Indian firms' employee cost growth slows down

Bangalore: Following the economic downturn, corporate India's staff cost rose by 11.2 percent during the January-March last fiscal, growing at a lesser pace than the previous three quarters of 2008-09. According to a Reserve Bank of India (RBI) study, the staff cost of 2,549 firms taken for the study had risen by about 20 percent in each of the first three quarters of 2008-09.

With the Indian companies cutting its overall expenditure, the rise in manpower costs was also seized. As the effects of the economic crisis became severe since September-October, the firms were forced to reduce the pace of the total expenditure.

The total business expenses, which grew by over 36 percent in the first two quarters, contracted by 0.5 percent during January-March period. The growth in October-December quarter had slowed to 12.6 percent. On an annual basis, manufacturing firms covered in the study posted 14.7 percent increase on staff costs largely on account of higher pace of expenditure in the first half of 2008-09. Also, in the services sector, IT firms registered a growth of 24.7 percent on staff cost and non-IT companies posted an increase of 23.1 percent.