Why TCS’s New Bench Policy Could Boost Margins & Investor Confidence
Updated June 2025
📌 Policy Snapshot
From June 12, 2025, TCS has implemented a new deployment policy that:
- Assigns a maximum of 35 bench days per year per associate
- Requires a minimum of 225 billed working days annually :contentReference[oaicite:1]{index=1}
- Mandates upskilling and work-from-office during bench periods
- Discourages short-term project assignments for better utilization
📈 Expected Margin Uplift
Effective bench management directly strengthens TCS’s bottom line:
| Metric | Before Policy | After Policy |
|---|---|---|
| Utilization Rate | ~85% | ~90%+ |
| Bench Days/Emp | 45–60 days | ≤35 days |
| Operating Margin (TTM) | ~25.3% | ~25.9% |
As of June 2025, TCS’s operating margin is 25.89%, up from 25.24% in 2023 :contentReference[oaicite:2]{index=2}.
🔍 Why This Matters
- Higher productivity per employee → More revenue without proportional cost increase.
- Cost discipline → Fewer idle wages and less write-off of unbilled salaries.
- Upskilling bench staff → Better candidate-project fit and faster deployment.
- Stronger investor sentiment → Clear management controls raise confidence.
📊 Investor Confidence Triggers
Separately, TCS CFO emphasized continued focus on:
- Margin targets of 26–28%
- Optimizing offshore cost and revenue per employee :contentReference[oaicite:3]{index=3}
- Leveraging GenAI to deepen productivity and cost-effective realization
Such clarity resonates well with shareholders, especially amid volatile global IT spending.
🌐 Broader Industry Context
Major Indian IT firms are reducing bench time from 45–60 days in 2020–21 to 35–45 days today :contentReference[oaicite:4]{index=4}. TCS's tighter cap places it at the forefront of utilization discipline.
🎯 Actionable Insights
- Investors: Improved margin outlook and better cost control make TCS a more attractive stable-hold amid global headwinds.
- Clients: Faster deployment, reduced bench cost may translate into competitive pricing and delivery efficiency.
- TCS Employees: Clarity on expectations and emphasis on skill-building increases engagement and efficiency.
- Competitors: TCS sets a new utilization benchmark; peers might follow suit or risk being perceived as less efficient.
✅ Final Take
TCS’s decision to cap bench days at 35 and require 225 billed days annually is more than HR policy—it aligns utilization, cost control, and talent development with financial targets. This move is likely to fortify margins, sustain investor trust, and strengthen TCS’s competitive positioning in a cost-conscious global environment.
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