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Softwares cos see downtrend in staff costs

Raja Simhan T.E.

CHENNAI, Feb. 12

THE spending on staff by top software firms in the country has come down sharply during the quarter ended December 31, 2001, compared to the previous quarter. This could be attributed to salary cuts across the board in many companies and onsite projects getting converted to offshore, says a city-based analyst.

Top software companies, however, spent more on staff during the quarter ending December 31, 2001, compared to the same period last year. This was despite the fact that the recession in the sector was at its peak during the last quarter, and the companies were cutting down unnecessary expenses. Figures collated by Business Line from the selected software firms (in terms of revenues) show that 11 companies spent less during the quarter ending December 31, 2001, compared to the previous quarter, while the rest have increased their expenditure in the said period.

However, compared to the quarter ended December 31, 2000, nine companies have increased their spending during the same period in 2001, with the rest reducing their spending.

The leader, Infosys, increased marginally its staff cost to Rs 287.71 crore (Rs 199.64 crore) from Rs 277.99 crore the previous quarter. Polaris' staff cost increased to Rs 40.76 crore during quarter ended December 31, 2001 (Rs 40.90 crore), compared to Rs 36.23 crore the previous quarter.

The staff cost for HCL Infosystems during quarter ended December 31, 2001 came down to Rs 21.62 crore (Rs 24.60 crore), as against Rs 22.83 crore the previous quarter, while for HCL Technologies, the staff cost reduced to Rs 43.24 crore (Rs 29.24 crore) compared to Rs 43.81 crore the previous quarter. Pentamedia's staff cost reduced to RS 2.57 crore (Rs 12.25 crore) compared to Rs 4.16 crore the previous quarter.

NIIT's staff cost reduced to Rs 25.46 crore (Rs 26.87 crore), compared to Rs 27.90 crore the previous quarter.

Says another analyst, it is interesting to note that but for three or four companies including SSI, the rest have increased their staff strength, but the staff cost came down during the last quarter. One of the reasons for reduced staff cost could be that since onsite projects are getting converted to offshore, software firms are now paying in Indian rupees, compared to dollars.

Interestingly, Satyam Computers' staff strength came down to 8311 by the quarter ended December 31, 2001, compared 8397 the previous quarter. However, the staff cost during the quarter ending December 31, 2001 increased to Rs 201.94 crore (Rs 134.37 crore), as against Rs 177.70 crore the previous quarter.

Meanwhile, for seven companies, out of the top ten, staff cost as a percentage of total sales increased in December quarter (DQ) 2001 over DQ2000. It was almost the same during DQ2001, compared to September quarter (SQ) 2001, with six companies, out of the ten, showing an increase in staff cost as a percentage of total sales.

Among the top ten, Mascot Systems led the chart with its staff cost as a percentage of total sales increasing to 67.31 per cent in DQ2001, compared to 58.28 per cent in DQ2000 and 69.05 per cent in the September quarter (SQ) 2001. Polaris was next with 57.59 per cent in DQ01, 56.01 per cent in DQ00 and 52.34 per cent in SQ01.

For Infosys, the staff cost as a percentage of total sales was 43.53 per cent in DQ01, compared to 36.19 per cent in DQ00 and 42.74 per cent in SQ01. For Satyam Computers the staff cost as a percentage of total sales reduced to 46.34 per cent in DQ01, compared to 60 per cent in DQ00, while it was 41.65 per cent in SQ01.

Staff cost as a percentage of total sales was in single digits for HCL Infosystems and Pentamedia Graphics. For HCL Infosystems, the percentage was 7.95 in DQ01, compared to 8.69 per cent in DQ00 and 9.60 per cent in SQ01. For Pentamedia, it was 2.13 per cent in DQ01, compared to 7.59 per cent in DQ00 and 4.16 per cent in SQ01.

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