The company’s faith in its own execution prowess and the assessment that it will bounce back by Q3FY21 has taken analysts by surprise
Unlike the global financial crisis of 2008, TCS' core banking and financial services sector clients have not been devastated by the current situation
MUMBAI: India’s largest IT services provider Tata Consultancy Services Ltd (TCS) had six hours to move key operations from secure delivery centres to home locations, and this was made possible by a few who decided to live in offices to smoothen the transition, senior officials of the firm told Mint in an interview.
"From a highly centralised model consisting of workspaces set in large delivery campus capable of accommodating thousands of employees, we had to switch to an extreme form of distributed delivery in a matter of days, which is not a trivial challenge," said TCS managing director and chief executive officer (MD & CEO) Rajesh Gopinathan.
And the IT major's customers did not expect this transition, said chief operating officer (COO) N Ganapathy Subramaniam.
"We moved mountains in the first six hours after the lockdown was announced. If not from Mumbai, business would always continue for customers from Chennai or Manila or Mexico. Now (under a global lockdown) these options were not there. The scale and complexity of the work from home model was all new to them," said Subramaniam.
Amid the unprecedented global pandemic, the company’s faith in its own execution prowess and the assessment that it will bounce back by Q3 of financial year 2021 took analysts by surprise. TCS' management, however, maintains that with government measures and virtual support from the workforce, this too shall pass.
“Employees had to deal with family/societal pressure, some didn’t want to travel and we had to accommodate all of it. We convinced customers that while we convince employees to travel, they will have to accept work from home if the need arises," said Subramaniam. Even if it meant that the company couldn’t charge customers for time it to took enable work from home.
With almost 80% of its 448,000 employee base in India, the lockdown forced the company from sending people home with their desktops in absence of laptops, staying in office for an entire week to establish secure connections and resources, and enable high security clearance from global and government customers.
“The banking and financial services, surprisingly, took a lot more time to enable remote working because they were concerned about regulatory and security issues, since we handle processes dealing with critical personal banking information," TCS also provides critical core support to NSE, BSE and the depositories, among other essential services, so an extended market ecosystem needed continuous tech support. "There was a lot of reluctance due to security concerns but as we explained that international customers, international exchanges have also enabled these models and good sense prevailed," Subramaniam added.
While the company expects robust performance by Q3FY2, if the pandemic continues to impact economy for an extended period, what are they really betting on?
“It’s not a guidance and we aren’t trivialising the impact of the pandemic. But governments have moved very fast and said they’ll postpone liabilities even if they can’t eliminate the issue. These measures should play out when economic activity restarts and we (TCS) are operating on that assumption as well," said Gopinathan.
The company is also relying on the fact that, unlike the global financial crisis of 2008, its core banking and financial services sector clients have not been devastated by the current situation. Banking customers are just taking anticipatory provisions to protect themselves. And no sector has been structurally hurt except that economic activities have come to a halt.
“We are modelling for the peak impact in Q1FY21 but if that doesn’t happen and the situation extends, we will need to have a different plan with different assumptions," added Gopinathan.
The plan clearly factors some level of certainty for employees as the company has announced freeze on hiring, suspension of increments, cost optimisation measures but no possibility of job losses. TCS has also reassured that the 40,000 odd fresher offers made last year will be honoured, subject to exams being conducted.
In fact, the management is so impressed with the efficiency of employees working from home and larger virtual deployments of projects that they are considering extending this even after the lockdown is lifted. By keeping only 25% employees at their secure delivery centres for up to 25% of the project duration, they see stronger potential for cost optimisation.
“If we need to take more pragmatic calls (on cost) then we’ll consider the variable component of salaries. Our employees are aware that things will get a lot worse before it gets better but we want them to be certain that we won’t consider retrenchment," said Gopinathan.