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TCS new benching policy: Employees face uncertainty, fear layoffs - here's what's happening
TCS new benching policy: Employees face uncertainty, fear layoffs - here's what's happening

Time of India

timea day ago

  • Business
  • Time of India

TCS new benching policy: Employees face uncertainty, fear layoffs - here's what's happening

The exact impact of the benching policy on the TCS workforce remains uncertain. Tata Consultancy Services (TCS) employees are worried about layoffs as the first round of the new benching policy at India's largest IT services giant ends. Several TCS employees appear to be taking to social media platforms like Reddit to express their concerns about their role and future in TCS. The newly implemented benching guidelines effective from June 12 restrict the non-billable period to 35 days annually, beyond which employees could face professional setbacks or possible job loss. According to an ET report, employees have reported various challenges, including urgent project searches, assignments in mismatched skill areas, unsuccessful client interviews, and difficulties securing projects in preferred locations. A concerned Reddit participant was quoted as saying, "This is the first step towards employment rationalisation based on utilisation. Brace for layoffs." A new recruit shared, "I have recently joined TCS and training was conducted in Java. Now, it's not even a month on bench and RMG is pressuring me to join a *** support project, far from Java and Python." However, the financial daily could not verify the veracity of the posts on Redditt. What is the TCS Benching Policy ? Explaining the revised bench policy, TCS chief executive and managing director K Krithivasan told Times of India: "It's always been expected that associates take responsibility for their careers. While HR supports project placement, we also expect associates to proactively seek new assignments after completing existing ones. What you're seeing now is simply a more structured version of what's long been in practice. We aim to minimise bench time." Also Read | Infosys vs Cognizant fight gets uglier! Why are the two big IT firms battling it out in the US? Explained The company prioritises substantial investment in employee development. "Once we've made that investment, we work to ensure associates are deployed," he said. "While preferences are considered, projects are driven by client needs, not personal choice. We deploy based on training, demand, and skill alignment. If gaps exist, we work to close them before deployment." When questioned about TCS withholding salaries for staff on extended bench periods, Krithivasan offered no direct response. TCS Benching Policy Impact The exact impact on the TCS workforce remains uncertain. Based on industry data, approximately 15-18% of employees at major Indian IT companies typically remain on bench. TCS, which leads India's IT sector, currently employs around 613,000 individuals. Last week a workers' rights organisation approached Union labour minister Mansukh Mandaviya, requesting immediate intervention regarding TCS's bench policy, which they described as "inhumane," "exploitative" and mentally taxing for technology professionals. Nascent Information Technology Employees Senate (NITES) submitted a formal complaint to the minister, claiming that TCS is pressuring benched employees through termination threats and withholding experience certificates if they cannot secure project assignments within specified timeframes. Also Read | TCS gives out variable pay! Over 70% employees to get 100% variable; no decision yet on salary hikes "These are not non-performing employees, but skilled professionals who find themselves temporarily without allocation… Instead of support, they are met with suspicion, coercion, and threats," NITES president Harpreet Singh Saluja said in the letter. Some staff members are however backing TCS' decision, noting that numerous employees have stayed unassigned for extended periods, turning down offered projects. These individuals have used their unallocated time for pursuing additional qualifications whilst not contributing to the organisation's productivity. "This may help TCS trimming some seriously underperforming resources, those stuck on TCS like a leech," a Reddit user posted. TCS Benching Policy: Industry Impact The IT sector anticipates significant changes as artificial intelligence (AI) begins to automate routine operations. "We expect IT companies to become stricter with their bench policies due to the soft business environment and AI-led demand for advanced skill sets," Pareekh Jain, founder and CEO of EIIRTrend told ET. He observed that staff expenses are notably affecting company profit margins. The stringent bench policy implemented by TCS might influence other IT firms, as managing bench strength becomes increasingly challenging due to AI-driven productivity improvements making it harder to reassign entry-level engineers, according to industry specialists. "Tech companies must continuously align their employees' skill sets with evolving client needs. By revisiting their bench policies, organisations are encouraging employees to reskill and stay relevant in high-demand areas such as AI, cybersecurity, and digital engineering," said Nitin Bhatt, technology sector leader at EY India according to the financial daily's report. "Going forward, tenure and grade-based promotions and merit increases will likely be replaced by assessments of skills proficiency and competencies required to take on new roles," he added. Also Read | 'Character assassination': Delhi HC asks Wipro to pay Rs 2 lakh for defamation of ex-employee; termination letter full of 'stigma and insinuations' Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now

