TCS defers increments, will not reduce jobs

The software services company will also honour all campus offers, even though it is expecting the repercussions of the coronavirus outbreak and the associated lockdown to be significant in the next quarter.


Tata Consultancy services (TCS) is expecting the second quarter of FY21 to be strongly impacted by the pandemic and the lockdown. However, Rajesh Gopinathan, CEO and MD, TCS, has assured all the employees that there will be no retrenchment and that the Company is not planning any furloughs. While he clarified that salary increments will not be offered right now, promotions may be considered, depending on how the business performs.

Gopinathan also assured that the Company will honour all the campus offers made, which number about 40,000, and that these freshers will be onboarded in the second and third quarters.

The pandemic has adversely affected the “positive momentum” that the Company had begun to witness in some of its biggest verticals. According to Gopinathan, the lockdown has forced the Company to successfully embrace a dispersed delivery model instead of an integrated one. Now, more than 90 per cent of the TCS workforce is able to seamlessly work from home. The CEO emphasised that the fact that TCS was able to maintain its execution capability and security processes amidst the restrictions is the most positive outcome of these testing times.

While Gopinathan is sure that the impact of the pandemic will be strongest in the second quarter of FY21, he is also confident that the Company will return to normalcy in the third quarter.

Even though there have been challenges, TCS has managed to somehow maintain profitability. Its long-term margin guidance has also remained at 26-28 per cent. However, it is expecting the performance in the US to be slow in the near future.

It is reported that the Indian multinational software services company faced a dip in profits due to lower income and mounting finance cost. While profits had grown by 2.76 per cent in FY20, the story will differ in the next fiscal. In Q4 FY20, the consolidated profit was reported to be Rs 8,049 crore, which shows a fall of 0.85 per cent on a quarter-on-quarter basis.

In the first quarter of FY20, TCS had onboarded 30,000 freshers from the campuses, while for quarter ending March 31, TCS had hired 1,789 freshers.

In FY20, the total employee strength at TCS was 4,48,464, and the attrition rate was 12.1 per cent.

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