Bad news for Ratan Tata’s TCS! Tech Giant faces major loss due to layoffs, spends Rs 11350000000 on…., 12000 employees to…
After its questionable pay practices, benching policy, and massive layoffs, Tata Consultancy Services (TCS), one of India’s largest IT multinational corporations, is once again in the news. In its quarterly results, TCS announced that it had incurred costs of Rs 1,135 crore for layoffs and restructuring. The company notified the stock exchange that the consolidated net profit amounted to Rs 12,075 crore after taking the restructuring costs into account. TCS also announced revenue of Rs 65,799 crore for Q2, slightly below analyst expectations, as reported by Jagran.
Why did TCS spend Rs 11350000000 on these layoffs?
In fact, during this fiscal year, TCS planned to dismiss about 2% of its employees, or about 12,000 employees across the senior and mid-level spectrum, as reported the Jagran. With the company’s obligation to pay advance salary and severance to employees at termination, the entire exercise cost TCS Rs 1,135 crore, the report mentioned. Earlier in an official statement, TCS stated that the move is part of the company’s broader strategy to become a “future-ready organisation”, focusing on investments in technology, AI deployment, market expansion, and workforce realignment. TCS stated that this workforce reduction process will take place throughout the year and will not be centered around a number.
What is the impact of these layoffs on TCS’s overall revenue and profits?
The company personnel and IT union representatives assert that the actual layoff count is a significantly more substantial number. They further alleged that many employees were apparently asked to resign voluntarily in order to minimize the official layoff count. Meanwhile, a close source from the company dismissed these claims as false, reported Jagran.
On Thursday, during an analyst call, TCS Chief Human Resources Officer, Sudeep Kunnumal was quoted as saying by TOI, “We have released about 1% of our workforce, mainly at mid and senior levels, due to skill and capability mismatches. Impacted employees are being provided with benefits, counselling, and outplacement support, along with severance packages above industry standards.”
“Additionally, there was some involuntary attrition as part of our regular performance and bench policy reviews involving new hires,” he further added, TOI reported.
TCS’s workforce fell by around 20,000 employees in the September quarter, reducing its total staff to 5.9 lakh — its biggest decrease ever and more than what analysts had expected, as per a TOI report. The decrease was due to carefully planned reductions, underperformance-related exits and bench policy changes relating to new hires.
Meanwhile, the IT major has announced a dividend of Rs 11 per share. The record date for the dividend will be October 15, and the payment for the same will be made on November 4. TCS had declared an interim dividend of Rs 11 per share in its previous quarterly results as well. K Krithivasan, Chief Executive Officer and Managing Director, said, “I would like to thank all our employees for their dedication and excellence. We are on a journey to become the world’s largest AI-led technology services company.”
STORY HIGHLIGHTS
- TCS planned to dismiss about 2% of its employees, or about 12,000 employees across the senior and mid-level spectrum.
- The IT major has announced a dividend of Rs 11 per share.
- The record date for the dividend will be October 15, and the payment for the same will be made on November 4.
- TCS stated that this workforce reduction process will take place throughout the year.
“Our journey is anchored in bold transformation across talent, infrastructure, ecosystem partnerships and customer value. The investments, including the building of a world-class AI infrastructure business, demonstrate our commitment to this transformation,” said Krithivasan. Further, the Tata Group firm announced strategic investments in a new business entity to build world-class AI infrastructure, including a 1 GW capacity AI datacenter in India, as per the filing.
News