This exceeds the standard 40-hour workweek. Many employees are forced to work long hours to meet project deadlines. Experts believe the industry’s focus on counting hours rather than measuring productivity, infrastructure challenges, long commutes and work-related stress negatively impact employee productivity in India.
Over the last five financial years, productivity per rupee spent on compensation to each employee has remained stagnant. Data from Xpheno shows that for every Rs 1 spent on talent costs, revenue returns have remained stable at Rs 1.8-1.9. Despite growth in revenues, the persistent 1:1.8 ratio of people costs to revenue productivity indicates a parallel increase in people costs. This finding is supported by data from annual reports of top IT companies like TCS, Infosys, HCLTech, Wipro, TechMahindra, LTIMindTree and Mphasis. Per-capita productivity in Indian IT companies is measured in terms of the ratio of people costs to revenues. The workforce has remained almost stable over the four financial periods, according to Prasad MS, head of workforce research at Bengaluru-based recruitment firm Xpheno. He said that despite digitalization, AI and automation initiatives and investments, there has been no significant increase in productivity.
Revenue per employee or revenue generated per employee is a common way to assess the productivity of the IT industry. However, simply counting hours worked does not necessarily reflect productive work. Aditya, a software developer, highlighted that working for long periods of time on non-reportable tasks or tasks that can be done with muscle memory can lead to fatigue and slow down problem solving.
On a five-year compound annual growth rate (CAGR) basis, TCS, Wipro and HCLTech saw a decline of 3.8-11% in total revenue per employee. On the other hand, Infosys and TechMahindra showed growth of 2.6% and 5.6% respectively.
Krishna Vij, business head of IT staffing at recruitment services firm TeamLease Digital, acknowledged that industry productivity is relatively low due to significant employee costs, but there are signs of improvement. He said that despite reduced hiring and cautious spending during the recent economic downturn, higher employee utilization has boosted total revenues, leading to increased productivity per employee.
Salary costs in major IT companies were to be 50-54% of their total expenses in 2023, which is higher than in previous years.
According to data from TeamLease Digital, the Indian IT industry also faces challenges in maintaining work-life balance, with 58% of the workforce reporting a poor work-life balance, compared to the global average of 40%. More than. This comes at a time when the sector is experiencing slow growth, resulting in fewer new hires and lower salary increases.
To create a more balanced and productive workforce, the technology sector needs to move beyond vanity metrics like the number of hours worked. Changing the cultural mindset will be important in achieving this goal, said Vij of TeamLease Digital.
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