India’s Tata Consultancy Services Refutes Reports Of Large-Scale Layoffs

Tata Consultancy Services Ltd., which reports its fiscal third-quarter earnings on Thursday, has denied any plans of large-scale layoffs, after several media reports over the past few weeks have suggested that such cuts could trigger labor activism in one of India’s largest foreign-exchange earning sectors.

TCS, India’s top IT services provider by revenue, accounts for about 10 percent of the 3.1 million workforce in the country's $118 billion-a-year industry. India's technology industry, known for its well-paid, white-collar employees, has managed to remain immune from unions. However, in the aftermath of the global financial crisis, India's IT industry has struggled to sustain its low-cost model as customers demanded lower costs and pared back orders. Alternative models such as cloud computing have since become increasingly viable.

“The involuntary attrition (layoffs) for the first nine months of this year has been 2574 employees, which represents 0.8 percent of the total employee strength. The corresponding numbers for FY14 and FY13 were 2203 and 2132 respectively. The total involuntary attrition for the current fiscal will be around 1 percent,” TCS said, in a statement to the Bombay Stock Exchange on Tuesday.

Some within the industry itself, such as TK Kurien, CEO of Wipro Ltd., Mumbai-based TCS’s Bangalore rival, have argued there are more mid-level employees in the sector than the available work warranted, and tools such as automation have not been used enough.

At a press conference in Bangalore on Dec. 12, TCS had warned that “non-performers” would be asked to leave, in an effort to make its operations even more efficient, even though TCS is operating at historically high utilization levels, that measures the proportion of staff on billable work compared to overall workforce.

However, the company’s chief financial officer told analysts at a recent event that the company’s earnings in the December quarter will be affected by the traditionally weak three-month period that includes extended holiday periods -- including Thanksgiving and Christmas -- and furloughs in its biggest market, the United States.

Export of IT services in the current year, ending March 31, will grow 13 percent, according to the National Association of Software and Services Companies (Nasscom), India’s IT industry lobby. Exports account for about 73 percent of the industry’s total revenues.

The industry continues to be a “net hirer” Nasscom told International Business Times in an emailed statement, following reports in the media on the alleged layoffs at TCS, but declined to comment on specific companies.

Infosys Ltd., India's No. 2 IT services provider, reported better-than-expected third-quarter results on Jan. 9. Third-ranked Wipro will report its results on Jan. 16.