Tata Consultancy Services Ltd is reevaluating plans to open offices in small towns and cities following the Nashik workplace harassment saga, which raised concerns about HR risks.
The company will be having a re-look at opening small offices, TCS chairman N. Chandrasekaran told shareholders at the company’s 31st annual general meeting on Tuesday.
“We definitely want to grow in all of our key locations. But one thing that the recent lesson has taught us is that we cannot have sub-optimal centres,” Chandrasekaran said in response to a shareholder’s question on expanding operations to other locations.
According to Chandrasekaran, it is very difficult to be present at centres of 100-200 people and this unnecessarily increases risk exposure. His comments come in the backdrop of a harassment case at the company’s customer support office in Nashik, which raised questions regarding workplace safety.
“I don't think other IT firms had such a proliferation of smaller offices like TCS had. TCS has realized it's very difficult to maintain the similar HR practices and the culture across these micro-offices, as was evident in their Nashik office incident,” said Ashutosh Sharma, vice-president at Forrester Research. “This is the reason they seem to be shifting towards bigger offices where they can have better presence of support functions and it helps them to control and manage the office aligned to their broader corporate culture.”
He added that other IT services companies may also integrate their smaller offices into larger ones.
Employees at the Nashik TCS office filed police complaints against colleagues in April, alleging sexual harassment, psychological abuse and religious coercion over a four-year period up to 2026. The Nashik police formed a special investigation team to probe the matter and arrested seven employees including team leaders and human resources executives. The investigations are ongoing.
Internal inquiry
When the issue came up two months ago, Chandrasekaran said the matter was being treated with utmost seriousness and instituted a high-level internal inquiry headed by chief operating officer Aarthi Subramanian.
On Tuesday, at least a fifth of the 42 shareholders present in the AGM quizzed the management on the incident and related workplace safety norms. Chandrasekaran reiterated that the company did not receive any complaints regarding the issue.
“The preliminary report that we have received shows that the company has not received any formal complaints through any channels, through the company channels, emails, or any other form. Nevertheless, the company wants to ensure that everyone in the workspace in Nashik is able to speak to the investigators so (that) we get the full details,” said Chandrasekaran.
TCS also initiated an independent investigation into the matter.
“The company has set up an independent investigation with third parties, a legal firm and an accounting consulting firm to look into the records, the procedures, the processes and the gaps, and it is being chaired by an independent director and independent members. Mr. Keki Mistri chairs the committee which looks into the final outcome of this report,” said Chandrasekaran.
TCS will increase compliance in case of procedural or process-wise failures and that any mistake on part of an associate will result in strict action, he added.
For now, experts suggested that the rise of automation tools will only aid tech services companies consolidating their workspaces.
“Given that we are envisaging a future for IT which will be less headcount-intensive with AI becoming an integral part of IT-related work, this will anyways drive consolidation of centres,” said Pramod Gubbi, founder of Marcellus Investment Managers.
Automation tools
The rise of automation tools reduces the need for human oversight in work related to coding, software development and maintenance. He added that IT services companies are also looking to manage costs and have hybrid set-ups, which might prompt companies to refrain from opening offices in smaller towns and cities.
“Nowadays, companies have a hybrid work set-up where offices can accommodate more people per centre. Certain employees can work from office for three days a week and the rest can come on the remaining working days, which increases office capacity without requiring companies to spend more on additional tier-II centres,” added Gubbi.
TCS has 312 offices globally, of which two-fifths are in India, according to the company’s annual filings. Its facility expenses rose 1.7% on a yearly basis to $415 million last fiscal, or 1.4% of the company’s revenue of $30 billion.
An email sent to TCS seeking comment on the matter went unanswered.