World's top companies are realizing AI benefits. That's changing the way they engage Indian IT firms
World's top companies are realizing AI benefits. That's changing the way they engage Indian IT firms

Mint

time2 days ago

  • Business
  • Mint

World's top companies are realizing AI benefits. That's changing the way they engage Indian IT firms

Global corporations embracing artificial intelligence are reshaping their outsourcing deals with Indian software giants, moving away from traditional fixed-price contracts. The shift reflects AI's disruptive influence on India's $280 billion IT services industry, as focus shifts away from human labour and towards faster project completion. Fortune 500 clients waking up to AI's gains from fewer people and faster work are considering so-called time and material contracts which are based on actual time and labour spent—At least, before committing to the traditional fixed-price pacts. A time and material (T&M) contract is an agreement where a client pays a service provider based on the actual hours worked by their team and the cost of materials or resources used, rather than a fixed upfront price for the entire project. 'There are some (contracts) where we do based on the outcome. There are some customers that expect that this is better to do it on T&M (time and material)," said K. Krithivasan, managing director and chief executive of TCS, during the company's post-earnings conference call with analysts on 10 July. As agentic AI evolved, clients also want to see how they are able to benefit from the results," Krithivasan said. 'So, they want to do it on T&M. And then after a period of time, move towards the fixed-price model. So, we are seeing both options here." The change reflects the disruption that AI is causing for India's $280-billion information technology services industry. And it comes when clients are still cautious about discretionary spending amid global uncertainty and AI risks. LTIMindtree, too, saw similar changes in its contracts with clients. 'I saw a positive response when the discussion was about converting some of the time and material contracts to managed services and output-based construct," said Venu Lambu, managing director and chief executive officer of LTIMindtree, in an interview with Mint on 18 July. According to Lambu, this was driven by an AI-led solution provided by the company. 'Our clients are excited about it; so they want to hear more from us, and they want to see how we can help them to transition from the time and material contract to a more outcome or managed services-based construct, and we see that as a big opportunity," said Lambu. Both TCS and LTIMindree had a mixed first quarter of FY26. TCS ended with $7.42 billion in revenue in the three months through June, down 0.59% sequentially, whereas LTI Mindtree reported a revenue of $1.15 billion, up 1.97% on a quarterly basis. The revenue breakup of Wipro Ltd, India's fourth-largest IT services firm, over the last two years also shows how IT sector contracts are changing. Wipro's share of fixed price contracts reduced to 52% of overall revenue at the end of the three months through June from 56% at the end of the April-June 2023. During the same time, its share of time and materials contracts increased to 48% from 43%. 'Clients agree to this as it shifts the risk to the IT service providers for cost overruns and scope creep, and forces the service providers to generate the productivity that AI promises," said Peter Bendor-Samuel, founder of Everest Group. As of now, IT service providers get paid in a staggered manner rather than a lump-sum amount at the end of the year. Such instances of deferring payments arise due to macroeconomic uncertainties, which might compel companies to service their payment obligations to their IT vendors at a later date. According to Phil Fersht, chief executive of HFS Research, the change in ways through which companies engage with IT firms is brought about as clients seek lower prices from IT outsourcers. 'Enterprise customers are demanding lower prices from their service partners, which is shifting the focus away from the provision of people-based effort to the provision of the actual work," said Fersht. AI is also prompting companies worldwide to use fewer people in operations as automation is replacing manual, redundant labour. For IT outsourcers, this poses a challenge as they are traditionally billed on the basis of the number of employees deployed for the client. 'Net-net, if customers demand a 20% price-cut, the only way the likes of TCS and LTIMindtree can deliver on those savings, while maintaining their own profit margins, is with the smart use of AI to provide the same services with fewer people," said Fersht. 'That means the way these contracts are developed needs to shift from pay-per-FTE (full-time equivalent) to a consumption-based model, which we at HFS are terming 'Services-as-Software.'" Bendor-Samuel, however, expects the trend of changing contracts to fizzle out: 'It is unlikely to be a permanent trend as outcome and fixed pricing is more complicated and, over time, the FTE or time-based models, which are far simpler, are likely to win out."

