PwC report: Indian companies get a 15-% net return on employees
April, 20th 2011
Indian firms on an average make a net profit of Rs15 on every Rs100 spent on an employee while they make a gross profit of Rs25 on each Rs100 earned by an employee, according to a report by Pricewaterhouse Cooper's (PwC).
The PwC report, which tries to measure the effectiveness of human capital, says Indian companies on an average pay a salary of Rs4.8 lakh to each of their employee while they get back an average Rs6 lakh from each of them.
PricewaterhouseCoopers assesses profit per employee or the human capital return ratio on investment at 1.79 for organisations across the country.
Across industry sectors, engineering and manufacturing account for the highest rates of revenue and profits per employee followed by fast moving consumer goods (FMCG) and pharmaceutical sectors, the report says.
The report, which is based on a survey of 37 firms across all sectors, states that organisations make an investment of Rs7,000 on education and development per employee.
For organisations with higher revenue base, the cost per employee is 1.3 times higher but their profit per employee is also 1.4 times higher compared with low revenue companies.
According to the report, Indian organisations on an average spend around Rs25,500 per employee on hiring charges with FMCG and other unclassified sectors spending more than double the least cost businesses.
In terms of retaining talent, engineering and manufacturing sector is on the top while information technology and information technology enabled services (IT/ITeS) sector remains the largest employer.