IT services companies' salary costs growing faster than revenues

The six IT services firms, on average, earned net sales of around Rs 38 lakh per employee in FY22, up from Rs 33.5 lakh in FY17 and Rs 37.3 lakh in FY20

There has been a surge in hiring and revenue growth in IT services companies in recent years, but the industry’s earnings are not keeping pace with the rising employee costs.

The result has been a steady decline in margins and subpar growth in profits.

The analysis is based on the annual finances of the top six IT services companies: Tata Consultancy Services, Infosys, Wipro, HCL Technologies, Tech Mahindra, and Mindtree.

Over the last five years, the IT companies’ average salary and wage costs per employee are up 19.7 per cent compared to a 13.6 per cent rise in net sales