TCS CEO says the business model is 20 years old — hinting that it may be time to go employee-lite

Tata Consultany Services (TCS) CEO Rajesh Gopitnathan during the company's fourth quarter earnings callScreenshot from TCSGlobal/YouTube
  • TCS is gearing up to make its new 25/25 secure borderless workplace (SBWS) model the ‘new normal' by 2025.
  • Currently, 90% of its employees are working from home.
  • According to the company, this model will enable a 25% increase in throughput and estimates that it won't need more than 25% of its workforce in the actual offices to be 100% productive.
  • ICICI Direct forecasts that this will allow TCS to differentiate itself in the market.
'Working from home' will be the new normal for the employees of India's largest IT company, Tata Consultancy Services ( TCS), even after the lockdown comes to an end. By 2025, only 25% of employees will be needed in office at any given time and offices will only need 25% of their total strength on any given day.

Its CEO Rajesh Gopitnathan believes that the crisis has actually been good as it forced them to shift to the next phase of their operating model. "It's about time. Our current operating model is currently a 20-year-old legacy. In some ways, this crisis actually leapfrogs us into a new model,” he said during the fourth-quarter earnings call.

The new secure borderless workspaces (SBWS) model will increase the company's velocity or throughput by 25%, according to TCS' chief operating officer N Ganapathy Subramaniam.

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"We don’t believe that we need more than 25% of our workforce, at our facilities, in order to be 100% productive," he said during the earnings call.

What this essentially means is that TCS is going to make work from home the new normal once the Coronavirus pandemic blows over. Although, that's hardly surprising since fewer employees in the office could result in more savings as many studies show.

"Our proven business continuity processes got enhanced and securely, from 100% work from approved facilities to 90% operating remotely and securely connecting to our clients and TCS systems and networks.," said the company in a statement.

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How did Coronavirus inspire TCS' new workspace model?
The Coronavirus pandemic may have forced the IT company to suddenly push their employees to work from home, but according to Gopinathan, the shift has been in the works for a while.

"For the last few years, we have actually been pushing the concept to its next evolutionary path by what we call the open agile workspace concept,” he said.

With the ongoing health crisis, TCS was forced to switch all the elements of its operating model. To not just SBWS, but also to the extended environment.

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"This is not just about moving the person out from the office and allowing a laptop or a desktop located in the house to connect,” Gopinathan explained.

He claims that other than the fact that the person has actually shifted out, no other perceptible reduction in quality or certainty has been noticed by the company's clients.

It will be the ‘new normal' even after the pandemic
Even after the Coronavirus pandemic comes to a close and the lockdown is over — TCS plans to continue with their SBWS model.

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"We're not going to go back to where we were. The reason we have been able to get on top of it is that we had invested in building those processes and systems,” said Gopinathan.

Over the past few weeks, TCS claims that they released they don't need to have more than 25% of their workforce in the office in order to be 100% productive.

"We don't believe that every employee needs to be present all the time at our offices. I think it's sufficient that they spend 25% of their time in the office,” said Subramaniam.

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"We also believe that 25% of the project team may not be located in one single location,” he added.

ICICI Direct forecasts that this will put TCS in a position to provide a unique differentiation of its services, setting it apart from the rest of the industry. Currently, more than 90% of the company's employees are working from home.

The model is going to put us a much better position to capture demand as customers are moving towards resilience and agility in the post-Covid scenario.
"TCS does not see milestones slipping at this point of time,” said Nirmal Bang's report on the TCS' fourth-quarter earnings.
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According to Gopinathan, this does not mean that people will lose their jobs. Being loyal to its talent is once of the ‘core principles' of the company and they plan to stick to it in the coming days. In addition to honouring the offers made to freshers, TCS will also be promoting its employees.

"We also want to reaffirm that our loyalty to our employee base is total. We don't see any form of retrenchment or any such activity happening due to the cause of the Coronavirus, which will only accelerate in the coming few weeks and months,” he said.

However, there will be no salary increments this year.
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Note: The article was edited to reflect that 25% throughput is expected to increase once the new 25/25 model is in place, not a 25% increase in efficiency.

See also:
Wipro's hiring will be slower in the coming months and current employees may be asked to go on leave without pay

India's looming jobs crisis is starting to unravel within the first 21 days of coronavirus lockdown

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