At Infosys, each employee is worth more than a crore

P Kumar, an Infosys employee helping customers in the US debug their software applications earns some Rs 5 lakh in annual salary, but is worth over Rs 1 crore for India's second biggest software exporter. "I was really not aware of this - now I can at least tell my friends and relatives that I am a crorepati," says Kumar who requested that his first name be not mentioned. 

Each employee at Infosys - India's second biggest tech firm -- is worth over Rs 1 crore, the company said in an additional note filed with regulatory exchanges last month. As India's outsourcing sector continues to grow bigger and more complex, experts and software professionals want these companies to start valuing their staff on their balance sheets. 

"A company's annual report shows the financial parameters. It only looks at the tangible assets, but we also wanted to inform the shareholders about intangible assets. Our employees are our value," S Gopalakrishnan, the CEO and managing director of Infosys, said. "You have to look at several things like the age of the employees, the revenue per employee and the exchange rate," he added. 

With over 2.5 million professionals and nearly $70 billion in revenues, India's top technology firms like Infosys are now valuing their staff in their balance-sheets , reinforcing the need to highlight the worth of thousands of software engineers, who otherwise are hidden behind quarterly earnings and other announcements. 

The only Indian tech firm to value its 'intangible assets', Infosys has valued each of its 1,30,000 lakh employees based on their earning potentials till retirement. Intangible assets are nonmonetary assets that are created through time and effort like brand value, intellectual property and human capital. 

While Infosys started this practice in 1996, other companies that have done this in the past includeBharat Heavy Electricals , Steel Authority of India and Satyam Computers. Infosys follows the popular Lev & Schwartz (L&S) model for evaluating how much the employees would earn for the company based on present earnings, if they stayed till the retirement age of 60. This is after discounting the estimated earnings at the employee's cost of capital. 

For the IT industry, the value of employees gains importance as earnings are based on the per-employee perhour billing model and profitability is linked to the value added by the workforce. "Our core corporate assets walk out every evening. It is our duty to make sure that these assets return in the morning mentally and physically enthusiastic and energetic," NR Narayana Murthy , Infosys founder and chief mentor, said in an earlier annual report. 

The six-billion dollar company classifies non tangible assets under human resources, intellectual property and internal and external assets. In its annual report the company states its profitability depends on its ability to leverage the ability of its staff to learn and enhance the reusability of their knowledge and experience. At the end of the last financial year, the company valued its brand at nearly $8.87 billion. 

"There is growing criticism that traditional balance sheets do not take into account intangible factors such as brand, image, customers, employees, patents, to name a few. 'Unreported' or intangible assets are on an average five to 10 times those of the tangible assets.