined headcount rise 5% from the previous year, according to data collated from the annual reports of each of the companies.
A bulk of the increase came from the two IT giants, with TCS seeing its employee count rise by 9% and Infosys seeing a 2.4% growth in the headcount. Headcount at RIL grew by 1.4%. In contrast, HDFC Bank saw a 1.3% decline in its employee base, while the number of employees at ITC remained little changed.
“Hiring was not a priority for Indian Inc,” said Sandeep Chaudhary, chief executive of Aon Hewitt India, a human resources consulting firm. “Companies were focused on retention and productivity enhancement.”
Even for the IT companies, which are among the largest white collar job generators in the country, the rate of employee addition has slowed over the last three years. For instance, at TCS, the largest company by market capitalization, the headcount grew by 20% in fiscal 2012, however, in fiscal 2014 that slowed to 9%.
IT sector along with many other sectors are reducing their reliance on employee addition for generating revenues, explained consultants.
“Many organizations are moving away from the linear co-relation between revenue and headcount. Ever since 2008, the organizations are looking at revenue per employee very closely, and they will be careful about adding headcount even when times are good,” says Rajiv Krishnan, partner and leader (people and organization) at audit and consulting firm, EY.
Along with headcount, the increase in salaries and wages reported by the top five companies cumulatively was also the lowest in three years, although it was in line with profit performance.Rs.69,059.48 crore for fiscal 2014, the cumulative salary (includes bonus, excludes benefits like gratuity) rose by 20% to Rs.56,194.76 crore.
RIL, however, reported a 2% drop in its salaries and wages, even though its profits grew by 5% in fiscal 2014.
In the last three years, salary hikes have been on the decline, and the average raises were 10% this year, versus the 10.2% last year, according to Anandorup Ghose, rewards consulting practice leader at Aon Hewitt India. Even so, absolute salary hikes in India remain among the highest in the world due to high inflation in the country. “Salaries in India are strongly linked to inflation. In Western countries, companies have low-single digit salary hikes, because even their inflation is low,” pointed out Krishnan of EY.
ITC was an outlier on this count. The company reported a 20% increase in salaries and wages in fiscal 2014 because of increased competition for talent within the sector.
“At ITC, recruitment strategy is based on the growth and expansion plans of our various businesses. Compensation is aggressively benchmarked to industry with an attempt to not only attract but to retain the best talent,” said a company spokesperson in response to a query from Mint.
Nikita Abhyankar contributed to this report.