TCS may reduce employee headcount further

Young engineers hopeful of finding a job at TCS, the country’s largest employer of IT engineers, may be disappointed as it is all set to reduce its headcount without firing anyone.

For the first time in several years, TCS headcount went down by 1,414 employees from the fourth quarter of last year to the first quarter of the current financial year. And this reduction in headcount may soon become a norm even as the company vows not to fire any employees.

When asked whether TCS headcount may not rise again anytime soon, Chief Operating Officer NG Subramaniam said, “It is a fair point. What we are saying is that we are going to be hiring less, and at the same time, we need to manage attrition. We have to continue to upskill our existing people, make sure our utilisation goes up."

On June 30, TCS employee count stood at 385,809. At over 12 per cent attrition rate, which is lower than the average it sees, TCS lost over 46,000 employees last year. In order to increase employee count, it will, therefore, hire at least 45,000 people this year, which as per the company is not going to happen.

“Our utilisation is 81 per cent, including trainees, and 87 per cent excluding trainees. I believe it is not high enough. With our scale of close to 385,000 employees, 10 per cent is close to 40,000. I think we have a lot of room to grow and improve our utilisation. We would be okay to go up to 90-92 per cent," Subramaniam told BusinessLine in an interview.

Add to that, the company has started using automation internally to enhance productivity, while it tries to sell more of its automation services to customers who are shying away from the traditional annuity-based IT services contracts.

The push for productivity will be higher in the current and forthcoming quarters as the company settles down with its new divisions which were created recently.

“Normally, during this quarter, productivity gains of about 30-40 basis points are also there. That used to be the trend. But in this quarter, we consciously didn’t apply any productivity elements because we went through an organisational change. We put in place new teams for all the digital services. We felt that it was important to complete the transition and then make sure the team settles in before we start productivity elements etc. We believe that aspect will help us moving forward," Subramaniam said.

All this is coupled with a massive consolidation exercise the IT major is undertaking wherein it is getting rid of smaller development centres and consolidating operations in fewer centres.

Last week, for example, TCS shut down its Lucknow development centre. The company said none of the 2,000 employees have been asked to leave and have been moved to Noida. However, employees who do not wish to change cities, might be forced to quit and the company is yet to announce a severance package for them.

Similar consolidation is being seen even in Mumbai, where TCS had more than 20 locations.

Now, all these employees are being made to shift to the company's new centre in suburban Thane region.

So even while TCS continues to keep all its people unlike many of its peers who have fired thousands of their employees, the new strategy undertaken by the company will ensure that the overall headcount will gradually fall.