Tata Consultancy Services’ (TCS) CEO and MD K Krithivasan said that the return to office policy has worked well for the IT services giant to maintain its organisational culture. He added that almost 65 percent of its associates are going to the office 3-5 days a week, just a quarter after this policy was implemented and followed by its peers.
Speaking exclusively to Moneycontrol on the sidelines of the World Economic Forum (WEF), Krithivasan expressed confidence that most employees will be back in the office in the next couple of quarters.
“Our position on ‘return to office’ is to ensure that the associates get the best value and our organisational culture is maintained. So these two have been our key reasons behind encouraging associates to come back to office. We have almost 65 percent of the associates are coming back to office at least for three to five days. And we are working with them. We are sending positive incentives for them to come back to office on all five days. I'm sure we'll get there in a couple of quarters,” Krithivasan said.
Also read: Davos 2024: Budgets are no more sacrosanct, customers are recalibrating, says TCS CEO K Krithivasan
This was a major shift from TCS’ earlier 25X25 vision announced in 2020 by former CEO Rajesh Gopinathan. According to this plan, by 2025, only 25 percent of its associates will need to work out of its facilities at any point of time. Also, the employees will not need to spend more than 25 percent of their time at work.
Hiring Slowdown
In the third quarter ended December 31st, TCS' headcount decreased sequentially by 5,680 on a net basis. This was the second consecutive quarter for the company to experience a decline in headcount. In Q2, headcount decreased by 6,333 employees quarter-on-quarter.
The company’s attrition rate improved as it further dropped to 13.3 percent in Q3, down from 14.9 percent in Q2.
When asked if this was because the company had over-hired or whether jobs were getting automated, Krithivasan said it was a combination of both and everything else.
“I won't say we over-hired, I would use the word we proactively hired from the market sensing demand situation and over the period of time we train them in the technologies where we will have opportunities to deploy. And so and when we first saw the weakness in demand, we realized that we have enough people with us. Right now, we are not hiring to replace the people that are leaving us, and we are able to internally deploy them,” he said.
He added, “We are hiring still. The difference is in the amount of people that are leaving and how much we hire. The difference is about 4,000-5,000 people. If we are hiring another 5,000-6,000 people, you will see a positive headcount addition. That based on demand outlook. Only when we get a much better handle on the demand outlook, you will see a positive headcount.”
TCS reported its Q3 earnings on January 11. Net profit stood at Rs 11,058 crore, up 2 percent YoY. Consolidated revenue rose 4 percent YoY to Rs 60,583 crore.
The EBIT margin or the operating margin was up to 25 percent, an expansion from 24.3 percent in the previous quarter.
TCS’ deal total contract value stood at $8.1 billion, reflecting a good pipeline despite not winning a single large or mega deal in the quarter.
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