Slowdown bug bites TCS, no more benches

The IT companies earn more when they employ more but that’s now a thing of the past. Recession has clearly taken a toll on business with not many new projects coming in and existing clients cutting back on their IT budgets.

The gates to the largest Indian IT company TCS is gradually closing for engineering graduates. How would it impact the aspiring IT engineers and the company? There would be no more offer letters in advance and a slim chance of employment for the ones who finally graduate, and that only if the company has more business on hand and needs to recruit.

However, for S Ramadorai, the CEO of TCS, the bigger worry now is to deal with the existing bench—the idle number of employees that typically amounts to 15-20 per cent for an IT company and for TCS which employs over 1,30,000 employees, it’s a daunting task. "We cannot afford benches anymore. We will redeploy and retrain existing bench and put a freeze on lateral hirings. The non-performers will have to find alternatives, " Ramadorai said.

So, even if Ramadorai tactfully puts it, more layoffs in TCS is a reality and the company also plans to make changes in variable pay structures to tame employee cost and link salaries more and more to the performance of the company.
"One change is to increase variable pay component and even make adjustments in the existing structure. There is a lot of room for cost cutting," Ramadorai said.

Well, the IT companies incur almost 50 per cent of the total cost on employees. Now, in these tough times when business is not fast and thick, it is this expenditure that they are aiming to axe. Therefore, a tough job market and more layoffs are inevitable.