Big Indian IT Companies Spent 63% Of Revenues On Salaries; Rs 3 Lakh Crore Spent On Salaries Alone!
The IT sector in India has seen unprecedented boom over the last five years. However, this strains even the IT behemoths. Now, you will ask why?
The answer lies in the salary expense. As revenues increase, so are salaries, however, salaries seem to eat into more than 50% of the revenue.
Many people are attracted to lucrative jobs and salary hikes given in the largest IT services companies like TCS, Infosys and Wipro, among others.
62% Of Revenue Goes into Salaries For Top IT Companies
As per the reports, it is believed that in FY22 the IT companies pay as much as 62% of their revenue in salaries. When it comes to the salaries and hike, L&T Infotech along with its sister company MindTree was the most generous whereas Tech Mahindra was diagonally opposite to it.
When we look at previous five years, IT companies which includes the likes of TCS, Infosys and Wipro have maintained their salaries outflows at an average of 53-55%. However, it has been the smaller players like L&T Infotech (LTI) and Mindtree shelled out the most, between 60-63%.
Once again, it is none other than HCL Tech and Tech Mahindra (TechM) which have shelled out the least average outflow of just 51%.
Over these five years, Infosys, TechM and Mindtree managed to reduce the ratio of salaries to revenue. On the contrary, companies like TCS, Wipro, HCL Tech and LTI witnessed the increase in higher salary growth when compared to revenue.
Only Few Companies Able to Control Salary Increase
In nutshell, essentially all IT companies saw an increase in the revenues from FY18, however comparatively few of them could prevent the salary expense in a way that it does not affect the margin much.
Typically, a higher growth in salary expenses as compared to the revenue is indicative of the fact that the company paid more money in order to retain the talent or to hire freshers for that matter.
Overall, these 7 IT companies: TCS, Infosys, Wipro, HCL Tech, TechMahindra, LTI, Mindtree earned nearly ?5.5 lakh crore in revenue in FY22 and paid out ?3 lakh crore as salaries.
The same figure for these companies overall the period of past five years stands at, ?22 lakh crore as revenue and ?22 lakh crore as salaries.