At 40%, TCS miles ahead of Infy in retaining employees

Written by P P Thimmaya | Bangalore | Updated: Apr 19 2014, 09:24am hrs
Tata Consultancy Services (TCS), Indias largest IT services exporter, has clearly outstripped its nearest rival, Infosys, on the human resource (HR) parameter as well, retaining 40% of the total employees hired during FY14. On the other hand, Infosys was able to retain only 9% of the total employees hired in the fiscal.

In FY14, gross employee hiring at TCS was 61,200 while the net addition was 24,268, which works out to an absorption ratio of 40%. In the case of Infosys, the total gross addition was 39,985 while the net intake was only 3,717, which results in an absorption rate of 9.2%.

TCS, whose total headcount crossed the 3-lakh mark in FY14, has consistently been able to contain attrition in the range of 10-11%. In the fourth quarter of FY14, the overall attrition rate at TCS was 11.3%, including that in BPO services, while for the IT segment alone it was 10.4%. At Infosys, in the fourth quarter of FY14, attrition rose sequentially to 18.7% from 18.1%, raising concerns about the companys inability to manage the level of employee exits.

Despite TCS size, the company has able to handle the complexity and diversity of a large workforce with people from 118 nationalities. At the end of the fourth quarter of FY14, female employees in TCS constituted 32.7% of its total workforce.

The divergent results on the HR front by both companies boil down to the growth rate recorded by them. Amitabh Das, CEO,Vati Consulting, an HR services firm, said, TCS is witnessing continuous and sustained growth, which is a glue for holding on to to its employees while, in case of Infosys, there is a lot of turbulence, which pushes many people out of the system.

TCS ended FY14 with dollar-revenue growth of 16.2% while it was 11.5% for Infosys. Das felt that both the companies follow almost similar models in terms of hiring and training, but TCS has bettered the art of managing employee expectations.

In an earlier interaction with FE, Ajoyendra Mukherjee, global HR head, TCS, had talked about how the company was able to build a uniform culture in such a large organisation.

It is not easy. It is the core value system that works as a common glue. The question is, how transparent we are as an organisation. The policies have to be well-designed and have to also meet the local regulatory requirements.

On the other hand, Infosys has found it challenging to maintain a high level of employee engagement at all levels. To stem the current level of attrition, the company has given a 6-7% increase in salary, the second in a span of nine months.

Infosys CEO SD Shibulal admitted that the current level of attrition was much higher than the companys comfort level, and that it was taking various corrective measures. These include restructuring the variable compensation, more promotions, focus on promoting people from within and a fast-track programme that will allow high performers to keep moving up etc. Shibulal said, We are hoping that all of this will have an impact and attrition will start coming down.

For FY14, TCS registered a revenue of $13.4 billion while it was $8.2 billion for Infosys. As for net profit, TCS has reported $3.13 billion while Infosys posted $1.75 billion.