And yet, despite its stark simplicity, theres been a real groundswell of support in recent years for the argument that revenue per employee rpe is one of the most underrated metrics available for assessing business performance in a crowded marketplace. But, that analysis examined revenue per employee that only one point in time. Revenue per employee for contractors, builders, remodelers. This statistic depicts the average annual revenue per employee of professional services within software as a service saas companies. On the other hand this metric is higher in the high tech, low laborintensive companies. Through the use of the revenue per employee ratio, a company can determine efficiency and use that assessment to make adjustments to operations. Revenue per employee has historically been the measuring stick for staffing and employee efficiency within independent insurance agencies. Hence, a comparison of revenue per employee is generally most meaningful among companies within the same industry, and the definition of a high or low ratio should be made with this in mind. What is average revenue per employee for software companies.
May 03, 2019 revenue per employee is a ratio that is calculated as companys revenue divided by the current number of employees. The ranking shows the revenue per employee of major it services vendors worldwide. Aug 24, 20 revenue per employee is a very good one. Analysts often compare revenue per employee of different companies in the same industry to measure produc. The revenue that a company generates over a given period of time divided by the number of employees. Over time, the revenue per employee changes as the startup scales from prerevenue through to seed stage and beyond. Oct 18, 2018 the stage youre in matters a lot for this metric. One recent study in the technology industry software, hardware, it services, etc found that the top 10% of companies ranked by performance had roughly twice the revenues per employee as the average. Notably, there isnt much of a correlation between the revenue per employee and total revenues r2 of 0. What is the typical revenue per employee for a b2b saas.
Mar 28, 20 iei has compiled publicly reported revenue per employee data and averaged it by industry to arrive at the following benchmark figures. What industry has the highest revenue per employee. Analysts at expert market dug through data on the top 100 companies in the world in terms of revenue, and showed us how much each makes per employee. Also public companies which have huge revenues pad this number by having 50100150% of their ftes as contractors, i. Revenue per employee 2017, the softletter benchmark 53. Mar 09, 2015 revenue per employee has historically been the measuring stick for staffing and employee efficiency within independent insurance agencies. The arr per fte metric is not a metric youll use to pilot your business. Tech companies that make the most revenue per employee. Profit per employee therefore focuses companies on intangibleintensive value propositions and, in turn, on talented peoplethose who, with some investment, can produce valuable intangibles. This ratio is most useful when comparing it against other companies in the same. Which companies make the most revenue per employee. Guesstimate of revenue per employee in small company space. Mar 16, 2011 the ranking shows the revenue per employee of major it services vendors worldwide. Industry statistics cover all companies in the united states, both public and private, ranging in size from small businesses to market leaders.
Revenue per employee 2016, executive summary softletter. But revenue per employee should be a staple statistic on any dashboard. How technology can increase your revenue per employee by vin damico, principal damicon, llc this article appears on the website of damicon, llc. Revenue per employee total ranking has deteriorated compare to previous quarter. Lowest revenue per employee in the systems software industry detected in shares of varonis systems vrns, rpd, rht, cvlt, data. Lowest revenue per employee in the systems software industry. Pharmaceutical commercials begin to be more interesting. Revenue per employee financial definition of revenue per employee. Iei has compiled publicly reported revenueperemployee data and averaged it by industry to arrive at the following benchmark figures. The quantitative piece actually has three parts the ratio, the tolerance range, the trend. In depth view into sap revenue per employee annual including historical data from 1995, charts, stats and industry comps.
One way to improve a companys profit per employee is simply to shed lowprofit employees. Revenue per employee is the calculation used to determine how productive employees are in a business. We look at industry averages and some of factors that cause variation in the overall efficiency of employees. This formula indicates how productive each employee is in generating revenues for the company. Labor needs vary from industry to industry, and laborintensive companies will typically have lower revenue per employee ratios than. How software companies revenues per employee stack up. Benchmarking your industry interestingly, smaller firms, which you. Revenue per employee is an absolute figure in terms of a currency. While revenue per employee remained unchanged compare to. Find out whats driving budgets to increase in 2020. This statistic shows the revenue per employee of selected tech companies in 2018. Benchmarking saas startup efficiency with revenue per. The only performance goal youll ever need for hr leaders.
From an industry perspective, the regulated and securityconscious financial services segment and the techforward it services. Guesstimate of revenue per employee in small company space in. However, does revenue per employee translate into bottom line performance. Autodesk inc revenue per employee adsk, sales per employee. In addition to revenue, the industry market analysis shows information on employees, companies, and average firm size. It results from your business performance and is generally used by investors or acquirers to benchmark. Sep 06, 2019 this statistic shows the revenue per employee of selected tech companies in 2018. You should also consider your total salary, wages, payroll taxes, and benefit costs as a percentage of revenue relative. The industry average revenue per employee continues to. The softletter benchmark 53 are all publiclyheld companies and most of our basic business metrics are derived from documents these companies are legally required to provide to investors. Revenue per employee is a measure of how efficiently a particular company is utilizing its employees.
Revenue recognition by industry understanding the challenges and impacts to your business. Revenue per employee benchmarks of billion dollar companies. As jesse hulsing pointed out to me, examining this figure over five years reveals quite a bit about the health of the business. For the past few years, one popular metric in the financial sector has been revenue per employee rpe. Revenue per employee of leading tech companies 2018 statista. Businesses calculate revenue per employee by dividing total revenue by total number of employees. Overall, energy companies led the pack in revenue per employee, followed by healthcare and utilities. Within technology sector 5 other industries have achieved higher revenue per employee. For that matter, some of the service work that i perform is billable to our buyers.
