karthik,
You are working with a FREE compiler. It seems you are learning the old adage "you get what you pay for".
SDCC is developed for LARGE systems and then someone MADE IT WORK for the '51. For that reason, no SDCC library routines will be particularily compact (who need compact on a PC or a UNIX server).

As I stated in a previous post on another subject: "if you want (anything close to) optimum, you need a compiler developed specifically for the '51, not the '51 version of an universal compiler". The '51 is a very different beast from your garden variety processor, just think about what is involved with optimizing for 7 kinds of memory ( Register banks, bit data, data, idata, sfr, xdata, code) as opposed to the PC with one.

Erik