TCS moves 500 workers from UK to India

As a part of its cost-cutting drive, Tata Consultancy Services (TCS), the country’s largest software company by headcount, has brought about 10% of its UK workforce back to India.

Denying media reports of jobs cuts in the UK, a TCS spokesperson told DNA Money, “About 500 employees are being brought back to work in our India offices. There are no job cuts happening as reported by certain sections of the media.” The spokesperson said that the relocation exercise began January-end and has now been completed. After the relocation, TCS’ staff strength in the UK stands at 4,500. 

Earlier on Friday, a portal Silicon.com quoted A S Lakshmi, the head of the TCS’ UK & Europe operations, as saying, “In the current circumstances, we felt it was prudent to reduce the selling, general and administrative (SG&A) spend that we had. Therefore, we took the decision to look at how many people we need and to send some of them back.”

The portal reported that TCS has pulled back sales and admin staff from delivery centres and customer offices in the UK. Analysts said that TCS would save not only on SG&A costs but also on those that accrue while delivering projects from onshore locations.

Nitin Padmanabhan, an analyst with Mumbai-based brokerage Centrum Broking, said TCS bills its clients about $60 an hour for onsite support compared with $26 per hour for offshore. However, the margins for onshore are much lower than offshore as the per employee cost is about $70,000 per annum for the former, more than double the $30,000 for the latter.

Padmanabhan said, “In the last two quarters, TCS has seen some project resizing from clients. The relocation of employees could be the fallout of that to manage margins and trim costs.”

In February, the 130 employees that TCS hired from a UK-based financial services company Legal & General (L&G) through a mutual agreement were reportedly put on consultation and ‘were finally replaced by staff from India’, confirmed the spokesperson. But Lakshmi had denied this to a portal Computing.co.uk. “What we are not doing is replacing UK employees with Indian staff,” he had said.

This might have been because TCS had to face vehement protests from laid off locals. “There will always be people affected by such decisions, but we are looking at how best we can redeploy that resource — there is potential that employees could take on global opportunities within other TCS contracts,” Lakshmi had told the portal.

TCS serves customers such as British Airways, British Telecom and United Utilities in the UK. The company recently won a $54.7 million IT deal from UK’s Child Maintenance and Enforcement Commission.