Tata Consultancy Services (TCS), India's largest IT services firm, has been undergoing a significant workforce realignment. Amid a period of rapid technological change and automation, the company is reducing its headcount. However, as per reports, TCS is mitigating the impact of these difficult layoffs by providing comprehensive severance packages to affected employees, offering compensation ranging from six months to two years' salary.
Rationale for the decision
TCS has reportedly decided to reduce its workforce by approximately 12,000 employees, representing about 2 per cent of its total strength. This restructuring is driven by the fact that the skills of many employees no longer align with evolving client demands. The company's goal is to ensure its teams are agile and "future-ready."
Severance package details
According to a report by Mint, the restructuring primarily impacts employees whose skills have become redundant or who have failed to upskill in line with shifting client requirements. The exit benefits offered are tiered:
- Bench Employees (unassigned for 8+ months): Will receive a simpler package consisting only of three months' notice period pay.
- Employees with 10 to 15 Years of Service: Will receive a severance package equivalent to approximately 1.5 years' salary.
- Senior Employees (15+ years of service): Are eligible for the highest payouts, potentially receiving 1.5 to 2 years' salary as severance.
Additional support measures
TCS is also offering robust non-financial support, including:
- Outplacement Services: The company covers agency fees for three months to assist separated staff in securing new employment.
- Mental Health Support: Access to therapy and counselling facilities is provided through the "TCS Cares" program.
- Early Retirement Option: Employees nearing retirement age may opt for early retirement, receiving all accrued benefits plus an additional severance package of six months to two years' salary.
CEO commentary and status
TCS CEO K. Krithivasan stated that this was "one of the most difficult decisions" he has had to make, emphasising that the move is necessary to strengthen the company for future challenges. Most workforce adjustments were completed in August and September, with only a limited number of cases currently being offered opportunities for redeployment through the Resource Management Group (RMG).
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