TCS wage cut worries tech workers

Tata Consultancy Services’s decision to pare staff wages has triggered rumblings in the Indian outsourcing landscape with employees beginning to wonder if indeed they are circling the drain before the slowdown in the world’s largest economy drags them into a quagmire.

Even as employees shuffle uneasily in their seats, top officials at Indian outsourcers closed ranks and sought to allay concerns claiming there was no generic parallel that can be drawn from the action of the country’s largest software exporter.

On Tuesday, TCS in an email communique to its 100,000 plus employees said a combination of internal and external factors saw it failing to meet its Economic Value Added target—a financial performance method calculated as the net operating after taxes profit minus a charge for the opportunity cost of capital invested.

Infosys Technologies, the closest Indian rival of TCS, chose not to read anything into the missive. “It is not an industry issue,” said Infosys Chief Financial Officer V Balakrishnan.

On its part, TCS said, though it met its revenues targets, the EVA target forms the basis for the variable pay computation and has been given in advance, each month during Oct-Dec period.

Based on the audited results, the EVA-based variable payout amounts to Rs 293 crore for the quarter. The actual variable payout based on expected EVA given in advance amounts to Rs 376 crore.

Therefore, the advance payment that has to be adjusted amounting to Rs 83 crore, will be recovered during the current quarter from the employees.

The recovery would be reflected in employee wages in the months of February and March 2008.

“I think it is a company specific strategy. And right now, if you look at our own quarter and the way that business, is growing, I think volumes are not an issue at all,” said Ganesh Natarajan, vice-chairman of industry body Nasscom and managing director of Zensar Tech.