TCS spend on employees is justified: Tata Sons chairman N Chandrasekaran

TCS CEO & MD Rajesh Gopinathan (left) and Tata Sons Chairman N Chandrasekaran at TCS AGM in Mumbai | Photo: KAMLESH PEDNEKAR
Tata Consultancy Services (TCS) shareholders cheered the company's movement to the spot ahead of IBM in market cap at the 24th annual general meeting on Thursday, though many of them were apprehensive of the rising employee cost, especially retaining some staff beyond the age of 60 and even in some cases 72.


Some of them raised concerns that the company may be splurging a lot of money given that over 100 employees now earn more than Rs 1 crore towards salary.


Tata Sons Chairman N Chandrasekaran, however, justified the employee costs. "It's not correct to say that the company is paying too much to the top management. If you see, TCS management deserves a lot of credit across the board for producing excellent results and the company would like to reward them," he said.


Chandrasekaran, who had a long stint at the TCS helm before taking over as the chairman of Tata Group, said sometimes specialist skills don't depend on the qualifications but on the employee's experience. “Some employees have been requested to work with us despite crossing their retirement age,” he said, “because of the value addition they offer to a very complex organisation”. While the company will not compromise on the industry leading employee cost to revenue ratio, they will seek to optimise cost further, he said.


Among other top concerns the shareholders raised were about the need to have more clarity on digital revenues and various technology areas within the new technology services to which the company attributes 28 per cent of its revenues.


The company said it completed the implementation of the strategy to use its subsidiary TCS America more for marketing and sales operations. This has helped in better cost management as well as revenue growth, though marketing expenses of the subsidiary is looking higher, it said.


TCS Chief Executive Officer and Managing Director Rajesh Gopinathan reiterated the focus on continuing the industry leading employee retention numbers. On his expectations from the Union Budget, Gopinathan said the finance minister is expected to present a growth-oriented budget and will reignite the digital India initiative.


"We are looking for long-term stability in currency."