TCS Rolls Out 100% Variable Pay In Q1 To Over 70% Of Employees; Details
TCS Rolls Out 100% Variable Pay In Q1 To Over 70% Of Employees; Details

News18

time15-07-2025

  • Business
  • News18

TCS Rolls Out 100% Variable Pay In Q1 To Over 70% Of Employees; Details

Last Updated: Tata Consultancy Services, India's largest IT services company, has announced 100% variable pay for more than 70% of its employees; Details TCS Variable Pay 2025: Tata Consultancy Services (TCS), India's largest IT services company, has announced 100% variable pay for more than 70% of its employees for the April–June quarter, the Economic Times reported. For the remaining staff, payouts will be determined based on the performance of their respective business units. 'All employees up to C2 grade (or equivalent grades) covered under the QVA plan will receive 100% of the Quarterly Variable Allowance (QVA). The individual payout for the C3 grade and above may vary, depending on business performance," chief human resources officer Milind Lakkad stated in an internal email, as reviewed by ET. TCS follows a structured grade hierarchy beginning with trainees at the Y level, moving up to systems engineer at C1, and then ascending through C2, C3 (A & B), C4, C5, and finally senior management levels. Those in the C3 and above bands are typically considered senior employees. Despite timely quarterly variable payments, the company is yet to announce its annual wage hikes amid ongoing macroeconomic challenges that have weighed on its revenue in dollar terms for three consecutive quarters. TCS added 5,060 employees in Q1 FY26, bringing its total workforce to nearly 613,000. Krithivasan, however, remained cautiously optimistic, stating that discretionary tech investments — key drivers for software services firms — are expected to recover once macro clarity emerges. view comments First Published: July 15, 2025, 10:15 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.

HCLTech starts the year strong, but margins raise worry
HCLTech starts the year strong, but margins raise worry

