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BENGALURU: HCLTech, in its recent investor presentation, said that employee costs as a percentage of revenue are higher than pre-pandemic levels.
In FY24, employee benefit cost was Rs 62,480 crore, which is 56.8% of the revenue. This is up from Rs 55,280 crore, which was 54.5% of the revenue in the year-ago period.
There has been a significant increase compared to the year immediately preceding the pandemic (2019-20) when employee benefit costs, excluding contractors, were 49.4% of the revenue.In the financial year that ended in March 2020, employee costs were Rs 34,928 crore.
Meanwhile, the firm has said that the increase in employee costs was due to an increased employee count at on-site locations. However, the exact mix of on-site and offshore employees has not been revealed by the firm.
“Onsite percentage increased due to acquisitions and taking over people as part of large cost take-out deals. Second is that fresher hiring remained subdued last year. These two reasons contributed to higher employee cost as a percentage of revenue,” Pareekh Jain, CEO and lead analyst at Pareekh Consulting, said.
Mrinal Rai, principal analyst at ISG, said that with an increasing focus on enabling clients to make the best use of the latest innovative technologies, there is also a focus on enhancing these professional services skills. These can also contribute to increasing the cost of resources, he said. This comes at a time when HCLTech, along with its peers, is trying to cut costs and even moderate appraisals, which are in single digits for most leading IT services firms. For HCLTech, the average salary increase for employees has been 3.4% for 2023-24 – among the lowest in a top IT services firms.
In FY24, employee benefit cost was Rs 62,480 crore, which is 56.8% of the revenue. This is up from Rs 55,280 crore, which was 54.5% of the revenue in the year-ago period.
There has been a significant increase compared to the year immediately preceding the pandemic (2019-20) when employee benefit costs, excluding contractors, were 49.4% of the revenue.In the financial year that ended in March 2020, employee costs were Rs 34,928 crore.
Meanwhile, the firm has said that the increase in employee costs was due to an increased employee count at on-site locations. However, the exact mix of on-site and offshore employees has not been revealed by the firm.
“Onsite percentage increased due to acquisitions and taking over people as part of large cost take-out deals. Second is that fresher hiring remained subdued last year. These two reasons contributed to higher employee cost as a percentage of revenue,” Pareekh Jain, CEO and lead analyst at Pareekh Consulting, said.
Mrinal Rai, principal analyst at ISG, said that with an increasing focus on enabling clients to make the best use of the latest innovative technologies, there is also a focus on enhancing these professional services skills. These can also contribute to increasing the cost of resources, he said. This comes at a time when HCLTech, along with its peers, is trying to cut costs and even moderate appraisals, which are in single digits for most leading IT services firms. For HCLTech, the average salary increase for employees has been 3.4% for 2023-24 – among the lowest in a top IT services firms.
