TCS has taken a step in implementing a salary hike for its employees, despite the impact it will have on the company’s operating margin. TCS (Tata Consultancy Services) CFO Samir Seksaria revealed that the annual salary increase, effective from April 1, would result in a 200-basis-point hit on the operating margin, which currently stands at 23.2 per cent.
Nevertheless, India’s largest software services exporter is confident that improved efficiencies will help offset this impact. TCS, in addition to the salary hike, has also initiated the promotional cycle and rewarded exceptional performers with raise ranging from 12 per cent to 15 per cent during the latest annual compensation review.
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TCS is pleased to note that its attrition level continues to trend downwards and expects to return to its industry-leading, long-term range in the second half of the year.
TCS reported a further decrease in attrition for its IT services, during the June quarter, which stood at 17.8 per cent over the past 12 months. TCS workforce has grown to 615,318 employees as of June 30, with a diverse composition of 154 nationalists and women comprising 35.8 per cent of the base.
TCS says that it remains committed to honoring all the offers made and plans to leverage the capacity built in the previous years. This commitment to salary hikes comes in contrast to reports that Infosys has deferred such hikes for the June quarter. The challenging global environment has impacted demand for Indian tech companies, necessitating strategic responses.
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While TCS experienced significant revenue, expanding its order book to $10.2 billion during the June quarter, concerns about near-term demand persist due to global economic uncertainties.
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