TCS says only 1% ‘involuntary attrition’ this year

Breaking its silence over the ongoing controversy surrounding job cuts, Tata Consultancy Services has said that it will terminate the services of around 1 per cent staffers this year.

This means that the axe could fall on over 3,000 employees as the company had 313,757 staffers on its rolls as on September 30.

In a late evening press statement, TCS said that 2,574 employees or 0.8 per cent of its workforce was asked to leave the company in the first nine months of this year. The corresponding numbers for fiscals 2014 and 2013 were 2,203 and 2,132, respectively, it said.

“Performance appraisals and associated processes are an integral part of the company's operations. Given the circumstances, as an exception, we are sharing specific data on the actual quantum of involuntary separations over the last three years, which establishes that there has not been any exceptional action in the last few months,” TCS said.

The alleged layoffs have created a storm in IT industry circles as the Tata group company employs over 3 lakh people – nearly one quarter of total private sector jobs in the organised sector. As per some estimates, TCS was to dish out pink slips for 25,000-30,000 non-performers.

Industry watchers expect TCS to give more commentary on the HR situation when it releases its third quarter results on January 15. TCS Chief Financial Officer Rajesh Gopinathan has already indicated that ‘Insurance’ and ‘UK region’ will be the weak spots for the company (in Q3), in addition to fewer billing days use to onsite holidays and furloughs.

Already, there is uncertainty over TCS’ $2.2-billion contract with UK-based Friends Life Group as the latter is set to be bought over by Aviva, the UK’s second-largest insurer. TCS’ subsidiary Diligenta was given the administration responsibility for 3.2 million policies of Friends in 2012. “TCS has a company has been outperforming the market for some time now and so a quarter or two of slow growth is not a worry. However, we expect the management to provide more details on what’s happening on the HR front,” said Ankita Somani, IT Analyst with MSFL Research.

Some analysts believe that increased automation and the advent of machine-to-machine communication have given TCS the ability to reduce staffers and prune its cost structure. Others worry if the company is losing out on existing contracts to competition thereby compelling the management to reduce flab.

Moreover, the sharp appreciation of the US dollar against various currencies may also play spoilsport in Q3.

“We expect dollar revenue growth of 1.3 per cent quarter-on-quarter for TCS due to adverse cross-currency impact of 1.5-2 per cent. Margins are likely to remain flat or improve slightly led by 2.3 per cent QoQ depreciation of the rupee against the dollar,” a report from Religare Institutional Research said. TCS’ net profit is expected to grow by around 4 per cent sequentially.