TCS should pull up its socks on both HR and PR

TCS should rethink its HR policies, and that would be the best way to keep employee unions at bay


Both TCS shares as well as NSE’s Nifty index have declined by about 2%. Photo: Mint
Both TCS shares as well as NSE’s Nifty index have declined by about 2%. Photo: Mint

Investors in Indian IT stocks have clearly disregarded rumours about Tata Consultancy Services Ltd (TCS) laying off between 25,000 and 30,000 employees. Since the time the rumours first surfaced in mid-December, both TCS shares as well as NSE’s Nifty index have declined by about 2%.

If there was some credence to those numbers, the company’s shares would have fallen at a much faster pace. After all, the above-mentioned numbers amount to 8-10% of the company’s workforce. Considering that the company is operating at all-time high utilization rates, with barely enough room to breathe, it’s foolhardy to think that the company will get rid of so many of its experienced employees in one quarter.

Still, the rumours have refused to die down and discussions among TCS employees (both online and offline) quote the 25,000-30,000 number as gospel truth. See http://mintne.ws/1tM2Gn7. Besides, things have gotten ugly with some disgruntled employees staging protests and some employee unions reportedly stepping in to protest.

According to two analysts at leading institutional brokerages, while there’s no doubt that the rumoured layoff numbers are bunkum, the company’s handling of the situation leaves much to be desired.

TCS has said that this year is no different from other years, when annual involuntary attrition is between 1% and 2% of its employee base, including employees who retire and those who are hired for specific projects. But conversations with TCS staffers suggest that the number of executives who have been asked to leave is far greater than previous years. Apart from this seeming discrepancy in their view of the goings-on and the company’s official statements, employees are also displeased with the manner in which some of them have been suddenly asked to leave the firm.

TCS may dismiss all of this as hearsay; but the fact remains that in the past month, the level of insecurity among its employees has increased considerably. For a company that is as labour-intensive as TCS, managing over 300,000 employees, the anxiety in a section of employees can create problems that may take a long time to go away.

Infosys Ltd recently testified to this. In an interview with The Hindu Business Line newspaper last year, its head of human resource development said that the company hadn’t yet recovered from the iRACE (Infosys Role and Career Enhancement) programme it introduced in June 2009. The programme involved higher performance benchmarks and resulted in a decrease in the frequency of promotions (among other things), and had led to an increase in attrition rates soon after it was launched.

While TCS may not have introduced a drastic change in its HR policy like Infosys did with iRACE, there are some similarities in the two cases. Immediately after iRACE was launched, Infosys faced a backlash, with many of its employees expressing their ire on online forums. With TCS, too, employees have taken to social media to express their frustration with HR policies. Some people have been hosting meetings in cities, where the company has offices, to discuss layoffs.

While TCS has attempted to address the disquiet through internal communications and rejoinders to certain media houses, it evidently needs to do more. For instance, as one of the above-mentioned analysts says, the company should be more active in addressing criticism and rumours on social media. But it also seems that it should rethink its HR policies—that would be the best way to keep employee unions at bay.

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