A public sector romance and 10 per cent UK headcount cut

Indian outsourcer TCS has cut its UK headcount by around 10 per cent to control costs in a stagnant market.

UK and Europe head at the outsourcer, AS Lakshmi, told silicon.com TCS has reduced the size of its UK workforce to 4,500 people as part of a cost-cutting drive, by pulling back sales and admin staff from delivery centres and customer offices in the UK to fill other posts in India.

IT spend in the UK has been flat or shrinking in every sector apart from government during 2009, Lakshmi said.

"Twelve months ago we were still growing, the market was still growing so we had made investments in increasing our sales force, our consulting strength, opening up offices, buying equipment and so on.

"In the current circumstances we felt it was prudent to reduce the selling, general and administrative spend that we had, therefore we took the decision to look at how many people we need and to send some of them back."

According to Lakshmi, many of TCS' UK clients were also keen for TCS to move staff back offshore to get better value from outsourcing deals.

Lakshmi said that staff could return to the UK when the market picks up and that TCS is making even greater use of its teleconferencing equipment in the meantime.

TCS has now set its sights on breaking into the lucrative Whitehall IT market.

"The public sector is a very important segment for TCS. We have been investing quite heavily in delivering in that sector over the past few years.

"We are quite confident that we will break into the public sector in a significant way," Lakshmi said.

The outsourcer has already made some progress with the announcement today of a multimillion-pound contract to integrate financial, case management and CRM systems for the Child Maintenance and Enforcement Commission.

The company has also been bidding to deliver systems for the Department for Work and Pensions, HM Revenue and Customs, the Home Office and Ministry of Justice.

TCS currently provides services to more than 170 commercial and public organisations in the UK and Ireland, including British Airways, BT and the National Grid.