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TCS plans more lay-offs

Tata Consultancy Services is planning to lay off more people and discourage employees from staying more than two months on any of its benches at its centres.

business Updated: Sep 10, 2008 20:40 IST
Suprotip Ghosh & Vyas Mohan

Tata Consultancy Services (TCS), the country’s largest employer of software and software service professionals, is planning to lay off more people and discourage employees from staying more than two months on any of its benches at its centres.

Last month, the company laid off 25 people from its Kolkata and Bangalore offices, according to company sources who declined to be identified. Last year, TCS laid off 500 people after poor appraisals.

The layoffs are a part of an employee utilisation exercise for the information technology (IT) company, which employs 1.12 lakh people. The exercise would also include counselling employees and training them. Employees would be put on projects where they do not have experience, but can work if they upgrade their skills, said Ashok Mukherjee, vice president and head (global human resources), TCS.

The company had said in June that growth in the country's technology-services industry will slow this fiscal year because of delays in orders from financial institutions. IT companies, including TCS, have been going slow on recruitment and hiring plans.

“All global companies follow a strategy where there is constant evaluation of whether people fit in an organisation’s need,” Mukherjee said. “Termination is not an easy decision to take, and it is the last resort. However, if an employee were not to grow with the organisation, we would encourage them to find another organisation. This is here to stay.”
However, he defended the company’s decision to lay off 500 people last year.

“In an organisation of 1.12 lakh people, 500 is a very small number,” he said.

Currently, 21 per cent of TCS employees are in ‘non-revenue generating activities’, or the bench. The rest, 79 per cent, are ‘utilised’, Mukherjee said. Utilisation figures for TCS have improved marginally from last year, when it stood at 78.1 per cent.

In IT companies, bench includes employees who are not involved in any project., When the number of people on the bench far exceeds the total number of projects, companies will try to rationalise.

Sources in the company, however, said that TCS has circulated a communication in its new independent business units
(IBU) all across the world last month. The communication makes it clear that anyone who is on the bench would be liable to be transferred to any of the other IBUs across the world.

“Communications might have been sent to individuals on a case-to-case basis,” TCS spokesperson Ashish Babu said. “This is not a company-wide phenomenon.”

Sources also indicated that the company might have put up to 750 people on watch for counselling on performance related issues, which would lead to terminations if they fail to meet performance levels. Mukherjee said the company would allow its policy of appraisals, where anyone who gets 1 on a scale of 5 for two consecutive appraisals, would be asked to leave.

This effectively means that employees will not be able to stay at their preferred locations if they are shifted out of a project, or if the project comes to an end, according to sources in the company.

While the company saw its sales rise by 26 per cent in the quarter ended June 2008, profits rose by less than half that rate, at 12 per cent. The company’s gross margins fell by almost 7 percentage points to 28 per cent.