Tata Consultancy reviewing variable pay structure

KOLKATA - IT and business solutions major Tata Consultancy Services (TCS) Thursday announced a slew of measures, including reviewing the variable pay structure of employees, to weather the economic slowdown, and said it could cut jobs if the situation worsens.

‘We are reviewing the variable pay component of employee salaries. At this point of time, we are not contemplating any reduction in any other component of the salary package but if the situation worsens then we have to take some action,’ TCS chief executive and managing director S. Ramadorai said at a media conference.

Variable pay constitutes eight percent of the company’s revenue and 20-35 percent of the employees’ cost to the company. It is linked to performance of individual employees as well as the company.

Asked whether TCS would consider retrenchment if the situation worsened, Ramadorai said: ‘We are not ruling it out. But as of now we don’t have any such plans.’

The company, which has 140,000 people on its rolls, has decided not to hike salaries now. It has put on hold lateral recruitment ‘except where we have an urgent requirement’, and decided to transfer overseas on-site operations to off-shore wherever possible.

The company has also decided to increase working hours from 40 to 45 a week from next financial year (2009-10), and curtailed travelling expenses. ‘We have requested employees to travel only when there is a need,’ Ramadorai said.

He said there was a 4 to 15 percent pricing pressure on the company following re-negotiation of new orders by clients.

‘The environment is not as friendly as it used to be. There are genuine problems,’ Ramadorai said, adding: ‘A client even asked for a 70 percent price cut, but we said we cannot do that.’

To a query on the company’s present orderbook, he said: ‘Anything we say today may not be valid tomorrow. Because the company placing the order may go bankrupt.’

‘In the fourth quarter of 2008-09, we will have either no growth or degrowth,’ he added.

At the entry level, the company has given 24,500 job offers for the next fiscal. ‘As of now, we are standing by our commitment. But we may delay the recruitment from one quarter to another, think of giving them extended training and may even opt for pay renegotiation if the situation worsens,’ Ramadorai said.

Asked whether TCS has sacked 100 people in Britain, vice president and global head of the company’s human resources Ajoyendra Mukherjee said: ‘We have asked some people to go based on the yearly performance review but I cannot give you the numbers now.’