Mint

time14-07-2025

  • Business
  • Mint

HCLTech starts the year strong, but margins raise worry

HCL Technologies Ltd reported better-than-expected revenue in the June quarter and now sees full-year growth at 3-5% against 2-5% earlier, but the management lowering its full-year profitability by 100 basis points was a sore spot. On Monday, the country's third-largest information technology (IT) services company reported $3.55 billion revenue for the June quarter, up 1.34% sequentially. The performance exceeded expectations of 37 analysts polled by Bloomberg, who expected HCLTech to report $3.53 billion in revenue. This was its best first quarter in six years. HCLTech performed better than larger peer Tata Consultancy Services (TCS) in a lumpy first quarter because of its Europe business, and expects a stable FY26 despite lingering macroeconomic uncertainty. TCS ended the first quarter with $7.42 billion in revenue, down 0.59% sequentially. The Noida-headquartered company's management sounded confident. 'We observed that the environment remains stable from an overall perspective, with some variations across specific verticals. It also did not deteriorate as feared at the start of the quarter,' said C Vijayakumar, chief executive of HCLTech, as part of his prepared remarks during the company's post-earnings press conference on Monday. Vijayakumar's commentary is in contrast to TCS chief executive K. Krithivasan, who called out delays in decision-making and project starts with respect to discretionary investments. The HCLTech management narrowed its revenue guidance for the full year. The company now expects revenue growth between 3% and 5% in constant currency terms, higher than its 2% guidance on the lower end it had called out in April. Constant currency does not take currency fluctuations into account. While TCS's Krithivasan said that non-essential tech spending, which is crucial in boosting revenue of homegrown IT outsourcers, must be back once uncertainty lifts, Vijayakumar was optimistic of growth along expected lines. 'We are optimistic about meeting a revised guidance supported by our superior revenue growth and positive booking expectations for the upcoming quarters,' said Vijayakumar. For now, most of the company's incremental business of $47 million came from businesses based in Europe, which contributed 87% of it. HCL gets almost a third of its business from Europe. In terms of verticals, much of the incremental revenue came from banks and financial institutions, which makes up a little more than a fifth of the company's business and is its largest cash cow. HCLTech got $766 million from financial institutions last quarter. However, there were bigger causes of concern. The Noida-based IT outsourcer reported $450 million in net profit, down 9.3% sequentially. This was the company's second successive quarter of net profit decline. HCLTech's operating margins also raised concerns. Its profitability declined 160 basis points to 16.9% during the quarter. One basis point is a hundredth of a percentage point. The company even reduced its operating margin band to 17-18% for the full year as against its 18-19% target in April. Chief financial officer Shiv Walia called it one-time impact, attributing the drop to a bunch of factors, adding 'specialized hiring as well as skill and location mismatch and a one-off impact of customer bankruptcy' caused the margins to drop, among other smaller factors. While the software products business is historically its primary margin booster, operating margins for this vertical declined 190 basis points sequentially to end at 22.4% for the June quarter. Notably, HCLTech is one of the few large IT outsourcers that has a sizeable reliance on selling and licensing revenue of software products. Its revenue from its software business fell 4.6% on a quarterly basis to $330 million; still, the bigger impact of this arm is on the company's operating margins. Unlike TCS, HCLTech reduced headcount in the quarter. The company cut staff by 269 in the April-June 2025 period to end with 223,151, whereas TCS added 5,090 people in the first three months of the fiscal to end with 613,069 employees. Two of the country's three largest IT outsourcers adding headcount implies better signs ahead. More headcount in an IT services company means more demand for IT services and vice-versa. This increase in headcount comes on the backdrop of a tariff war started by US president Donald Trump coupled with geopolitical uncertainties. Both have put IT spends of large companies, many of whom count HCLTech as their IT vendor, in limbo. The company also highlighted a restructuring plan that was put in place. 'The restructuring consists of two components. One is a lot of facilities that we are not utilizing, mostly in locations outside India, is something which we believe we should optimize, because we have not been using some of these facilities, especially some of it related to our acquisitions,' said Vijayakumar. He also mentioned that the headcount would be cut because of the programme, in order to get to the company's 18-19% operating margin aspiration. 'The second is also that there will be some talent ramp-down that has happened, especially in some of the geographies outside India,' said Vijayakumar, adding that the upper end of its guidance factored a cost component to its restructuring programme. Like TCS, HCLTech did not call out orders or revenue from Gen AI, but announced a dividend of ₹ 12 per share. The company's shares fell 1.41% to close at ₹ 1,614 on Monday. The 30-share benchmark BSE Sensex index closed 0.3% lower at 82,253.46 points. The earnings were announced after market hours.

FAME fallout hits EV makers; Tête-à-tête with TCS CEO
FAME fallout hits EV makers; Tête-à-tête with TCS CEO

