In a clear admission that it is facing hard times, India’s largest software exporter Tata Consultancy Services (TCS) said it plans to review the variable component of employees' salaries every quarter in an attempt to cut costs. Variable pay accounts for 20 to 35 per cent of TCS employees' gross salary, depending on their hierarchy.
The company had earlier cut employees' variable pay by around 1.5 per cent in February 2008.
“We are trying to reduce costs. Our largest expenditure -- around 55 per cent of our gross revenue -- is manpower cost and employee salaries. We are not contemplating a pay reduction, but we are reviewing the employee variable pay," CEO and MD S Ramadorai told reporters here today.
All employees, from trainee to the senior-most manager, get variable pay. The total variable component -- which is linked to both the performance of the company as well of the individual — accounts for around 8 per cent of the company's gross revenue.
"We are also increasing employee working hours from 40 hours a week to 45 hours a week, with effect from April 1,” he added.
The company may also defer absorbing nearly 24,500 campus recruits, scheduled to join in June. Their salaries may also be revised, said Ramadorai.
According to analysts, a 10 per cent increase in working hours could add half-a-million billable hours for TCS alone, given that over 55 per cent of the company's contracts were the Time & Material variety.
The Rs 35,000-crore TCS also expects flat or lower Q4 results because its US clients have started pressing the company for a reduction in price ranging from 4 to 15 per cent. "Q4 results will either be the same as the third quarter or may see a dip,” Ramadorai indicated.
The company also plans to delay infrastructure and new projects to save costs. "Capital expenditure of TCS in the next financial year will be less than the Rs 1,400 crore announced for 2008-09,” Ramadorai said.
The company has reportedly laid off over 100 employees in the UK. “A lot of our work is on contract. Also, we retain employees, especially the ones on probation, on performance, and if their performance is not up to the mark, we ask them to leave. Although I am not sure why the employees in the UK were asked to leave, two of the reasons could be that their contracts ended or bad performance. Going forward, a lot of emphasis this year will be on employee efficiency,” Ramadorai said.
“We are also focusing on more offshore projects right now to cope effectively with the recession, by moving more roles and delivery functions to offshore locations such as India,” Ramadorai added.
TCS serves customers such as British Airways, BT and United Utilities in the UK. The company has around 4,800 professionals working at almost 65 customer sites in the UK and Ireland.
“In the last nine months, TCS has hired 30,000 people. For now, we have frozen our lateral hiring and may look at laying off employees if the situation does not improve. Currently, we have around 1,30,000 employees on our pay roll,” Ramadorai added.
Even I want to ask the same as Mr.Khan has asked - What does "We have frozen Lateral hiring" actually mean? There are people who got offer letter and waiting for joining date. Does it mean that TCS will not be hiring any more people until situation gets good which includes the people who received their offer letter? Can anyone clarify me with this?Because one of my close associates has been affected due to this...can someone clarify please
Posted by: SM
March 20 , 2009, 07:32 IST
Hi Manivel, No idea yaar. I too got the offer from TCS. I am 3 years experienced. I left my previous company due to getting the offer at TCS. after coming out of my previous company now TCS is not giving joining date. I have lost my job and not getting joing date at TCS. You can understand how bad my situation is. They are not support to stop the people who have left their company just because of new offer from TCS. Please post any one who could tell that when could they give the joining date for offered people.
That is why they say "Love your work, not your company".
People in India has so far associated TCS and TATA group in general with job security and this is the time to prove it wrong. TCS, especially, was never an employee-friendly company though it is celebrated as the "Best Employer" year after year.
Now people would realise that what they believed as "Working for TATA is like working for India and its growth" isn't worth at all.
Posted by: mathi
June 08 , 2009, 17:33 IST
hi manivel...did u got any response from them?Me too waiting for the joining date for the past 5 months...and without job....
Posted by: Lazybums
March 10 , 2009, 14:11 IST
Yeah, right. I know of people like you who just laze around taking home money for nothing. It won't work any more. Work harder or ship out. I work hard - why should I subsidize you? Get lost Manivel. Your attitude sucks.
What does "We have frozen Lateral hiring" actually mean? There are people who got offer letter and waiting for joining date. Does it mean that TCS will not be hiring any more people until situation gets good which includes the people who received their offer letter? Can anyone clarify me with this?
Clients in the US and else where are looking to cut there IT spending. Now proposing to work for more hours every day while getting the same amount from client may not work as client actually wants reduction in there bill. All this things are marketing gimmicks. Also TCS and TATA in general has a poor record when it comes to rewarding employees. Also many of this companies also talk of things like work-life balance , employee well being ..which suddenly evaporates when there margins are coming under pressure. This companies are still earning more than 1000 croce and not in red yet !!
Hi,
I know its very tough time for both the company as well as employee.
But the decision that u have taken that you will fire few employees and increase the working hours. I want to say two things
1. If you are increasing working hours that means you have work and if you have work then you must getting money for that work then why you are firing employees. First think about those people who helps you get that much business.
2. If you don't have that much work and not getting that much money then u can reduce salary and let them continue their work and give them to work for some innovative idea or about new technology that will help your company as well as your client.
According to me this is the not a good time for all of us then why only employees have to suffer. You should also help them to feel little bit stable.......
Regards,
Biranjan
Posted by: jai
February 27 , 2009, 23:20 IST
Ramadurai is laughing at your comments. He has achieved a lot in hiring. Now he wants to acheive in restructuring. These guys have no hearts man. They live and die for money.
Posted by: SiD
February 27 , 2009, 23:15 IST
This is what every company whose nature of business is US Market driven is doing. Adding up the increased 5 hours a week for each amployee will in totality addup to ~5% of its existing employee man-hours. This is the 5% that they will probably layoff & save on cost. Makes sense. -- Siddharth Sajwan
Content Guide
In a clear admission that it is facing hard times, India’s largest software exporter Tata Consultancy Services (TCS) said it plans to review the variable component of employees' salaries every quarter in an attempt to cut costs. Variable pay accounts for 20 to 35 per cent of TCS employees' gross salary, depending on their hierarchy.
