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Interview | Freshers can determine their compensation: TCS HR Head Milind Lakkad

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Tata Consultancy Services, India’s largest software exporter, will hire a record 77,000 freshers in FY22, up from its initial estimate of 40,000, on the back of strong demand for its services and an unprecedented war for tech talent, which is leading to high attrition.

Interview | Freshers can determine their compensation: TCS HR Head Milind Lakkad
Tata Consultancy Services, India’s largest software exporter, will hire a record 77,000 freshers in FY22, up from its initial estimate of 40,000, on the back of strong demand for its services and an unprecedented war for tech talent, which is leading to high attrition.
In an interview with Moneycontrol, the company’s chief human resources officer, Milind Lakkad, spoke about the demand for tech talent, the incentives it will roll out, how it plans to bring employees back to campus and why tapping more women and gig workers could become key in the way it manages talent.
Edited excerpts:
TCS will onboard over 75,000 freshers this year, up from 40,000 you had shared earlier. Is it going to stop with that or do you perhaps expect it to touch the 1 lakh mark this year?
For campus hiring, we have already done 43,000. We are looking at another 34,000. So close to 77,000 is what we’re looking at. We will look at the situation as the months go by and increase our numbers as the situation demands.
In terms of attrition, it is a six-quarter high… Attrition was 7.2 percent during the fourth quarter and 8.6 percent during the first. What is your comfort level here?
The 7.2 percent attrition was artificially lower because of the pandemic. We are normally operating at about 10-11 percent attrition, which has been the number for us many years. Our comfort level is ideally 12-13 percent, maybe another point up to 14 percent is our comfort level. It is a cause of concern, no doubt about it. But our strong employer branding, coupled with robust talent acquisition and development, is significantly yielding results for us. These (increased attrition) numbers, we believe, will stay at this level for the next two to three quarters, let us say till Q1 (FY23) and then it will start stabilising.
About lateral hiring, are the dropout rates still high at 40-50 percent, which is an average right now, from what we speak to recruiters?
I think the conversion rate has dropped a bit. I will not say it’s 50 percent for us. But we continue to make efforts to improve that as we go along. The overall compensation for bringing laterals has definitely increased for us marginally and it has always been the case. But the overall cost, we have managed it well through the current mix.
You are hiring a record 77,000 freshers this year. For the last couple of years you have been about 40,000 each year. How are you managing the whole process because the demand is pretty high at any given point of time and deployment of freshers will take time?
We have a programme where the kids in their seventh semester are put through the Explore programme. They learn about technology, soft skills and, at times, even unit-specific training that happens such as cloud or security, which are in high demand right now. We continue to assess them obviously and this has all been done virtually for 18 months. It will continue to be like that even after the pandemic and we will bring in physical aspects as the situation normalises.
There are about 1,500 students taking one digital certification every week. As we go along, we also have built in something called incentives based on competency. There is basic compensation and if they are ready by the time we want them or before that, they get certain incentives… This adds to their compensation. We are even thinking of increasing these incentives significantly…
This engagement for 6-7 months, even before they join, which we call the shift-left strategy, is important. They are not just ready to join TCS, they are ready to actually join a specific business unit when they come in – all these aspects that require a significant amount of planning, execution, and investment. The volumes have gone from 40,000 to 75,000 and we will be able to manage this.
Given the war for talent, are you looking at giving another hike?
So we are the first company that announced hikes twice in a year last year right now. This year we want to obviously go back to our regular cycle and we will do the next cycle in April.
Will you look at doing different things to ramp up supply? Are you perhaps reaching out to your ex-employees from your database who may want to come back? We have heard anecdotally that it is harder for ex-employees to join the company. Will you be more flexible if they are keen to join?
We are looking into all these aspects. We have a database of people, you know, who have missed our qualifying test or just missed qualifying in our interview. We reach out to them and say, ‘Hey, you missed it last time, do you want to think about it again and we can help you cross that bar?’ So those kinds of things continue to happen. We have a person-of-interest database. These are the people who have a very high chance of coming to us again because they missed it last time or for whatever reason they could not join us. With respect to getting ex-employees, we will obviously look into that on an ongoing basis selectively.
Freshers’ salary has for most part remained stagnant at about Rs 3.5 LPA for close to a decade. We are aware that TCS has a different salary scale for those with digital skills. Are there any plans to increase the salary?
