IT companies reduce wage bill in Q3: Assocham

NEW DELHI: Hit by appreciating rupee, the major IT companies including Infosys, TCS and Wipro have significantly reduced the growth rate of the wage bill during the third quarter of the fiscal (October-December 2007), a report said.

Assocham in its study Eco Pulse said the IT companies have reduced the wage cost growth rate by half during the third quarter despite 15 per cent increase in the number of employees. IT companies have been trying to minimise the impact of the appreciating rupee by containing the growth of wage bill, it said.

The wage bill of IT companies such as Infosys, Satyam, TCS and Wipro increased by about 22 per cent during October-December 2007 as compared to 45 per cent in the corresponding period in the previous year, it said. These companies, it added, had recruited about 25,000 employees during the period against 21,640 in the same period in 2006-07.

"Thinning margins due to appreciating rupee is putting pressure on the software companies to put a check on the pay package of employees," Assocham President Venugopal Dhoot said.

He said profit growth rate slipped to 12-30 per cent in the third quarter as compared to an impressive growth of 40-50 per cent in the same period last fiscal.

The Assocham study said software behemoth Infosys, along with its subsidiaries, doubled the intake of employees to 11,683 in the third quarter compared to recruitment of 6,062 employees in the corresponding quarter in 2006-07.

The wage bill of Infosys, however, rose by only 21 per cent in third quarter against an increase of 43 per cent in the same period last year, it said.

TCS, on the other hand, also reported a decline of four per cent in the wage cost to Rs 2,000.19 crore in October-December from Rs 2,089.34 crore in the same period last year. The study said recruitment plans of TCS, however, have remained unaltered as it employed 7,522 personnel in the quarter this year compared to 7,835 persons in 2006-07.

Similar trend in wage bill and recruitment was noticed in case of other companies like Wipro and Satyam, Assocham said.

It said Wipro recorded a slowdown in the increment of employee compensation cost to 29 per cent in the third quarter this fiscal from about 46 per cent in the same period last year. Satyam, on the other hand, registered a leap of 43 per cent growth in its employee compensation.