Tuesday, April 19, 2011

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.

"With India being the fastest growing economy, organisations that would maximise their human capital contribution to business performance, would be the ones to best leverage the positive economic environment," PwC India Leader People and Change practice Sankar Ramamurthy said.
Among sectors, engineering and manufacturing generate the most revenue and profits per employee followed by fast moving consumer goods (FMCG) and pharmaceutical space.

Moreover, organisations with higher revenue base incur 1.3 times higher cost per employee but also earn 1.4 times higher profit per employee organisations compared with lower revenue base companies.
The report, which is based on a survey of 37 firms across different sectors noted that Indian organisations spend about Rs 25,500 per hire on an average.

However, FMCG and other unclassified sectors spend more than double the amount towards their recruitment. This could be because of the high cost of their recruitment teams.
The report further said that information technology and information technology enabled services (IT/ITeS) sector recruits the highest number of graduates, but when it comes to retaining entry level talent, engineering and manufacturing sector leads the industry.

IT/ITeS, which has the lowest spend on L&D per employee, witness the highest termination and resignation rate as well.

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