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Indian firms make profit of Rs 6 Lakh per employee

Tuesday, 19 April 2011, 11:16 Hrs   |    32 Comments
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Indian firms make profit of Rs 6 Lakh per employee
New Delhi:Indian Companies pay a salary of Rs 4.8 lakh to each of their employee on an average, but earn a profit of Rs 6 lakh per employee in return, says a new survey.

According to a study by Pricewaterhouse Coopers (PwC) -- Measuring Human Capital - Driving Business Results -- organisations in India pay an average remuneration of Rs 4.8 lakh and earn Rs 6 lakh of profit per employee, which makes the human capital return ratio on investment to 1.79 for organisations in the country.

Besides, companies make an investment of Rs 7,000 on learning and development (L&D) per employee.

It further said that Indian companies make a pure profit of Rs 15 from every Rs 100-worth revenue generated by their each employee.
Source: PTI
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Reader's comments(32)
1: Dear Sir,
Tks,Ram Pratap Gupta
Posted by:Ram Pratap Gupta - 22 Apr, 2011
2: PWC is run by Indians with vested interest of its origin in USA.Its another Anderson which has been shut down on Enron scam and the doors are getting ready to shut down for PWC also.....................unless they mend their ways of working drastically for good.The Big s have become Big 4 and now getting ready to become Big 3..............
Posted by:J.Kannan - 20 Apr, 2011
3: PWC in India is run by INDIANS. Govt. in India is run by INDIANS. Any touchpoint with an Indian, there is lying and cheating -- all with money at the root.
Posted by:raj - 20 Apr, 2011
4: I do totally agree with Mr. Sultan on PWC issue and their COP to work in India should be CANCELLED as they are unfit to work in India with their unethical practice and code of conduct.

Posted by:J.Kannan - 20 Apr, 2011
PWC in India is run by INDIANS. Govt. in India is run by INDIANS. Any touchpoint with an Indian, there is lying and cheating -- all with money at the root.
raj Replied to: J.Kannan - 20 Apr, 2011
u r speaking/using in whatever languages that must be belongs to your state/country. Therefore, every activities/works/functions/observations or any other suitable/related words u use, those are all belongs to concern state's language. so I am not agree with your comments. because all are not equal.

I mean to say whatever yr activities/nature/source of nature/way of thinking/style of talking/thinking etc. are only belongs to your mentality not from others.
sridhar Replied to: raj - 30 Apr, 2011
7: My Dear Rajeevji,
I am not in Government service but I am in governance in Pvt. Sector for the past over three decades still going strong at my middle 60s.

Posted by:J.Kannan - 20 Apr, 2011
8: I dont know exactly how much profit that indian IT companies make from employees.But, I can say that its huge.I work for an organization which speaks more about values they recruited me from BPO and asked to work for IT.But getting a BPO salary ,with the client they are billing me as IT employee...So, when I compare my pay vth my fellow IT pals its not even 40% of them.

It means that they are getting huge margins by implementing this plan.
Posted by:Remo - 20 Apr, 2011
9: First thing is that author has not clear that its after paying 4.8 lacs salary or not.... i presume after paying salary company is making Rs.6.00 lacs per employee.
Second- PWC survey should not be taken in account as they havent done ethical business in india... infact their license to do business in India should be taken off
Third. Salary shown are on average means lower people who generate more profit are getting less salary and general manager and above draws most of thier gap between earning- salary
Fourth.Company submitting such survey should arrange database on thier website for confirmation purpose
Posted by:Sultan - 20 Apr, 2011
10: Dear Mr. Thakur,

The TRUTH IS ALWAYS BITTER and its MORE BITTER when revealed OPENLY. Do not ever compare Govt. Sector with Private Sector as they are far apart in admin and management. Its the name of the organisation that matters and not individual(s). here it is pretty clear and evident that PWC has earned a indelible BLCK SCAR because of their direct involvement with the SCAM and now that company has no name and fame. Are You a part of PWC or have they hired you to work.then why its itching for you when I come out with facts. Dear Cool down and if you are with PWC better look out for alternative assignment.

I shall reiterate that PWC is an embodiment of unethical practice and misconduct......What else you will describe that happened to Satahyam if not "SCAM" and SCAR.You will never find an answer to this Billion Dollar Question My dear friend.

