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Cost Cutting

In a bid to counter the affects of recession, firms are vehemently slashing their employee costs, with one in every three companies witnessing a year-on-year decline in their wage bills for the quarter ended March 2009. On a sequential basis, the employee costs for March 2009 have declined by about seven percent as compared to the December 2008 quarter.

The findings based on a study of the quarterly results of 150 companies in the BSE 500 also maintains that one-third of the companies have seen employee costs increase by over 25 percent during this period, reports Business Line. The hikes, in the post-March 2008 period, were given in the earlier quarters of June or September 2008, when the effects of slowdown were not apparent in the financial performance of companies. The employee expense for the firms was eight percent higher in the March 2009 quarter over similar costs in March 2008.

The study do not include public sector companies (mainly banks in the above universe), that have made provisions under the new wage bill. It also excludes IT companies whose employee expense also spills over into the selling and general administrative expense category. Sectors such as consumer goods and cement that have managed reasonable growth over the past year are the ones that have seen an increase in personnel expenses on a year-on-year basis. Technology companies such as Bartronics and Educomp Solutions that are in niche markets also comfortably hiked their wage bills.

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