High revenue per employee indicates that a company has found additional ways to obtain more sales from each employee. This is a white paper on guesstimation of per employee revenue in the sme space in the indian it industry. Dec 14, 2010 5 metrics every software ceo should obsess over. In general, the top tech companys revenue per employee is more than the manufacturing companies revenue per employee. This isnt sophisticated math, but ill walk the dog. There are dozens of financial indicators that the industry is improving slowly but steadily, and this report will help firm leaders assess the current conditions and plan for the journey ahead. Rpe is indeed a useful productivity indicator, but several caveats apply.
Companies seek to have the highest possible revenue per employee. From apple to toyota and nestle, weve taken a look into how much revenue companies in the manufacturing industry are making per year against the number of employees they have. For tech companies, we looked at rpe and compound annual growth rate of revenue and employees between 20142017. This was prepared during the process of evaluation of our billing rates to compare our rates with the market standards. Just take your total sales revenue and divide it by your total employees or fulltime equivalents ftes. But whats the right benchmark for electricians, plumbers, remodelers, contractors and builders. Revenue per head in software sammy abdullah medium.
In january 2018, the new revenue recognition standard update no. On average, companies in the energy sector make at least 2x per employee than others. Revenue per employee financial definition of revenue per. Which companies have the highest revenue per employee. Many firms measure revenue per employee, but if youve ever had a great year on the top line and not had much to show for it. I work for a small company, and you better believe that we use revenue per employee to justify each head on the payroll. We note that ferrari has the highest sales per employee with approx. Revenue per employee is one of the most popular financial metric by which to measure a software companys performance. The median headcount of these companies at ipo was 933 with the average. To see the complete softletter revenue per employee 2017 analysis, please subscribe to. Publiclytraded saas companies have an average revenue per.
Putting profit per employee in action for results forbes. Unlike many other industries, if a software company grows at only 20%, it has a. Revenue per employee earlystage companies typically have very low revenue employee. Within technology sector 42 other companies have achieved higher receivable turnover ratio. The chart of the week is a weekly visual capitalist feature on fridays. If a problem is identified on the quantitative side, then qualitative analysis is necessary. Top tech companies revenue per employee business insider. Apr 07, 2020 while i think that the revenue per employee benchmark is an important benchmark for business, it sometimes makes me a little nervous. Revenue per employee total ranking has deteriorated compare to previous. Over time, the revenue per employee changes as the startup scales from pre revenue through to seed stage and beyond. This statistic depicts average annual revenue per employee of professional services within software companies worldwide between 2015 and. At accenture, the employee headcount grew by 12% from 20142017, while revenue increased 5%.
Tableau software inc revenue per employee data, sales per. Netflix was the most effective company, generating over 2. Barclays raimo lenschow and saket kalia take a look at the software sector, investigating average revenue per employee rpe across their coverage, and what it might say about the relative. Companies use the formula total revenuetotal number of employees to determine the revenue per employee. One way of measuring the efficiency of a companys revenue model is to benchmark revenue per employee.
Also public companies which have huge revenues pad this number by having 50100150% of their ftes as. Revenue per employee is less in the industries which are laborintensive. The standard has broad implications and may affect many parts of your organization. Revenue per employee is the ratio of revenue generated per employee of a company on an average. The chart of the week is a weekly visual capitalist feature on fridays the worlds largest companies have many similarities, but the size of their respective org charts is not necessarily one of them. You also realize the way you do it isnt the only way it can or should be done. All of this means revenue per employee isnt a metric to optimize for. The worlds largest companies have many similarities, but the size of their respective org charts is not necessarily one of them. Software companies more profitable and efficient than. How software companies revenues per employee stack up barrons. Whether the goal is to organize the worlds information or to build an algorithm that makes millions of lives easier, pretty much every tech company in existence aims to leverage software in some way to do the types of jobs that would otherwise be impossible or uneconomical for humans to do. Two metrics we use to compare software businesses are revenue per employee. Revenue per employee earlystage companies typically have very low revenueemployee.
Additionally, a companys age can influence its revenue per employee ratio. Revenue per employee have you ever wondered which manufacturing companys employees are generating the most revenue for their business. Calculating revenue per employee by industry information. To see the complete softletter revenue per employee 2017 analysis, please subscribe to softletter. Analysts often compare revenue per employee of different companies in the same industry to measure productivity. A larger increase in hiring than revenue led to a decrease in rpe.
In general, relatively high revenue per employee is a positive sign that suggests the company is finding ways to squeeze more sales out of each of its workers. There is generally a growth in revenue per employee for tech companies. Jun 15, 2017 which companies make the most revenue per employee. Publiclytraded saas companies have an average revenue per employee of. May 23, 2017 the softletter benchmark 53 are all publiclyheld companies and most of our basic business metrics are derived from documents these companies are legally required to provide to investors. Revenue per employee is a ratio that is calculated as companys revenue divided by the current number of employees. Lowest revenue per employee in the systems software. Through the use of the revenueperemployee ratio, a company can determine efficiency and use that assessment to make adjustments to operations. Though this metric varies widely from industry to industry and company to company it nonetheless provides an interesting view. A commonly used measure of management efficiency is revenue per employee.