Posted by:J.Kannan - 19 Apr, 2011
RAJEEV BUNDELA Replied to: J.Kannan - 20 Apr, 2011
12: I think this 15% profit taking by companies is pretty normal.In US and all developed countries it is minimum 20%. Otherwise how will they grow and provide employment for more. We should be happy that. One of my directors was saying doing business ethically itself is so good that the owner is giving life to the employee as well as many indirectly dependent on him like milk vendor , vegetable vendor etc .
Posted by:Sreedhar Hiriyur - 19 Apr, 2011
13: The report is too short and deserves coverage in more detail.
Can we expect more details on the mode of survey and statistical concepts used
Posted by:P K Mis - 19 Apr, 2011
14: So what is there to be proud of? India is one of the most CORRUPT countries in the world and they do not even know it because one will have to live in other countries to appreciate how corrupted India is. By the way, where are all the profits ending up? Real Estate? For sure, real estate prices in India is ridiculously high compared to the most developed countries.
Posted by:AnandaVelu - 19 Apr, 2011
So true dude...
Arun Replied to: AnandaVelu - 19 Apr, 2011
Hey - talking about corruption - it is same every where and the western world is no different. The only difference is style of corruption. As for the companies making money off their emp. it is the same here. Did you forget the Indian consulting companies here who are ripping people they sponsor.
asht Replied to: Arun - 20 Apr, 2011
i m with u
RAJEEV BUNDELA Replied to: asht - 20 Apr, 2011
18: This speaks of money spent on human resource and what about the other investments and expenses on various other resources they mobilise in the process. After all that is considered then only we can comment wether a company is exploiting or not
Posted by:B. P. Kamalkumar - 19 Apr, 2011
19: The ratio of profit gained per employee to the CTC per employee should always less than 1 but its analyzed to be 1.79. This purely states that almost every employee are exploited in the service industry as well as the manf.
Posted by:deepak - 19 Apr, 2011
No, For a business to be profitable, it should always be greater than 1. So 1.79 is OK.
Sushil Garg Replied to: deepak - 19 Apr, 2011
Sushil: Deepak is right. Report is talking of profit not of earning. Means companies are giving 4.8 but saving 6 lakhs.
As profit comes after deducting all the expenses including salary,premises,light, transportation etc. And as per standard it should be less than 1.Here problem is appropriate compensation.
Pranav Replied to: Sushil Garg - 20 Apr, 2011
we are exploited because we let them to do the time of joining employer will made us to accept his all clauses while handing over the offer letter and we only look after the nearest profit of our interest rather than faraway losses.

Think about those employees who don't even paid their PF Amounts and Medical as companies do not provide it to them to evade taxes. Thinks about no. of Working hours, as we Indians feel proud to work for long hours. Our life only revolves on a 3x3 cube desktop and have drinks in the best bar on Friday night. Its not only Govt but Corporate are the real corrupt.
Vicky Replied to: deepak - 19 Apr, 2011
23: It is fact if they will not earn form us then why should they keep us they will kick away the person which is not benefited to them .
Posted by:Juhi - 19 Apr, 2011
But there has to be be fair profit which is less then 1%.
Ravikumar Replied to: Juhi - 20 Apr, 2011
25: When this exercise is performed by PWC, I have my doubts on its integrity and genuinity as they are the company behind RAMALINGARAJA SCAM (SATHYAM) and a party and partner to the scam..........JK
Posted by:J.Kannan - 19 Apr, 2011
Mr. JK,
I am not sure if you are aware of who PWC is? Just because one person or a small group in PWC did what they were forced to do, doesnt mean that every other work of PWC becomes questionable. By the way SATYAM's case was not a scam? Mr. Raju did not swallow crores of ruppees like the Telecom Minister.
Sorry, didnt mean no disrespect. But i do not agree with your ignorance to the fact.
Anupam Thakur Replied to: J.Kannan - 19 Apr, 2011
do u think PWC is not responsible to disclose the facts behind MR.ramalingaraju's SATYAM fruad, as an auditor of that esteemed corporation.
satya Replied to: Anupam Thakur - 19 Apr, 2011
28: Profits at what cost? Have they provided excellent products and services that customers love? Have they treated their employees well by rewarding in a fair manner and in providing a safe/comfortable work environment?

A fixation on money/profits is not new in India. In fact, it is the root cause for us being the most corrupt people on the planet.
Posted by:raj - 19 Apr, 2011
29: Very interesting!
As a OD trainer, one needs to correlate behavioral changes ( non measurable) into tangible output (profits - measurable).This, in turn, is related to Job Evaluation and Wage Fixation, which in turn needs to be linked to the "profit norms" expected of the profile.
Do we have industrywise figures?
I suppose the HCCR is of higher order for manufacturing sector for two reasons: they are paid relatively lower compared to service sector and also tangible output is easy to scale up to higher profits, keeping inputs constant.
Posted by:Venkat S Iyer - 19 Apr, 2011
Hey venket,if u get this .Pls respond .Tht w'd be kind of
Sujith Paul Replied to: Venkat S Iyer - 19 Apr, 2011
31: Its written very generically, I think there is not much material to substantiate the matter.
Posted by:Chinmaya Sn - 19 Apr, 2011
32: A 20% profit margin is what every placement agency charges for consultants, contractors, or full time employees in North America. These companies are providing resources, taking some responsibilities, liabilities, and risks while providing semi-stable employment to many - this pure staff augmentation and the profit margins are absolutely in line - there is no surprise here!
Posted by:The idiot - 19 Apr, 2011