Compensation Management at Tata Consultancy Services Ltd.: Coping with Turbulent Times in the Indian IT Industry

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Case Details:
Case Code : HROB112
Case Length : 18 pages
Period : 2003-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : Tata Consultancy Services
Industry : Computer, IT & ITES
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

TCS was established in 1968 with its headquarters in Mumbai. It was formed as a division of Tata Sons Limited (TSL), one of India's largest business conglomerates, and was called 'Tata Computer Center.' F C Kohli (Kohli) was appointed as the first General Manager in 1969.

Soon after, the division was renamed Tata Consultancy Services (TCS). During its early days, TCS, with a staff of 10 consultants and 200 operators, undertook IT consulting assignments with other Tata Group companies. For instance, it managed the punch card operations of Tata Iron and Steel Company (TISCO)...

The HR Policies

TCS gave utmost importance to its human resource function. The company viewed its employees as assets, which had to be utilized efficiently. The TCS senior management constantly kept track of the vast intellectual assets, their skill sets, the status of projects on which they were working, and the number of people available for being placed in other projects...

Performance-Linked Salary Structure

Despite being rated as one of the top IT employers in India, however, TCS had drawn criticism for its compensation structure.

According to the employees the salaries were not on a par with the industry standards. TCS was also under pressure to follow the Employee Stock Options (ESOP) schemes followed by its competitors. ESOPs had emerged as one of the most powerful tools for retaining employees...

TCS Announces Pay Cuts

In January 2008, the management of TCS gave a jolt to its employees by announcing its plans to cut 1.5 percent of the variable component of the total compensation of its employees. The reason cited for this was the company's inability to meet the EVA target for the third quarter of the FY 2007-2008...

 Excerpts Contd...>>


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