- TCS reported an increase in churn in the September quarter – at 21.5%, the highest in six quarters.
- Overall, the company’s workforce was 6,16,171, with a net addition of 9,840 employees.
- The IT major says that while attrition has likely peaked, the compensation expectations of experienced professionals are also declining.
- Milind Lakkad, the head of HR at TCS, also talked about moonlight, calling it an “ethical issue.”
The performance of IT key TCS deteriorated in the September quarter, in line with analyst expectations. However, the company believes that attrition has peaked and that the compensation expectations of experienced professionals have also been dampened.
However, the company explained that churn will not drop significantly anytime soon.
“We believe our year-over-year churn peaked in the second quarter and should decline from this point on as compensation expectations of experienced professionals moderate,” said Milind Lakkad, the company’s chief HR Officer.
Overall, TCS’s total workforce was 6,16,171, with a net addition of 9,840 employees in the September quarter. The company hired 20,000 freshmen in the second quarter, up 33% from the previous quarter.
However, the number of new hires has decreased: it hired 35,000 new hires in H1 FY23, up from 43,000 in H1 FY22. It’s worth noting that late last year, TCS set a target of hiring 40,000 freshmen by FY23. At the current rate, it looks like this number will be comfortably exceeded.
When it comes to attrition, this is TCS’s worst quarter, at least in the last six quarters.
Source: Company Reports
Analysts expect attrition to ease towards the end of the year, but that is more due to a material drop in demand, according to a report by ICICI Securities.
Credibility of this is the fact that Lakkad said professionals’ compensation expectations are likely to moderate as well.
‘Moonlighting is an ethical issue’
Lakkad also spoke about moonlight – a controversial topic with divided opinion – and said it is an ethical issue.
Lately, high turnover rates have emphasized moonlight – a practice where one person works across multiple jobs. Wipro’s executive chairman Rishad Premji even called it “just plain and simple deception.”
A major reason why people have multiple jobs may be the fact that average wages have fallen – from ₹4.54 lakh in Q1 FY22 to ₹4.5 lakh in Q1 FY23, despite strong inflation.
Another oft-cited reason is that an extra job improves employee skills – companies try to counter this by increasing in-house training programs and learning opportunities.
“In the second quarter, TCSers clocked 11.7 million learning hours, resulting in the acquisition of 1.5 million competencies,” the company said in a press release. Interestingly enough, despite the increase in the workforce, learning hours have decreased compared to the previous quarter, which came in at 12 million.
TCS reported a 10% increase in its net profit sequentially, to ₹10,431 crore, with a net margin improving to 18.9% over the period. It declared a dividend of 8 per share.
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