Glossarytaught in M5.06
Revenue per employee
Also called revenue productivity, per capita revenue.
Revenue divided by headcount. The productivity measure for a services business.
A firm with ₹1,200 crore of revenue and 42,000 employees generates about ₹2.86 lakh per person.
Rising productivity means the mix is shifting toward higher-value work, or that automation is doing part of what people used to do. Flat productivity with headcount growth means the business is scaling by adding bodies, which caps the margin permanently.
If an information technology services firm has changed its model, this line moving is the clearest sign of it.