in a Dynamic Environment - Tata Consultancy Services

76
Annual Report 2008-09
� on-site services 51.19% (53.87% in fiscal 2008)
� services from global and regional delivery centers
4.59% (4.21% in fiscal 2008).
Expenditure
Employee costs and overseas business expenses
The consolidated ‘Total employee costs’ for fiscal 2009
was Rs.14,473.86 crore (Rs.11,411.05 crore in fiscal 2008).
Employee costs as a percentage of revenues was 52.04%
in fiscal 2009 (50.45% in fiscal 2008).
This increase of 1.59% as a percentage of revenues is
attributable primarily to:
� increase in headcount
� increase in compensation package, particularly in
India
� effect of exchange variation for foreign currency
allowances paid to employees deployed at various
overseas locations
� increased contributions to retirement funds.
Utilisation of manpower resources including trainees was
69.40% as at March 31, 2009 (75.80% as at March 31,
2008). The utilisation excluding trainees was 79.70% as
at March 31, 2009 (79.10% as at March 31, 2008).
Overseas business expenses (other than employee
allowances paid overseas)
Overseas business expenses (other than employee
allowances paid overseas) increased from Rs.438.42 crore
in fiscal 2008 to Rs.460.07 crore in fiscal 2009. As a
percentage of revenues these expenses decreased from
1.94% in fiscal 2008 to 1.65% in fiscal 2009. Overseas
travel which constituted the largest component, increased
from Rs.274.10 crore in fiscal 2008 (1.21% of revenues)
to Rs.303.87 crore in fiscal 2009 (1.09% of revenues). This
reduction in travel related costs as a percentage of
revenues of 0.12% is primarily due to controls put in place
and increased utilization of videoconferencing and Voice
Over Internet Protocol (VOIP) facilities.
Services rendered by business associates and others
Expenses on business associates increased from
Rs.850.49 crore in fiscal 2008 to Rs.1,108.71 crore in fiscal
2009. As a percentage of revenues, these expenses
increased from 3.76% in fiscal 2008 to 3.99% in fiscal
2009. The increase of 0.23% is attributable to the need
for hiring the services of professionals with required skill
sets, not available within the Company. The management
conducts periodic reviews of the need for these associates
and the availability of the required skill sets within the
Company and manages these costs appropriately.
Other operating expenses
Nature of expenses For the year For the year
ended ended
March 31, 2009 March 31, 2008
Rs. crore % of Rs. crore % of
revenues revenues
Software, hardware
and material costs 1,031.22 3.71 1,068.26 4.72
Software licenses 423.51 1.52 466.23 2.06
Communication
Travelling and
390.33 1.40 308.42 1.36
conveyance 408.64 1.47 419.45 1.85
Rent
Legal and
595.89 2.14 423.85 1.87
professional
Repairs and
256.63 0.92 198.33 0.88
maintenance 176.53 0.63 145.53 0.64
Electricity
Recruitment and
196.23 0.71 158.22 0.70
training 120.99 0.44 173.03 0.76
Others 1,000.47 3.60 846.87 3.76
Total 4,600.44 16.54 4,208.19 18.60
Other operating expenses have increased from
Rs.4,208.19 crore in fiscal 2008 to Rs.4,600.44 crore in
fiscal 2009. As a percentage of revenues, these expenses
decreased from 18.60% in fiscal 2008 to 16.54% in fiscal
2009, primarily due to:
� reduction in the cost of software, hardware and
material procured for rendering systems integration
projects by 1.02%
� reduction in cost of software licenses procured by
0.54%
� reduction in recruitment and training costs by 0.32%
� reduction in travel and conveyance costs by 0.38%
� reduction in ‘other expenses’ by 0.16%.
The reductions in the above items of expenses are results
of cost control measures taken by the Company.
However, rent costs as a percentage of revenues went up
from 1.87% in fiscal 2008 to 2.14% in fiscal 2009 mainly
due to requirement of additional space commensurate
with growth of business.
Other income
Consolidated ‘other income’ in fiscal 2008 was a gain of
Rs.728.29 crore, which in fiscal 2009 was a loss of
Rs.426.99 crore.