Time of India

time14-07-2025

  • Automotive
  • Time of India

FAME fallout hits EV makers; Tête-à-tête with TCS CEO

FAME fallout hits EV makers; Tête-à-tête with TCS CEO Also in the letter: Smaller EV players wiped out after FAME red flag Sales tailspin: Okinawa Autotech: Annual sales crashed from 31,618 units in 2023 to 4,855 in 2024. Just 1,422 units have been sold till July this year. Annual sales crashed from 31,618 units in 2023 to 4,855 in 2024. Just 1,422 units have been sold till July this year. Ampere Vehicles (owned by Greaves Electric Mobility): Combined registrations under Ampere and Greaves fell to 26,963 units in 2025 so far, down from 36,148 in 2024 and 66,958 in 2023. Combined registrations under Ampere and Greaves fell to 26,963 units in 2025 so far, down from 36,148 in 2024 and 66,958 in 2023. AMO Mobility: Has sold just 25 vehicles in 2025. Has sold just 25 vehicles in 2025. Benling India: Only 95 vehicles were registered this year. Only 95 vehicles were registered this year. Hero Electric: Sales fell off a cliff—from 29,965 units in 2023 to 2,916 in 2024, and just 382 so far in 2025. The company is now undergoing insolvency proceedings. The issue: The issue: Refunds and resistance: Also Read: Market shift: Unfair to call TCS a one-trick pony: CEO Krithivasan Reason why: 'Not a one-trick pony': A new hope: Also Read: Sponsor ETtech Top 5 & Morning Dispatch! Why it matters: The opportunity: Reach a highly engaged audience of decision-makers. Boost your brand's visibility among the tech-savvy community. Custom sponsorship options to align with your brand's goals. What's next: Amazon Prime Day boosts sales across categories, but smartphones lag Uptick in sales: Growth from last year: Tariff impact: Keeping Count Other Top Stories By Our Reporters Tata Tech doubles down on auto software: Devanahalli farmers propose price for tech park land: Global Picks We Are Reading Happy Monday! Electric two-wheeler makers are reeling from the FAME subsidies crackdown. This and more in today's ETtech Morning Dispatch.■ Prime Day power-up■ Tata Tech priorities■ Devanahalli protestsElectric two-wheeler makers penalised for violating the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) subsidy norms are now reeling , with several smaller players fading fast from the collapse follows the ministry of heavy industries pulling the plug on subsidies after audits found several firms flouting localisation rules under the Phased Manufacturing Programme (PMP), part of the FAME-II. The government demanded refunds, with total clawbacks pegged at Rs 469 Greaves, and AMO Mobility have collectively returned Rs 170 crore. Others, including Hero Electric, Okinawa, and Benling, have taken the legal the non-compliant firms struggle, the spotlight has shifted to the bigger players. TVS Motor, Bajaj Auto, Ola Electric, and Ather Energy have expanded their grip on the segment, backed by robust supply chains and far greater consumer trust.K Krithivasan, CEO, TCSTata Consultancy Services (TCS) chief executive K Krithivasan has pushed back against suggestions that the company is a 'one-trick pony', after the software giant reported a third straight quarterly decline in dollar revenue. Speaking to ET in a post-results interview, Krithivasan said the slowdown was a result of a mix of factors in an unpredictable company is struggling with sluggish spending from aviation and retail clients, while the confusion in the EV space has also hit the auto sector hard. Clients, Krithivasan added, were focusing on programmes that reduce costs. While international revenue has stayed flat, domestic revenue also took a hit following the end of the BSNL however, doesn't make TCS overly reliant on one account. BSNL contributed only $1 billion to TCS's $30 billion revenue. Calling this out to call TCS a one-trick pony is a 'disservice', Krithivasan said. The company is proud of what it did with BSNL, but it has many other projects as well, and is not losing market share, he expects international business to rebound this year. TCS is now counting on a refreshed services strategy, leaner leadership, and AI to turn this Top 5 and Morning Dispatch are must-reads for India's tech and business leaders, including startup founders, investors, policy makers, industry insiders and Reach out to us at spotlightpartner@ to explore sponsorship flagship Prime Day sale, exclusive to its Prime members, delivered a significant boost for brands across electronics, beauty and personal care, home and decor, and sellers reported a three- to fourfold jump in sales compared to last year's event, thanks to deep discounts and aggressive surge was particularly sharp for Solara, a home and kitchen brand. Founder and CEO Gopal Kolli said the company clocked five to six times its usual sales on the first day alone, doubling last year's Prime Day figures. 'With all the quick commerce, we weren't sure how it would perform, but it surprisingly did very well,' he analysts echoed the momentum. 'Across categories, we're seeing almost a two-to-threefold increase in both traffic and order volumes,' said Satish Meena, adviser at ecommerce consultancy Datum Amazon said the US edition (July 8-11) was its biggest Prime Day ever. Still, the event saw relatively muted discounting, with several brands opting out due to the tariff pressures triggered by policies under US President Donald accounted for 12.5% of all TV viewing time in the United States in May, while Netflix accounted for 7.5%, according to a Nielsen report. (Source: NYT Tata Technologies is increasing its focus on software-defined vehicle (SDV) offerings as global automakers shift research and development (R&D) priorities from mechanical components to software and electronics to promote in-car protesting farmers of Devanahalli have offered to sell their 450 acres to the government for a proposed high-tech park, on the condition that they receive Rs 3.5 crore per acre.■ 24 hours with Alexa Plus: we cooked, we chatted, and it kinda lied to me ( The Verge ■ Metadata shows the FBI's 'raw' Jeffrey Epstein prison video was likely modified ( Wired ■ Supporting mission-driven space innovation, for Earth and beyond ( MIT News

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