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TCS is one of the biggest job creators in India

20 June-2014, Firstbiz: Tata Consultancy Services (TCS), India’s largest IT services company by far, with a turnover of Rs 81,809 crore in 2013-14 and profits of Rs 19,164 crore, is the toast for the job market. Or so it seems.

TCS is one of the biggest job creators in India

TCS is one of the biggest job creators in India
TCS CEO N Chandrasekaran. Reuters

With over 3,00,000 employees – 300,464 to be exact–and more hiring plans in its pipeline, the company is the biggest creator of jobs in India. In fact, according to a recent Economic Times report, TCS is the biggest employer in India right after Indian Railways and India Post, and PSU companies like Coal India.

The IT services company hired 61,200 people in the last fiscal. It plans to hire 55,000 people this year.

The picture that TCS paints in the job field looks perfectly rosy. But maybe, it isn’t really.

TCS has managed to keep its employee costs much lower than its peers. The cost per employee of the company has barely risen in the last seven years. How? An ET report today notes the company is hiring more freshers, instead of experienced employees.

The report notes that TCS will add about 25,000 freshers in fiscal 2015.

Although this seems like a good news for college graduates, it isn’t. The report notes that salaries of freshers hired by the company is at about Rs 3.15-3.50 lakh annually and have not increased in the last four years (at a time when the retail inflation has averaged near double digits).

Could this be the reason for TCS’s attrition ‘problem’? Though the employee churn at the company seems better than its peers, Firstbiz’s editor R Jagannathan argues that it is actually a bigger issue than it is made out to be.

According to this article, last year, TCS had an attrition rate of 11.3 percent – which means for every 100 employees added, 11 left.

“In 2013-14, it added 61,200 employees gross, but the net addition to staff was only 24,268. This means it lost 36,932 employees during the year for whatever reason. Its real attrition rate is thus closer to 60 percent – for every 10 employees added in the year, six left,” notes Jagannathan.