TCS Mandates Final Call For Reluctant Staff To Return To Office; With Hirings At All Time Low In IT Sector And Others Why Gamble With A Job?

Tata Consultancy Services (TCS) has decided to extend the deadline for employees to return to the office by an additional quarter, now scheduled until the end of March.

However, the company has emphasized that this extension marks the final opportunity for employees to comply, with potential consequences for those who fail to do so.

With a majority of companies announcing a hiring freeze and several rounds of layoffs, one would think that those who have a job would do anything to keep it, but here (TCS), the trend seems to be in reverse, where the management is asking people to work from the office and (some) employees are reluctant- hence what could be made out of this reluctance?

Meanwhile, NG Subramaniam, the chief operating officer, conveyed that this decision was based on considerations of work culture and security concerns.

“We are demonstrating patience, yet firmly upholding the stance that employees must resume office work,” he remarked. “We have issued our last communication on this matter, and non-compliance will result in repercussions.”

Subramaniam highlighted the vulnerabilities employees and employers face when working from home, emphasizing that in the current scenario of cyber threats, organizations could unwittingly expose themselves to risks.

He stated that the controls and security measures available at home are often inadequate compared to those in a professional office environment.

The Threat
During the third fiscal quarter, Infosys, India’s second-largest IT firm, disclosed that one of its US units experienced a cyber security incident, leading to the unavailability of several critical applications.

Similarly, in December, HCLTech reported a ransomware attack, though it asserted that the incident had no discernible impact on its operations.

Hence, TCS aims to restore its pre-pandemic work culture, moving away from the 25-by-25 hybrid model introduced during the Covid-19 crisis, which was initially announced in 2020; the company had outlined plans for a quarter of its workforce to operate remotely by 2025, contingent upon all employees returning to the office.

During the December quarter earnings announcement on January 11, TCS disclosed that 65% of its workforce had been attending the office for up to three days per week.

Subramaniam stressed the imperative of reinstating the company’s original culture, noting that during the pandemic, around 40,000 employees had joined and left the organization solely through online channels, without any in-person interactions.

Such a situation, he emphasized, is not conducive to the organization’s overall health and productivity.

The Ballooning
During a period marked by significant industry churn, TCS experienced a notable surge in headcount, with an increase of over 167,000 between April 2020 and October 2023.

However, subsequent quarters saw a reversal in staff additions as the company moved to address the challenge of high employee costs.

Addressing concerns surrounding attrition and the erosion of trust among employees within the IT sector, NG Subramaniam emphasized the importance of security and confidentiality.

He stressed the necessity of face-to-face interaction for fostering talent and making critical leadership decisions, noting that remote work hinders the cultivation of a strong organizational culture.

The Departure
In June 2022, TCS disclosed that 25,000 employees had joined and departed before ever setting foot in an office.

By January 2023, the company recorded its highest-ever attrition rate of 21.5%, which subsequently decreased to 13.3% in the December quarter.

By the end of the third quarter, TCS’s workforce stood at 603,305 employees, marking a decline of 5,680 individuals.

The reduction follows a larger dip of 6,333 in the second quarter, representing the company’s most significant decrease in numbers since the 2008 crisis, as TCS moderated its hiring efforts.

As TCS facilitates the return of employees to office spaces, the company anticipates a return to its “normal operating mode” by the conclusion of the current fiscal year, as outlined by chief HR officer Milind Lakkad during an earnings conference.

The Challenge
The challenge of encouraging employees to return to offices is not unique to TCS, with other industry players reporting similar hurdles in boosting campus attendance.

Hence, many companies have adopted roster systems mandating up to three days of in-office work.

While TCS has initiated campus visits, counterparts such as Wipro and Infosys have opted to refrain from such engagements.

Despite challenges, the Indian IT services sector is displaying signs of recovery, with recruitment experts noting a 10% increase in hiring intent as of January.

The resurgence follows a headcount correction prompted by the macroeconomic downturn in 2023, with the top five companies collectively reporting a headcount reduction of over 61,000 from the previous year.

Campus Hiring In The IT Sector Hits All-Time Low
India’s renowned software giants are set to conclude the current fiscal year with the lowest intake of fresh engineers in over two decades, having hired between 70,000 and 80,000 recruits for the $245-billion industry.

The decline comes amidst waning global demand for technology services post-pandemic.

Estimates from staffing firms suggest that less than 10% of the anticipated 1.5 million engineering graduates will secure job placements this summer.

The sharp decline in fresher recruitment signifies a significant departure for a sector that once dominated college campuses, hiring a record 600,000 freshers during the technology services boom in fiscal 2022.

As demand for digitization receded following the abatement of the Covid-19 pandemic and amid escalating geopolitical tensions in regions like Ukraine and Israel, Indian IT firms reduced their intake of freshers to approximately 250,000 in fiscal 2023, marking the onset of a substantial downturn in new hiring.

“In the face of prolonged challenges, we anticipate another year of minimal freshers and entry-level hiring activity in India,” stated Anil Ethanur, co-founder of Xpheno, a specialized IT hiring firm.

Earlier predictions by hiring experts suggested a 50% drop in fresher recruitment for FY24 compared to the previous year.

However, Ethanur noted, “the sluggish uptake across key talent segments and stagnant demand significantly impact fresher intake,” with his firm estimating a 60-65% decline in fresher hiring by the fiscal year’s end.

While major IT firms like Infosys and Wipro are expected to abstain from campus recruitment for a second consecutive year, TCS, India’s largest software services company, announced reduced fresher hiring and ongoing adjustments to lateral recruitment strategies, prioritizing existing capacity utilization and closely monitoring demand trends.

Samuel Rajkumar V, director of Career Development Centre at Vellore Institute of Technology (VIT), remarked, “This year’s placement figures have been affected by the non-hiring activities of IT services giants like TCS, Cognizant, Infosys, and Wipro, which typically recruit in the seventh semester.”

He added that TCS and Cognizant had initiated their hiring processes the previous month and are expected to conduct interviews in February, albeit with a projected decline in offers compared to the previous year.

Against the backdrop of the pandemic’s onset in 2020-2021, the IT industry experienced a decline in entry-level hiring, onboarding only 85,000 employees.

Over the past 12 months, the sector has witnessed a net addition of less than 50,000 entry-level positions, according to Xpheno data.

Amidst cautious market sentiments, leading IT companies anticipate a substantial decline of 40-60% in overall fresher intake for the fiscal year 2023-2024, noted Krishna Vij, business head of TeamLease Digital.

Tier 2 colleges, heavily reliant on IT services, are likely to bear the brunt, with anticipated declines of over 50% in job offers.

“Significantly, many prominent recruiters have either downscaled their fresher hiring efforts or opted out of conducting campus visits this year,” Vij observed.

However, Ethanur stated that on popular job boards and professional networking portals, there are opportunities available for freshers and entry-level talent within the range of 40,000 to 50,000 positions.

According to hiring executives, the adoption of remote work and AI-driven reskilling represents a strategic response to evolving workforce preferences and technological advancements.

Vij from TeamLease highlighted that the economic slowdown and concerns over a global recession have impacted hiring plans, leading to apprehensions within the sector and affecting opportunities for aspiring engineers.

Analysts, however, expressed cautious optimism regarding a potential rebound in fortunes by the fiscal year 2025.

While there has been a significant decline in headcount among the top five companies, totalling over 61,000 year-on-year for the October-December period, the Indian IT sector is showing signs of recovery with a 10% increase in hiring intent as of January.

However, according to experts, these hiring initiatives primarily target experienced professionals for replacement positions.