The end of the one year lock-in on any major changes will allow TCS to consolidate its hold on CMC and get a better grip on day-to-day operations to control cost and improve profitability.
The move, according to insiders, might lead to a few changes in key management positions. TCS also plans to realign the perks and salaries of CMC employees across the board. Retrenchment, however, is a no-no, for the moment.
Soon after the takeover in October last year, TCS appointed only two senior executives in CMC: a deputy managing director and chief operating operator (COO), and an executive to head human resources. The company now plans to position a few more senior executives in the top management team at CMC.
It is going to be a smooth affair. A couple of senior CMC executives have already retired and are working as advisors with the company while some more are due to retire soon, said a highly placed TCS official.
When contacted by eFE, the TCS spokesperson said the company would not retrench any employee.
In fact, we have added around 500 employees in this financial year, he said. However, he confirmed that the focus of the management would be to bring down the cost and improve operational efficiencies.
Sources indicate that the company being a government organisation had rather liberal policies on perks like foreign travel, etc. In some cases, the employees total cost to the company was higher than packages at comparable levels in the private sector.
There would be initiatives to create a parity in terms of perks and remunerations of CMC and TCS. However, it will take a few months to complete the exercise, the spokesperson said.
The TCS official said that the first priority of the management would be to improve the bottom line of the company by reducing cost and increasing productivity.
We are also working towards raising CMCs business processes to international standards. We expect a few centres to be CMM (capability maturity model) certified in next six months, he said.
TCS is also building synergies of operations between the two companies to capitalise CMCs strengths. The companies will be jointly bidding for projects in areas where CMC is strong. CMC retains a fair amount of domain expertise in areas like defence, ports and cargo.
CMC has recorded marginal growth in its to revenue of Rs 565.33 crore for the financial year 2001-02 as compared to 552.6 crore of the previous year. However, the net profit of the company touched Rs 33.64 crore, registering an increase of 34 per cent over 25.09 crore of the the previous year.
Interestingly, the net margin is less than 7 per cent, compared to the over 20 per cent in the software services sector.