Tata Consultancy Services (TCS), India’s largest IT services firm, has reportedly slashed variable pay for senior employees for the January–March 2025 quarter. This marks the third consecutive quarter where such cuts have been observed. According to a Moneycontrol report, senior employees—whose variable pay forms 15–20% of their total compensation—received only a fraction of their entitlement, with some getting as low as 20%.
However, TCS has pushed back on these claims. The company said that over 70% of employees received their full Quarterly Variable Allowance (QVA), while others saw payouts based on their unit’s performance—citing it as part of standard policy.
New Policy Ties Pay to Office Attendance
Introduced in April 2024, TCS’s revised QVA policy ties payouts to employee attendance at the office.
- Less than 60% attendance: 0% variable pay
- 60% to 75% attendance: 50% variable pay
- 75% to 85% attendance: 75% variable pay
- Over 85% attendance: 100% variable pay
Despite adhering to work-from-office requirements, some employees claim they still received reduced payouts, especially in the last two quarters.
Annual Salary Hikes Put on Hold
In another blow to employee morale, TCS has delayed its annual wage hikes, which were initially expected in April 2025. Chief Human Resources Officer Milind Lakkad attributed this move to global economic uncertainty and said the company would decide later in the year based on business conditions.
Lakkad also assured that TCS would not scale back investments in employee training, emphasizing that learning and development would continue for trainees, lateral hires, and existing staff.
Hiring, Attrition, and Promotions: A Mixed Bag
Despite cost-saving measures, TCS is still hiring. It added 625 employees in Q4, reversing the previous quarter’s net loss of over 5,000. The total workforce stood at 607,979 by March 2025. Notably, the company promoted 110,000 employees across all four quarters of FY25.
Fresher hiring remains on track, with 42,000 trainees onboarded this year and similar plans for next year.
Attrition rose to 13.3% in Q4 from 13% the previous quarter and 12.5% a year earlier. This marks a third straight quarter of rising attrition, though Lakkad pointed out that the quarterly annualized rate had actually dropped by 130 basis points.
Outlook: Cautious Optimism
TCS CEO K Krithivasan acknowledged mixed signals from the market. While there were early signs of discretionary spending recovery in Q3, momentum dipped again in Q4. Some client projects began scaling down from mid-February, although no major cancellations were reported.In a volatile macroeconomic environment, TCS appears to be treading carefully—balancing cost controls, employee morale, and future workforce strategy.
