TCS Kochi start layoffs at the Kakkanad office. Sacked employees issued termination slips

Reports are coming in that TCS has issued termination slips to some employees at the TCS Kochi office (at Kakkanad) as part of its recently announced restructuring exercise. TCS had earlier announced that there will be layoffs across India as part of their restructuring. This has nothing to do with the strength of TCS as the leader in IT outsourcing but a strategic move. “Involuntary attrition” is the term used, though it basically means employees get fired.

The number of employees sacked is unclear but has been reported in reputed newspapers like Indian Express.

It is always better to check as sometimes it just turns out to be a rumor.

http://www.newindianexpress.com/states/kerala/Layoff-TCS-Hands-Out-Pink-Slip-to-Employees/2014/12/31/article2595990.ece

Globally, many companies like Microsoft and IBM have done regular restructuring over the past few years.

TCS officially distances itself from the claim that lots of employees are being laid off. According to the article in Money Control yesterday

http://www.moneycontrol.com/news/cnbc-tv18-comments/tcs-allays-layoff-fears-no-pink-slips-for-employees_1263016.html, they refute that any unusual number of layoffs are happening. Apparently 1-1.5% involuntary attrition per year is standard, except that for the size of TCS, that works out to 3000 to 5000 employees.

Kakkanad in Kochi, Kerala, is home to software companies like TCS, CTS and Wipro, while Infosys is located in Trivandrum, which is the capital of Kerala and located 200 Kms away from Cochin.

There is even a Facebook page created called “We are against TCS layoffs” – ostensibly by employees affected by the layoffs.

The reports also include photographs of the termination slips issued to the employees affected by the Layoff.

While TCS is a very large organization that regularly has employees leaving involuntarily, this time the apparent size of layoffs is causing people to get jittery. There are unconfirmed estimates that upto 30 000 employees may eventually be affected by the layoffs across India.

TCS has over 330 000 employees, so even a count of 30 000 employees fired would only come to 10% of the size.

In addition TCS is on course to recruit 50 000 people next year.  It is unclear if the freshers being recruited in 2015 are going to be affected in the restructuring – TCS has said that their hiring plans are on course. Those who have been given offer letters through campus recruitment will be called for training. In previous years, sometimes the freshers who have been offered jobs in IT companies like TCS have been affected by a delay in being called to join.

TCS continues to prepare for more employees to be added to their strength. They have already announced plans for building the worlds biggest corporate training centre in Trivandrum, which is 5 hours drive from Kochi. They are also building a new development centre in Trivandrum at Technopark, which is the oldest and biggest single park in India.

The question on the mind of TCS kochi employees will be “Which projects are affected by the layoffs?”

It is also not clear if the impact is for lower ranked employees or seniors. Reports in the newspapers online versions suggest that many mid senior employees will be targeted. That makes sense from a purely financial perspective, since senior employees enjoy a higher pay and can have a bigger impact on the cost savings in any restructuring exercise.

Additionally , as in the US, companies will learn that lower ranked employees (and lower paid) can perform at close levels to a senior  employee with extensive training.

Other IT employees need not gloat at their peers in TCS, because if the biggest company is setting the trend, other IT companies are bound to follow.

Larger companies like TCS can easily cut costs and improve margins through layoffs, since the employee salaries are a reasonably big component of their overall costs.

The good thing to come out of this is that some of the employees may decide to start companies or startups on their own, particularly if they are experienced. It will also free up a pool of senior employees that Startups can employ. There may be also a slight impact on the overheating of salaries in the market. Companies may find that employees think twice before jumping ship, if they are looking to move to a larger company like TCS, CTS, Infosys or Wipro.