TCS employees on the edge as co's new benching policy completes first cycle
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As the first 35-day cycle under Tata Consultancy Services ' ( TCS ) new bench policy ends on Thursday, thousands of benched employees are staring at uncertainty, with many taking to social platforms to voice their anxiety.The policy, implemented on June 12, caps the maximum bench period — that is, time without any project allocation — at just 35 days a year, after which they risk career degrowth or even termination.Online forums like Reddit are flooded with posts from TCS employees expressing their concerns.While several employees have been scrambling for projects, others allege that they are being forced into projects that don't suit their skill sets. Some are getting rejected in client interviews while others are unable to find projects in their home locations, going by various posts on Reddit.'This is the first step towards employment rationalisation based on utilisation. Brace for layoffs,' one anxious Reddit user wrote.One fresher claimed, '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.'ET could not independently verify the veracity of any of these claims.The number of people likely to be impacted is also unclear. According to industry estimates, on an average, 15-18% employees in leading Indian information technology (IT) firms are usually on the bench. TCS, India's largest IT company, has a workforce of about 613,000 people.Meanwhile, an employee welfare body on Wednesday urged Union labour minister Mansukh Mandaviya to take urgent action against TCS for the enforced bench policy that it called 'inhumane,' 'exploitative' and psychologically distressing for IT professionals.In a letter to the minister, Nascent Information Technology Employees Senate ( NITES ) alleged that the IT giant is coercing employees on the bench with repeated threats of termination and denial of experience letters if they fail to meet unrealistic deployment timelines.'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.However, some employees are supporting TCS' move, saying that several employees have remained on the bench for years, rejecting projects offered to them with some of them utilising the time to go for higher studies and generally not perform at the company.'This may help TCS trimming some seriously underperforming resources, those stuck on TCS like a leech,' a Reddit user posted.TCS did not respond to ET's requests for comment until the time of publishing this article.Justifying the new 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.'He noted that the company invests heavily in upskilling. '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.'Krithivasan did not directly respond to a question on whether TCS has started withholding salaries for employees benched for extended periods.TCS, like other IT companies, has been reeling under the impact of macroeconomic uncertainty and reported a third consecutive quarter of degrowth last week.The IT industry is also bracing for the impact of artificial intelligence (AI) automating most of its repetitive tasks.'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 IT consulting firm EIIRTrend, said. Employee costs are significantly impacting companies' margins, he noted.TCS' decision to make its bench policy strict could have downstream impact among other industry peers with bench strength increasingly becoming a problem for IT companies as AI-led productivity gains have made entry-level engineers difficult to redeploy, experts said.'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.'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.Demand contraction in IT services had impacted TCS' employee utilisation, which took a hit last quarter and also affected the company's margins, its CFO Samir Seksaria had said last week.The company's employee cost reached an all-time high of Rs 37,715 crore in the first quarter ended June. It now constitutes 59.45% of its revenue, even as attrition remains high at 13.8%, data showed.The country's third-largest IT player HCL Technologies, too, took an unexpected hit on its margins because its employee utilisation went down during the June quarter.Utilisation dropped 'due to a delay in ramp up for a specific program, (while) we encountered ramp downs in specific areas, which resulted in a larger bench due to also productivity benefits that we brought about, and it was also due to demand supply mismatch between skills and locations,' HCL Technologies MD and CEO C Vijayakumar said during the company's earnings call on Monday.
