TCS axes 1,000 non-performers in Apr-June '05

CHURN IN IT FIRMS

This is due to the salary model based on the economic value-added model.

About 1,000 employees have left Tata Consultancy Services, India's largest software services company, in the first quarter of this financial year.

This, according to sources in the company, is a result of the salary model based on the economic value-added (EVA) that was rolled out two years ago. Those exiting, they maintain, are primarily the non-performers.

The EVA model "� involving assessment, retraining and exit discussions "� moves on a two-year cycle and the last quarter was the first one when its impact kicked in.

Under a new five-tier appraisal system, a large percentage of those who have left were classified as non-performers. They were given low rankings for the second year in a row and failed to show signs of improvement despite undergoing a mentorship programme.

A company spokesperson said, "The EVA model has been implemented across TCS. We are witnessing immense value being delivered at the corporate level as a result of adopting this practice and TCSers are also seeing the benefit of the model," he added. But he refused to comment on the attrition, citing the quiet period in the run-up to the quarterly results.

Sources in TCS, however, said it was a conscious move by the company to enhance result-orientation among its employees. According to the new EVA-based system, every employee's salary has a fixed and a variable component. The variable component of the pay takes into account the performance of the individual and the company.

The EVA model goes beyond individual performance and places considerable onus on the organisation to ensure good rankings. On the flip side, if one is stuck with a team of which some members do not perform, then one is stuck with low ratings, which translate into low take-home pay.