We want people to feel hungry, we want them to learn and we provide them all different pathways to get there. If you take digital, people get double the base salary at Rs 3.5 lakh per annum. If you want to reach there, we say come in and apply for it, you get three more chances within three years to get to that level.
We actually say that we allow associates to decide their own compensation. (We want the candidates to) demonstrate that hunger there. In Explore, where we are paying differentially based on competency, we are thinking of increasing that component even more.
TCS is looking to get employees back in the office from December. Will you be doing it in phases because the campuses can run only at 50 percent capacity? Also, would there be compensation changes, with remote working becoming a permanent stay?
We believe in our 25 by 25 vision, but at the same time we do not believe in 100 percent remote work. (By 2025, only 25 percent of the TCS workforce will work out of TCS facilities at any time.)
We will come back to normal first before we go to the new normal. When I say come to normal first, we will get most of our workers to offices first. Most of our seniors have already started coming to work at least two to three times a week. Towards the end of this year, we will try to get the larger workforce gradually into our offices.
Talking about 25 by 25 vision, it can be 80 percent in 2022, 60 percent in 2023 and 40 percent in 2024. It would be 25 percent by 2025. So that is the path we will take depending on individual aspects and customer situation. At the macro level, that is how we will realise this vision and we are committed to it. But to ensure that after these 18 months of working virtually, it is very important to just come back to work and build that social capital and then slowly move on to the 25 by 25 model. When it comes to compensation changes, we are not thinking about that at all, at least at this point in time.
What has happened over the last 1.5 years is that location was no longer a criteria to hire the right talent. You don’t have to map candidates to a city because of remote work. Is this going to change now, because you are looking to get employees back to office? Is that going to change for you?
The silver lining coming out of this pandemic is that mindset has changed significantly, both for our customers and our own people. So we will see a lot more talent to be leveraged across locations as long as we find the right talent, it doesn’t matter whether somebody is sitting in Pune, Hyderabad, London or New York. We can just integrate them into the pool. This change is going to create a significant customer value and also for the organisation because of the fungibility of talents that got created as a result of this.
The scale will go up significantly and many experts will work on multiple projects and projects across multiple locations at the same time. Their time will be premium and experts will work on multiple projects across locations as long as they have the right skills, and the customer gets the best value. The mindset of being physically there in the same room together for executing the project has gone away. Imagine the value it creates for organisations like us.
We have also seen a drop in attrition, especially geography-specific. Somebody in New York is working on an assignment, which is based out of Chicago, who otherwise would have quit. They would say, ‘I want a job in New York and I cannot move out of New York. If I don’t have the next assignment, I'll quit and join somewhere else.’ That is actually going away because we are able to find an assignment for him or her in another location… So it is a mindset change that has happened in the market, and that will create value for us in value for the customers.
There are a lot of women who have dropped out after working for a few years. What are you doing to kind of go after that segment?
We actually have started with an initiative called Rebegin. It is an initiative only for women who have taken career breaks and want to start up their careers. This is intentional hiring, which we are doing here specifically for this group of associates. We need to tap into this (talent pool) and it’s a win-win for everybody. We will actually have a lot of hungry associates wanting to come back to work and create differentiation at the same time. An organisation, obviously, will have to look for such people who are wanting to make a difference. Hence the birth of this Rebegin initiative in TCS and I expect to get significant results out of it. Till date we have got 4,807 applications for Rebegin.
The other question is about gig workers. There are many people again who would like to programme for TCS for maybe two days a week and then work on their side projects for the rest of the days. How are you tapping into this gig worker pool?
It is definitely part of our future of work model we are looking into right now. We have done some prototypes within our internal project support. We are identifying activities that can be done independently by somebody without being part of the core group. We are also identifying customer-specific activity during the sales cycle, where we want to build some prototype that we want to demonstrate to a customer or a specific industry situation. Some of these things can be done independently.
The most important part here is to identify those kinds of activities, which can be done independently. And then why not start the internal gig first in which people can do these kinds of assignments, in addition to their regular job outside of their job hours. This is the kind of thought process we're looking at right now. The way it will happen is a three step process. First try and do this for internal projects, then try to do it with internal gig workforce within and then go for external workforce.
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