TCS to increase working hours, may freeze variable pay

KOLKATA: It’s official now. Tata Consultancy Services (TCS), the country’s biggest software company in terms of sales, may freeze variable pay to



its over 1 lakh employees as part of a string of cost-management initiatives to cope with the pangs of the global meltdown. The company has also decided to increase employee working hours from April 1, 2009, to 45 hours per week from the present 40 hours that every TCSer needs to clock each week. This was indicated by TCS chief executive officer & managing director S. Ramadorai here on on Thursday.

"In a bid to rein in total manpower costs and spruce up employee efficiency and productivity levels, TCS will take a relook at its performance-linked variable pay practices. Variable compensation payout accounts for 7.5-to-8% of our revenues and this will now be reviewed," said Mr Ramadorai. Manpower costs account for 53% of TCS’s total costs.

Elaborating on other initiaitives to beef up internal efficiences, Mr Ramadorai also confirmed that TCS is increasing employee working hours to 45 hours a week from the present 40 hours per week level. "We believe the additional five hours can be effectively used to upgrade employee skills wherever necessary," said Mr Ramadorai.

Incidentally, the variable component of a TCS employee’s salary is linked to the performance of the company, the business unit of the individual and the individual’s performance. At present, it ranges between 20-to-35% of an employee’s gross salary. Comprising of distinct `company’ and `employee’ components, the variable allowance payment to each TCS employee happens on quarterly and monthly basis respectively, said a TCS official. More importantly, the variable pay increases with seniority.

The latest developments come at a time when TCS is under increasing pressure from global clients to reduce its cost of service delivery and is even losing clients who are trying to drive a hard bargain. "I cannot share client specifics. But it’s true that we have lost some clients. One client, for instance, demanded a 70% discount which was simply unsustainable," said Mr Ramadorai, in response to a specific query.

Dwelling on TCS’s plans to unlock internal efficiencies in times when the company was experiencing muted growth, Mr Ramadorai said: "Our capex was at Rs 1400 crore in 2008-09. You can now expect our future infrastructure-related spends to either get delayed or reduced. They will be rationalised based on real-time decisions once we take a call on the infrastructure budgets for the next fiscal.

TCS managing director S. Ramadorai, however, is unwilling to confirm whether the company’s Rajarhat software campus rollout will hit a roadblock in the backdrop of the company’s decision to cutback future infrastructure-related spends.
Not too long ago, TCS had indicated plans to unveil a spate of cost management initiatives that included ways to rationalise or consolidate TCS’s infrastructure globally to save costs. Other measures recommended were saving on energy costs through efficiency programs and optimising on travel and communication costs. The TCS management had also indicated that it was re-examining its capex program to conserve cash in the current volatile environment.
Tata Realty Infrastructure Ltd (TRIL), the real estate arm of the Tata group, has been roped in to execute development of the TCS upcoming
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campus at Rajarhat.

Confirming this, TCS’s global human resources head Ajoyendra Mukherjee said: "TRIL has been given the mandate to execute the Rajarhat software campus over the next 24-odd months. I cannot share investment numbers at this point, but I can confirm that 15,000 employees will work in the upcoming Rajarhat campus which will come up at our 40 acre plot. Once the new campus is set up, we may relocate a section of TCS’s employees operating at some of out leased facilities in Salt Lake Sector V."

TCS has some 8000 IT professionals on its rolls in Kolkata who are distributed across the company’s eigth-odd centres in the Salt Lake Electronics Complex (Saltlec). Six of these facilities are leased while two are owned by TCS.

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