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Profiles of employees affected and implications In the past, job cuts were influenced by sub-par performance of individual employees, whereas the recent wave of layoffs has significantly impacted specific segments of the IT workforce. While the younger and less experienced employees have the relevant skills and are often able to be more easily placed on projects, senior resources face distinct challenges. So, the people most affected by the job cuts are middle-level executives whose roles are deemed redundant due to reasons such as automation, non-deployability on billable projects, skill mismatch, cost considerations and structural changes by way of reduction of layers in the organisation. This creates a paradox wherein years of accumulated experience, traditionally considered to be a valuable asset, becomes a weakness due to non-alignment with evolving project demands. This trend poses a significant challenge for a large segment of the established IT workforce, signalling a shift in the traditional career progression model, where career mobility and growth solely depend on skill relevance on a continuous basis rather than tenure. Experienced professionals face the challenge of upgrading their skills quickly or seek opportunities in other industries or geographies. In some companies, entry-level employees, including trainees who did not meet the new, tougher assessment norms were affected. In some cases, the job roles cut relate to technical support functions due to automation. Non-customer-facing and administrative non-revenue generating roles have been affected. How companies have been affected While the job cuts will result in short-term gains to the companies in terms of cost savings and improved operational efficiencies, they dent the image and result in loss of goodwill built over time. They will affect the ability of the companies to attract good talent in future. The departure of experienced employees will result in loss of valuable insights and institutional knowledge essential for fostering creativity and innovation. These pervasive psychological impacts on both the laid-off and surviving employees reveal significant hidden costs, which may be termed the 'invisible cost' of layoffs. Impact on morale The recent layoff wave has caused immense financial hardship and damaged the morale of the affected employees who have a lot of family obligations. Unlike in the West, the affected employees in India do not have access to social security benefits nor adequate job opportunities, thereby making the situation more stressful. The retained employees will face enormous stress due to fears of job insecurity and possibility of additional workload due to reduced staff, which may also lead to burnout and poor mental health. Lessons for IT companies Historically, Indian IT firms competed in the global market, by leveraging their large, cost-effective workforce, wherein the growth was driven by headcount additions and utilization rates. Over the last decade (2014-2024), the top four Indian IT players collectively saw a 187% increase in revenue, followed by 206% increase in employee cost, which as a percentage of revenue has increased from 48% in 2014 to 57% in 2024, implying that manpower productivity has been relatively stagnant. This model is susceptible to global macroeconomic uncertainties, with the clients pushing for significant price reductions (20-30%) and cutting down on discretionary IT spending, impacting revenue growth. A fundamental shift in the IT services business model seems to be imminent by decoupling headcount growth from corresponding revenue contributions. The new driver of the future growth of the industry will be increased manpower productivity, enabled by automation and AI. While it is imperative for the IT companies to adopt multifaceted strategies to remain competitive and capitalize on the opportunities presented by AI and related technologies, companies that invested in strategic workforce planning and effective upskilling programs saw better alignment between talent supply and demand and faster redeployment of at-risk staff in emerging roles. Companies should proactively rotate and redeploy the resources across functions/projects so as to provide contemporary hands-on project skills to all employees. They may also consider flexi-resourcing models, which may include part-time, gig and consulting options, to the affected employees before resorting to job cuts. Impact of reskilling initiatives As per the recent annual reports of the large IT companies, over 90% of the employees went through upskilling programs in the last three years. In this context, concerns are expressed with regard to the level of effectiveness of the current practice of self-learning based upskilling programs and their impact on internal redeployment of the trained persons so that job cuts could have been avoided. Experts are of the opinion that unless the training programs are designed combining role-specific learning pathways with project-based hands-on skilling, they will not be effective. Companies that integrated classroom training with mentorship, project shadowing, career coaching, and internal job support enabled the employees to successfully transition to the new roles rather than face redundancy. Industry analysts also point out the need for more effective and universally adopted reskilling frameworks tailored to the profiles of individual employees, leveraging the power of AI. HEIs should focus on skills The industry's pivot from volume-based to value-based services and the explicit demand for niche, high-value AI and data analysis skills suggest the imperative to focus on skills, as the traditional academic degrees alone are no longer sufficient for career success. This is all the more important as the industry expects fresh graduates to be 'ready-to-deploy' resources and the traditional traditional structured training to freshers has been dispensed with. In view of the large shortage of industry experienced teachers, Higher Educational Institutions can leverage the availability of displaced industry professionals to engage them as Professors of Practice to impart students with the industry-ready skills. Lessons for students, employees In an environment of increased job insecurity, employees need to take ownership of their careers, which includes actively seeking internal mobility opportunities, exploring new roles within the company, and being prepared for new role transition and relocation if necessary. The concept of lifelong learning has transitioned from a desirable attribute to an absolute necessity to stay employed. Continuous upskilling and reskilling in contemporary technologies is now a 'must' and is no longer an option. Micro-credentials, which are compact, skill-focused courses, are emerging as a vital bridge between academia and industry. A recent study reveals that 93% of Indian employers have hired candidates with micro-credentials and found them to be more job-ready, significantly reducing ramp-up time for new hires. Role of industry associations and government Addressing the current challenges and preventing similar situations in the future requires a collaborative and multi-pronged approach, involving industry associations, academia and the Government of India. Industry associations like Nasscom can play a crucial role in tracking industry trends globally and provide foresight so as to enable the companies to put together strategic resourcing and reskilling plans. The government may collaborate with industry and academia for launching nationwide reskilling drives, especially targeting mid-career professionals and fresh graduates. The Ministry of Education and Ministry of Information Technology may collaborate with industry and HEIs to offer teacher training programs for displaced people interested in teaching so that they can transition smoothly into their second careers. Way ahead The Indian IT industry is going through a massive reset due to the unprecedented disruption driven by digital transformation, which is bound to cause a lot of stress all around. The path forward requires concerted and co-ordinated efforts from the industry and academia, duly supported by the government, so as to navigate the current turbulence deftly, mitigate the adverse impacts of workforce transformation, and position themselves for sustainable growth in the challenging future ahead. (Prof O. R. S. Rao is the Chancellor of the ICFAI University, Sikkim. Views are personal)
