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The employees seem to be feeling the heat of deceleration in economic growth and resultant fall in corporate profitability across majority of the sectors. An analysis of the expenses of the top 200 listed companies shows that the growth in employee costs for the first nine months of this fiscal months continues to remain muted.
The aggregate employee costs for the first nine months of fiscal 2014 has seen sharp 18.38% jump compared with 14.66% rise in the previous fiscal, but the rise is still lower than 20%-plus rise seen in fiscal 2010.
Though the aggregate data seems to suggest that employees would have got better compensation than last year, the rise in employee costs has been primarily on account of addition in workforce at select organisations rather than a sharp rise in individuals salary.
Rajeev Dubey, president group HR, corporate services and the aftermarket sector at Mahindra & Mahindra, says that hiring in his company has been need-based against business critical positions with a long-term impact.
At Mahindra & Mahindra, average increment for executives in the last three years has been about 13% while for workers it has been around 6% to 7%.
A closer look at the data for BSE 200 companies reveals that the 18.38% rise in employee costs has been due to large recruitment drive in banks (SBI) and two information technology firms over last one year. Also exceptional one-time provisions-related to employee benefits at NTPC, SAIL and SBI has led to employee costs rising faster so far this fiscal.
While Sate Bank of India has seen its employee costs so far this fiscal increase by R4,457 crore on year-on-year basis, primarily due to pension and wage hike provisioning, TCS and Tech Mahindra, too, individually reported nearly R3,500- crore jump in employee costs due to recruitment of freshers.
Tech Mahindra has been hiring aggressively in last two quarters taking the head count of those having less than three years experience to 33% of the overall workforce.
Similarly, Tata Consultancy Services has seen gross addition of 41,000 employees (including 23,000 fresh engineering graduates) in the first nine months of 2013-14, taking its head count as end of Q3FY14 to 290,713 employees.
From an overall human resources point of view, we are maintaining our retention levels pretty high, attrition is at 10.9%. The kind of initiatives that we have taken and the overall business environment are definitely helping