TCS Salary Cut Pay Cut: TCS may again cut variable pay for 2008-2009

The news is not so good for the TCS employees. TCS or Tata Consultancy Services, India's largest software IT company may cut the variable pay or Variable Salary for the second quarter of 2008-09. The rumors has been going on for a while now and some news agencies like indiatimes.com has reported it on their website.

Obviously, no one would be happy to hear such a news of pay cut or salary cut. But from the point of view of company management, the problems are aplenty. The IT industry of India has a significant dependency on the foreign market. These markets are witnessing big turmoil so no IT company will be shielded from the effect. Then comes the Dollar Dependency - In last 1 year, we have seen Dollar to Rupee Exchange rate moving from 45 to 39 and now to 48-49. This has affected the balance sheets of the company.

Last year also, TCS went for a pay cut or salary cut in the variable pay. (News)
This year also, There is a fear that TCS may not pay employees upwards of trainees a portion of their variable pay for the second quarter of 2008-09 as part of an austerity measure forced by the global financial meltdown.

The fear is that employees, otehr than trainees, may NOT be given the non-fixed portion of their variable pay for July-September 2008. Provided the fears come true, about 70 per cent TCS employees or nearly 70,000 staff would be impacted by such a step.

As per the news reported on IndiaTimes, a TCS spokesperson said: "We are now in a silent period and will be able to offer clarity on this only after our Q2 results are announced."

Variable pay at TCS is divided into two components -- a fixed portion which an employee is assured of at all times, and a changeable proportion which alters depending on the performances of the employee and the company. For instance, if the variable pay of an employee is Rs 100, he is guaranteed the fixed part or Rs 70 under any circumstances.
One can only hope that this step is not implemented by TCS management, else it would pave the way for other IT companies to cut their salaries too. Biggies like Satyam, Wipro, Infosys, Patni, HCL, etc. all appear to work in unison when it comes to cut back on costs.

TCS fires employees citing “Non-performance”

After the TCS salary cut, its time for the employee cut. TCS has fired around 500 software engineers citing reasons of “Poor Performance”. TCS says that this is a regular exercise and last year also there was a similar no. of people asked to “resign” from the job based upon the poor performance.

Recently, TCS created a big uproar by deducting the salary of employees or going for a salary cut, making “TCS salary cut” the hot favourite search term in India on Google. Now, it seems that this news item will make another term “TCS job cut” or “TCS fires employees” another famous term.

As per the news item: (http://infotech.indiatimes.com/articleshow/2757974.cms)
BANGALORE: Tata Consultancy Services Ltd, India's largest software services exporter, said on Tuesday that about 500 of its staff had resigned after their performance was rated poorly.

"Those who cannot meet the performance requirements of our company are asked to look for another job commensurate with their abilities," a spokesman for Mumbai-headquartered Tata Consultancy told Reuters. "This (financial) year so far about 500 people have resigned voluntarily."

This is something that can be real worrisome for the people in the IT sector. TCS is a major player and commands a good enough employee strength. It can be a trend setter in the IT market with activities like this as it has major backing from other businesses. However, other IT companies which solely have IT business may still find it difficult to go for such a extreme decisions.

The company's financial year runs from April to March. "It's not an exceptional thing, it happens every year and it's part of our annual performance exercise. Last year also similar number of people left the company," the spokesman said.

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