Tata Consultancy Services Limited is a multinational business solutions, consulting and information technology company that is a subsidiary of the Tata group and is placed among the most valuable IT services world while. With over sixty-seven branches TCS offers a wide range of information technology related services in the areas of consulting, enterprise software, business process outsourcing, technology education services as well as software management. In the offering of its functions, the company has become one of the largest private sector employers in India. In the IT industry, Tata Consultancy Services has had the lowest attribution rates and had even retained its employees during the global recession in 2008. However, at the end of the year 2014, various reports from the media in India indicated that TCS was in the process of undertaking massive employee layoffs under the guise of performance related restricting whereby a large number of senior to middle-level employees would be asked to leave.
The current situation at TCS can be labeled a crisis as the number of jobs to be lost in the layoffs was unprecedented in the history of India’s IT industry because of its magnitude. The delay of the company to respond to the news reports posed a danger to the corporate reputation of the company (Varey 2015). For the thousands of the employees of the Indian IT industry who have been handed pink slips over the past years the future is bleak. The furor over Tata Consultancy Services efforts to terminate a large number of its employees in the cutting down of its costs brings to the IT professionals the need to organize themselves. The TCS response to the news reports on its restructuring in December of 2014 was impersonal and terse. There was the failure in the communication strategy employed by the company in protecting its corporate reputation (Dijkmans et al 2015). The situation at hand needed to be addressed to account for the concerns of the stakeholders to the firm as well as the employees.
The IT industry is matured and has a large base, and this resulted in the reducing the net rate of hiring. The information technology profession has seen a slackening and shrinking of the profit margins in the recent years, and as a result, the massive layoffs have hit the IT sector. The termination of the some of its employees in the centers had already attracted the attention of the activists who had been for a while organizing these workers. The trade unions in the country used the opportunity to increase their presence to this group of workers. The fact that the company delayed in responding to the situation in the media and refused to comment on the scale of the planned job losses, the numbers of persons to be sacked apparently was grossly exaggerated.
The allegation against TCS by the trade unions was that they challenged the claim by the company of only terminating underperforming employees. The trade unions claimed that those who had received termination were within the required ratings of the company and yet they had been terminated from work. They also argued that the layoff process was cruel and inhumane to the employees as the terminations were given to them but no further explanations were issued on the reasoning behind the dismissals. The company was also alleged to have conducted the layoffs as part of a calculated plan and not as part of the routinely carried out performance-related terminations as it had claimed to be doing. All these issues received so much attention by the people because the trade union has effectively used the social media to unite the people in one voice against the TCS layoffs. Blogs and Facebook became a vital tool in sensitizing the public on the issue at TCS. Evidence of the termination letters was posted to the online groups, and by mid-January the shares on social media and reader comments on blogs had spread the news about the firing of TCS employees. Facebook was efficiently used whereby the members of the trade unions posted actively on its site by using posters, headlines, and captions to aid their cause. The uproar from the results of the social media frenzy gave rise to the protest witnessed in the streets of India of people uniting and fighting the massive layoffs by TCS. The trade groups continued recirculation and highlighting catchy Facebook comments and popular tweets on its social media sites arguing that these protest helped in assisting the consulting between TCS and its employees. The widespread attention the trade unions had received made the TCS carry out communications internally with its employees but did not address the issue of layoffs and terminations. The company also clarified to the media through twitter handle that the large-scale layoffs were baseless claims and were false
The problem that was facing TCS was drawing attention and concerns from the key stakeholders involved in the TCS situation. There was the need for an understanding of the reputational issues and how that would affect the services, product and the operation of the company at large. Since reputation is built on perception, the company had to come up with ways to ensure that it avoided landing in potential issues as well as prioritizing and looking into the cost of reputational events. The consumers and partners of the company were avoiding purchases related to the negative perception that the company was portraying and the TCS sorted this issue by using past financials as well as implied valuation (Varey 2015) The media was motivated to represent the company in a negative light while at the same time there was lack of balance in the view of the issue at hand due to lack of in-depth reporting (Dijkmans et al 2015) The shareholders, on the other hand, were worried about the effect on the share prices and the change in investments. This was handled by TCS by offering detailed follow-up information from the company. The civil society and trade unions had concerns about the advocating for fair standards, and this was achieved by changing the outlook of the company and giving updates on performance.
In the face of the corporate crisis at TCS, the course of action that could be undertaken by the company is to repair its corporate image and doing so within the shortest time possible since time is of the essence in ensuring that the effect of the crisis is put under control before long-term effects. In maintaining the image of the company and due to the movement of the situation the company can gain credibility by working and consulting with the employees and trade union in reducing the reputation issues related to it. The company could also create new stories to show the company in the favorable light by using the media to showcase the goodwill of the company in its contribution to the society by employing more entry-level employees than other companies. Concurrently the company could also reinforce activities within the business and have seamless integration between company’s actions and reputational consequences and also use paid media to deliver messages with maximum targeting and control (Claeys 2015). The correct responding to the reporters will give the chance to refute the critics and providing the signals as required. Being transparent with the operations of the company will also ensure that the key stakeholders are satisfied that the company is on the right path as a business entity. The company can also employ the service of a third party that is credible since they can boost the reputation of the company more than the public relations team (Feldman et al 2014) In order to recover the brand of the firm and repair the corporate image, it is imperative that the company’s leadership such as a senior executive to take charge of the reputation strategy to improve on the overall picture.
All of all the events experienced by TCS were crucial as they provided a learning lesson to the company on the importance of good corporate image and the need to have an active corporate communication strategy. It also brought to the attention that there is the need for internal and external communication between the stakeholders and the company. The unpredictability of the situation provided the perfect condition for the company’s management to handle the crisis and how to tackle future ones when they occur.
- Dijkmans, C., Kerkhof, P., Buyukcan‐Tetik, A., & Beukeboom, C. J. (2015). Online conversation and corporate reputation: A two‐wave longitudinal study on the effects of exposure to the social media activities of a highly interactive company. Journal of Computer‐Mediated Communication, 20(6), 632-648.
- Feldman, P. M., Bahamonde, R. A., & Velasquez Bellido, I. (2014). A new approach for measuring corporate reputation. Revista de Administração de Empresas, 54(1), 53-66.
- Claeys, A. S., & Cauberghe, V. (2015). The role of a favorable pre-crisis reputation in protecting organizations during crises. Public Relations Review, 41(1), 64-71.
- Varey, R. J. (2015). Corporate reputation and the discipline of marketing communication. In Handbook of Communication and Corporate Reputation (p. 104). Wiley Blackwell.