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TCS will have 75% of its employees WFH by 2025, but not many are convinced

Mental health, productivity and company culture are a few challenges that firms have to deal with.

May 27, 2020 / 11:09 PM IST

Tata Consultancy Services' (TCS) 25x25 work-from-home (WFH) model has set new standards indeed for the IT sector. This is ambitious and of course could result in huge savings in terms of facilities, transport and rentals.

However, industry watchers are not quite convinced. Many have pointed out that the system is still evolving and it is too early to say if it works.

What is 25x25 WFH model?

Rajesh Gopinathan, CEO, TCS, in the FY20 annual report, said, “Our customers are comfortable with this model and want us to take more work that others are not able to handle. This has given us the confidence to come out with a bold new Vision 25x25.”

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By this model, the company believes that by 2025, only 25 percent of its associates will need to work out of facilities at any point of time. Also, the employees will not need to spend more than 25 percent of their time at work.

The company employs close to 4.5 lakh employees. By its estimation, it expects only 1.12 lakh to work from office by 2025. From the company’s standpoint there are advantages for both the employer and employees.

What does TCS save?

Most of the experts and top IT executives Moneycontrol spoke to agreed that savings come from facility and travel.

Facility expenses account for about 3.1 percent of its revenue on average for TCS. However in FY20, the expense came down by 33 percent and it accounted for only 1.4 percent of the overall revenue. The facility expenses stood at Rs 2,175 crore, down 33 percent from Rs 3,275 crore in FY19.

A top executive from a major IT firm said the biggest saving would be from transport. The company picks up and drops employees using its own transport. Though the company did not disclose the quantum of saving, the executive said that the savings are huge. This could apply to TCS as well.

In addition to employee transport, the company can cut down on visa and travel expenses if remote working becomes a norm globally. Travel accounts for about 2 percent of overall revenue.

With close to 3.5 lakh employees WFH, there could be potential savings in rentals as well.

According to FY19 annual report, the Tata Group's operating lease rent expenses, which are treated as rental payments, were Rs 2,181 crore. TCS operates out of 135 offices across 23 cities in India alone. The offices are a mix of SEZ, company-owned spaces and IT parks.

In its FY20 annual reports, the company said that it does not foresee any large-scale contraction in demand despite the reduction in the workforce operating out of its offices. “The leases that the Group has entered with lessors towards properties used as delivery centers / sales offices are long term in nature and no changes in terms of those leases are expected due to the COVID-19,” the company said in the report. The lease agreements range from four years to a decade or more, according to the report.

Why it might not work despite advantages

This model is not without advantages. It offers flexibility to young mothers and women who are caring for the elderly, and were unable to avail this earlier. It would give more opportunities for those in tier 2 and 3 cites as remote working becomes a norm.

Unlike TCS, most of its peers are still evaluating options with some looking at 50-50 model, where 50 percent will work from office and others from home, till the time vaccine is in the market. According to reports, that could take 12-18 months or longer.

C Vijayakumar, CEO, HCL Tech, and R Srikrishna, Hexaware Technologies, said that they foresee 50 percent of its workforce working from office on a rotational basis till there is more clarity.

But, WFH for 75 percent of workforce in the longer run is not convincing as the challenges are multi-dimensional.

Productivity and digital burnout

Milind Lakkad, Chief Human Resources Officer, said in the annual report that the productivity levels have increased since the employees are saving time on the daily commute and better engagement. Some of the projects has seen higher throughput, though these are early days, he added.

However, this productivity cannot be taken for granted.

VV Apparao, Chief Human Resources Officer, HCL Tech, explained to Moneycontrol that while the productivity has seen 16-20 percent increase during lockdown for HCL Tech, it is unclear if it would still remain high once the lockdown ends.

"People will have other responsibilities then like children going to school and you are going to get things from outside. There could be a lot of distractions," he said.

The other issue would be dealing with burnouts. Satya Nadella, CEO, Microsoft, in a recent media interaction said that permanent WFH could be damaging to employees.

TCS has launched an initiative to help employees deal with stress and anxiety. However, it is too early to say how effective this would be.

Take for instance Praveen*, a TCS employee. Before lockdown, Praveen worked an average of 9 hours. Now he works 10-11 hours on average per day and his break times are shorter. But his productivity has increased.

Two months in, he is not burnt out yet, but he is not keen on working from home for longer. “Well, it might work for higher officials or those with kids to take care of. But I would rather work from office,” he says.

This is a challenge companies have to prepare for.

Other challenges

Pareekh Jain, founder, Pareekh Consulting, pointed out that Indian homes are not suitable for long-term WFH given that people live with extended families and often share smaller space.

Kanchana Krishnan, Senior Director, JLL India, a real estate consultancy firm, said that majority of the workforce are middle-class families who might not be able to invest to create a workstation at home.

“In addition, WFH in part works wells since you are already working with people you know. It is yet to be seen how team collaboration will work when a new person joins the team,” pointed out Jain.

Company culture

Most of all, each company has its distinct company culture, which attracts employees. This could the infrastructure perks employees enjoy, employee engagement programme or the management’s flexibility in letting employees learn new skills.

“So with WFH how will companies ensure that the company culture is intact?” asked Jain. According to Jain, management has to evolve to address these challenges. “One needs to rethink employee engagement and how to connect with them,” he added.

In addition, there is not much clarity on various challenges prolonged WFH can create. “It is too early to even think about making it permanent,” added another expert.

*Name changed to protect privacy.

Swathi Moorthy
first published: May 26, 2020 06:47 pm