Layoffs possible, says TCS

Kolkata: As part of cost cutting-measures to tackle the global economic downturn, IT major TCS today said job-cuts are possible if the situation worsens, but said there are no immediate plans for lay-offs.

The company has, however, ruled out salary hikes next year and frozen “lateral intake” besides increasing weekly working hours for employees.

TCS managing director S Ramadorai said “there would be no hike in salaries in the forthcoming year” and added that “job cuts are possible if the situation worsens”. He added that the company is reviewing variable pay components of the staff salaries. The variable pay component of TCS employees differs between 22 per cent and 35 per cent of his/her gross salary, depending on an employee’s rank, he said.

Variable pay represents 8 per cent of the total revenue of TCS, whose headcount is 1.4 lakh. “We have around 1,40,000 on our payroll. On an average, 20-35 per cent of an employee’s gross yearly salary is the variable pay component,” said Global Human Resources vice president Ajayendra Mukherjee.


Ramadorai said the company is also looking into all aspects of cost reduction, including capital expenditure and infrastructure. “The environment is not as friendly as it used to be. All sectors in the country are facing a crisis and we are no exception,” said Ramadorai, who is also the CEO of the company that spends 54 per cent of its total expenses on manpower.

“If the situation remains unchanged, then we are not contemplating job cuts. But, if the situation worsens, then lay-offs are certainly a possibility,” said Ramadurai, adding that the judgment of efficiency levels of employees will now be very different from what it used to be.

The company also announced increase in working hours from 40 to 45 hours a week. According to analysts, the 12.5 per cent increase in working hours can add 6,25,000 billable hours for the TCS.

Expenses on communication and travel will also be curtailed, while the company will look at taking up more turn-key assignments. “We don’t want to be in the queue where we wait for payments. Many companies with whom we have worked in the past have filed for bankruptcy and payments are due,” added Ramadurai.

The CEO also announced that the 24,500 campus offers, where the students are expected to join in July 2010, will be delayed. “We have stood by our commitment for all the campus offers of 2009. However, for 2010, we have already sensitised the campuses and we will only be absorbing trainees on a real-time need basis. If situation worsens, a change in their pay package is also on the cards.”