TCS: No Slowdown Here

Image: Danish Siddiqui / Reuters

Keeping the cubicles packed: TCS has 280,000 employees worldwide

In a world beset by growing unemployment, don’t blame Tata Consultancy Services: It hired 70,000 people last year. Some 45,000 of those were engineers—mostly software engineers—fresh out of college. India’s largest outsourcer of IT and consulting services, TCS now has 280,000 employees worldwide, and last year it spent nearly $50 million just on training and recruiting. Most of those hires were new employees, not replacements for those who left—TCS says it has a low (10.5 percent) attrition rate. That kind of growth puts the Mumbai company on the Fab 50 for the fifth straight year and the sixth time overall.

How does any company find so many new workers each year? For most of the hires, 85 percent of whom come from India, TCS takes a quasi-production-line approach to ensure that engineering colleges are churning out the right candidates. It evaluates hundreds of colleges around the country and assigns the top ones an A, B or C grade based on the quality of its faculty, course materials and infrastructure, among other criteria. Last year TCS recruited from only 370 of these colleges.

Colleges that fail to get a grade can make improvements suggested by TCS and try again next year. And to make sure its “accredited” colleges don’t slip, TCS regularly hosts faculty workshops to educate professors on new trends in the technology business. There are also student competitions, scholarships and internships for zeroing in on the cream of the crop. It all makes for a youthful company culture—the average employee is 28 years old.

The low cost of Indian engineers gives TCS an edge in serving mature markets such as North America, where the company gets 53 percent of its business. New hires in India are paid an average of $7,400 a year, a little more than a tenth of their US counterparts. TCS often dispatches Indian employees to the US for short-term projects; in fact, it received the second-largest number of the temporary H-1B visas last year.

The immigration bill that the US Congress is considering now threatens that edge. If it becomes law, companies will face much higher visa fees, caps on the share of their workforce on H-1B visas and restrictions on seconding H-1B visa holders to their customers’ locations. TCS says it’s closely following the process.

In any event, TCS will keep adding workers at a breakneck pace. In the last quarter it signed two new clients that will each generate more than $100 million of annual revenue for the firm.