Money Matters

India is finally shining on the salaried class. With their bottomline and topline surging, corporates are shelling out more to keep employes...

India is finally shining on the salaried class. With their bottomline and topline surging, corporates are shelling out more to keep employess happy.

The salary hike best reflects the mood of the economy. For, an income rise means an increase in purchasing power. More money in the market will in turn fuel growth. A bigger workforce as a result of expansion and new investments also means bigger paychecks.

A study by The Indian Express of the balancesheets of 1,715 BSE-listed companies reveals that their wage bill has risen considerably. The wage bill of the top 100 companies has shot up from Rs 53,207 crore to Rs 58,908.43 crore 8212; a jump of 10.71 per cent. The annual trend here gives a clear indication of quarterly and half-yearly movements.

8220;It8217;s a welcome change for the salaried class, though it will put pressure on bottomlines. The services sector alone has seen a jump of 30-42 per cent rise in salaries,8221; says Partha Rakshit, MD, AC Nielsen ORG-Marg Pvt Ltd.

A case in point is the booming telecom sector. Bharti Tele Venture8217;s salary bill has zoomed to a whopping Rs 490.54 crore in the financial year ended March 2005 from Rs 16.84 crore in 2003-04.

IT firms 8212; which saw a 30-40 per cent rise in wage bills 8212; saw a further hike due to higher competition. Infosys8217; wage bill has shot up 34.50 per cent from Rs 2,362 crore to Rs 3,177 crore while Wipro registered a 37 per cent rise at Rs 2,867 crore. Satyam Computers saw a 49.3 per cent hike.

The impact is more so on small companies, as they work on wafer thin profit margins. Mindteck India has seen its bills rising 116 per cent from Rs 2.92 crore to Rs 6.33 crore. Subex Systems8217; wage bill has jumped 85 per cent from Rs 9.2 crore to Rs 17.05 crore.

Story continues below this ad

Among the biggies, SBI tops the list with its salary bill rising 7.12 per cent from Rs 6,447 crore to Rs 6,907 crore. Reliance has posted a marginal rise of 3.15 per cent from Rs 763 crore to Rs 791 core. ITC8217;s wage bill rose 24.90 per cent to Rs 464.99 crore from Rs 372.28 crore. Pharma major Ranbaxy saw its employee bill jump 33.53 per cent to Rs 311 crore from Rs 232.97 crore.

It8217;s a similar case for small and medium size companies who have to shell out that extra buck to attract and retain talent. 8220;It8217;s a competitive world. Typically, an experienced software engineer now receives an offer letter from one firm and takes it to another company and gets a clean jump of 20-40 per cent over the previous one and then joins the third company on an even higher salary,8221; says Amit Sheth, Managing Director of AurionPro Solution Ltd, an Internet software solution provider.

But some pointed questions remain. Are higher salaries scaring foreign investors? 8220;No, the rise in the salary level will not make India unattractive. We have a large skilled resources pool and are witnessing rapid improvement in productivity. But it is imperative that the industry and the academia work towards increasing the knowledge pool in India to maintain our competitive edge,8221; said Infosys CEO Nandan Nilekani.

And are companies taking the labour factor seriously? 8220;Companies should understand and evaluate the costs-versus-risk equation. Although infrastructure, process, project management and security risks are normal in any external service provider relationship, human capital consistency and legal jurisdiction are not typically included in the due diligence process,8221; said Ian Marriott, Research V-P at Gartner.

Story continues below this ad

That apart, as long as the economy shows good growth, employees can look forward to better wages. 8220;Monetary compensation is still the best incentive for employees in India. With business looking up, there is definitely going to be an increase in demand for talent.We ourselves are increasing our workforce by 130-150 every month,8221; said Manoj Mandavgane, GM, 3i Infotech.

But many big companies have also managed to move against the tide by reducing their wage bill, thanks to attractive voluntary retirement schemes. Public sector steel major SAIL has cut its wage bill by 24.8 per cent and Tata Steel by 11 per cent. FMCG major Hindustan Lever has done the same by 0.44 per cent to Rs 568.32 crore.