India Inc’s wage bill growth halves in Q3, close to decadal lows

India Inc’s wage bill growth halves in Q3, close to decadal lows
Source: Pixabay
  • The IT sector’s wage bill growth fell to 3% in Q3 FY24 from 22% in the same quarter last year.
  • Sectors like FMCG, metals, power, cement, pharma, chemicals also saw single digit wage growth in Q3.
  • The BFSI sector remained an outlier as its wage bill growth was strong at 22% in Q3.
The age of sharp salary hikes seems to be over. India’s top 500 listed private companies’ wage growth has moderated to 9% year on year in the third quarter of FY24. Including public sector enterprises, BSE500’s wage inflation slowed to 11%. In the same quarter last year, it was at 20%, says a report by Nuvama Institutional Equities.

“The worrying aspect of wage bill growth is the sharper moderation in private sector wage bill growth. Private sector wage bill growth has moderated to 9% YoY—a decadal-low (ex-Covid). Such a sharp slowdown, if it persists, could weigh on consumption, particularly the premium segment,” says Nuvama’s Q3FY24 Earnings Review.

Unsurprisingly, the IT sector saw the most moderation, as its wage bill growth in Q3 at just 3% year on year. In the corresponding quarter last year, it was at 22%.

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“For IT companies, headcount is now contracting year on year. While this could bottom out, sustained recovery is needed for its revival,” said Nuvama. As per Xpheno, the top eight IT services firms in India reduced their headcount by 75,000 in the last one year.

Sectors like FMCG, metals & mining, power, cement, pharma, chemicals saw single digit wage growth. “Wage bill growth is moderating in most other spaces as well. For most sectors, wage bill growth is below the levels seen a year ago,” said Nuvama.


On the other hand, sectors like auto, consumer services, durables and real estate sector saw double digit wage bill growth in the quarter.

BFSI sector remains an outlier

The only sector which saw strong wage bill growth in Q3 is banking, financial services and insurance sector; which came in at 22%. The average annual attrition in the sector is still high, at around 30-35%. In private banks, it’s much more pronounced at 40-45%.

While private sector banks saw their wage bill go up by 23%, in PSU banks, the growth was at 20%. Financial services, however, saw its wage bill go up by 29%.

Wage bill growth
SectorQ3 FY24Q3 FY23
Metals & Mining4%4%
Consumer services14%24%
Real estate 12%32%
Source: Capitaline, Nuvama Research

Dwindling EBIDTA growth

The Nuvama report also says that in the third quarter, BSE500’s revenue growth remained subdued at 6-7%, similar to what was seen in the first half of FY24. The earnings before interest tax depreciation and amortization (EBIDTA) growth on other hand, dwindled to 10% from 20% seen in the first half.

“This is mainly due to fading input price tailwinds and operating de-leverage. PAT growth, however, held up in high teens. All in all, chinks are developing in profit momentum with EBITDA slowing sharply as margin tailwinds fade while demand fails to recover,” Nuvama said.

Even as the aggregate profit growth held up to 16% YoY in Q3, a weak revenue growth does not spell good news for corporate employees who are hoping for a chunky wage hike.

“Given a weak top line, wage bill growth is likely to remain subdued going ahead as well, potentially weighing on urban consumption,” says Nuvama.